Sitting of 6 December 1996

Preamble
The House met at half-past Nine o'clock
PRAYERS
[MADAM SPEAKER in the Chair]

Trade and Inward Investment
[Relevant documents: The White Paper on Free Trade and Foreign Policy: a Global Vision, Cm 3437, and the Report from the National Audit Office on Overseas Trade Services: Assistance to Exporters, of Session 1995–96, HC 293.]
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Conway.]
9.34 am
Mr. Dennis Skinner: On a point of order, Madam Speaker. With the Government in turmoil, as they are now, what would be the precise arrangements for telling the House if the Chancellor of the Exchequer were sacked over the weekend? Would we be the first to be told about the sacking? [Interruption.] It is very important to next week's agenda, because the Chancellor is clue to speak in the House—
Madam Speaker: Order. That is not a point of order. The hon. Gentleman is trying to deal with a hypothetical situation. I think that we had better get on with our Adjournment debate.
9.35 am
The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Ian Lang): I welcome the opportunity of this debate to address the important subject of trade and inward investment, as I am sure does the whole House. The story is a good one. We are exporting more than ever before in our history, foreign investors are flocking to locate in Britain, and Britain is leading the world as a global champion of free trade. The debate centres on Britain's place in the world today, which is the envy of Europe.
The reasons for the astonishing success are clear: over the past 17 years, the Government have taken tough decisions, brought our economy up to date, and pursued policies based on a clear set of principles—Conservative principles of free enterprise, free competition and free trade. We pursued those policies in the face of constant opposition from the Opposition parties, and how foolish they now look for that opposition—in the eyes not just of the British people but of the world—because the world looks up to Britain; it takes Britain as a role model, whereas under the previous Labour Government, we were a laughing stock.
I invite the House to consider our export performance. We are selling more goods and services to the rest of the world than at any time in our history—more than when half the world was coloured pink or when Britain was the
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cradle of the industrial revolution, making things that no other nation could make. With just 1 per cent. of the world's population, we are the fifth largest trading nation. We export more per head than either Japan or the United States, and those exports are growing all the time. Manufacturing exports have almost doubled since 1979. Only last week, my right hon. and learned Friend the Chancellor of the Exchequer announced that our exports were up by 8.5 per cent. on a year ago—more than double the world economy's rate of growth.
We have halted a long-term decline in Britain's share of world trade, and we have done so in the teeth of unprecedented competition from all over the world. As trade barriers have fallen and developing countries have burst on to the world stage, the fight becomes tougher each year. We are not only fighting, but winning: our share of world trade is increasing faster than that of France, Germany and Japan. I want it to grow further. It is already growing further in many parts of the world. Last year, our market share grew in five out of the six eastern European markets and in half the middle east and north African markets.
The reason why we are exporting more is that our goods and services are competitive all over the world. That position of fundamental strength gives me great cause for optimism about the fact that our performance can and will be sustained, provided that we do not change our policies. We are doing well where it counts—not just in the European Union, important though that market is. We are well placed in the world's most rapidly expanding export markets. Last year, British exports to Japan increased by 26 per cent. and to the Philippines by 22 per cent. We have a current account surplus with Japan of almost £1 billion and with the Asian tiger economies of more than £3 billion. In the past three years, British exports to India have risen by more than 80 per cent. It is no wonder that our position is increasingly the envy of the world.
Back in the 1970s, our economy was weighed down by declining industries, often underwritten by massive state subsidies. Any exports from those companies meant exporting taxpayers' money as well as the products themselves. That was untenable. But now, the sectors that are driving Britain's exports are the world's growth sectors, which need no such subsidy from the taxpayer. We are global players in new technology—we are now Europe's biggest exporter of computers, of microchips, of television sets. Our media industry now earns more for us than the lumbering behemoths of nationalised industries ever did.
Mr. Tim Smith: Will my right hon. Friend confirm the figure that he gave just now? If it is correct that we have a £1 billion current account surplus with Japan, that is a remarkable transformation. Only a few years ago, it seemed virtually impossible to export to Japan and there was a huge flood of Japanese imports into this country. Now, we have fantastic Japanese investment here, plus British exports to Japan.
Mr. Lang: My hon. Friend is absolutely right, and the picture is reflected in many other markets around the world.
We are now selling not only manufactured goods, but expertise—British know-how—all over the world. Only yesterday, I hosted a major conference at the Department

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of Trade and Industry, when delegates from all over the world came to hear about the British experience of privatisation. They met, among others, British banks from the City of London that are imparting their expertise on privatisation in every continent.
Those privatised companies—which, as nationalised industries, were a national disgrace—are now international winners. They are almost invariably represented on the trade missions, which I and my ministerial colleagues lead, and I can tell the House from first-hand experience that they are among the most warmly welcomed by our foreign hosts, who are eager to do business with them—and excellent business they do. The companies that we privatised not only pay significant sums in tax every year—what a turnaround that is—but they now account for 10 per cent. of our exports. They are genuine, competitive exports, not subsidised by the British taxpayer. But still the Labour party, almost alone in the world, opposes privatisation.
Everywhere one goes around the world, one finds British goods and services being sold. Sometimes they dominate whole industries. Some hon. Members may follow motor racing and the Grand Prix circuit—the epitome of diverse international competition, one might think, but not a bit of it. Of the 22 formula one cars that started in the main Grand Prix this year, 18 were designed and built in Britain. What about the all-American Indy car circuit? Every car in this year's Indy 500 race was designed and built in Britain. At whatever position Damon Hill or David Coulthard take the chequered flag, we can be sure that Britain will be up among the winners every time.
It should be no surprise that British exports are booming. We have always been one of the world's great trading nations. The trouble is that for much of the post-war period, the venturing instincts of the British people were suppressed. They were weighed down with burdens on business, with taxes, with rules and regulations. We have liberated British business from the shackles of Government intervention, burdens and socialism. We have released the venturing instincts of British businesses—large and small.
Mr. Nigel Evans: I am grateful to my right hon. Friend for giving way and, obviously, proud of the United Kingdom's tremendous achievement in attracting so much inward investment. On the subject of bureaucracy and red tape, one factor that adds costs to business in the rest of Europe is the social chapter. If the 48-hour working time directive were imposed on Britain, the Labour party would embrace it—it does not mind having extra costs heaped on businesses and the subsequent unemployment that that creates. What progress is my right hon. Friend making with negotiations with businesses in this country on the impact of the imposition of the 48-hour working time directive on employment in this country?
Mr. Lang: My hon. Friend is right and puts his finger on a particularly important distinction between the Conservative party's approach to burdens on business and that adopted by the Labour party. If my hon. Friend can bear with me, I shall develop that theme a little later in my speech. I shall be publishing a consultation paper on the working time directive later today.
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The House will wonder how we have managed to achieve the turnaround and release the venturing instincts in British business. We have done so, first, by creating a stable and growing economy, which is blessed with low inflation, low interest rates and falling unemployment. My right hon. and learned Friend the Chancellor's Budget, which the House finished debating earlier this week, was living proof that we shall continue to run the economy in a sound, prudent way, while being true to our instincts as tax cutters and proponents of small government. My right hon. and learned Friend was able to point to low inflation, falling borrowing and strong growth; he was also able to cut taxes for individuals and companies alike. Next year, the average family will be £1,100 better off than at the previous election. We promised, and we delivered.
But a stable economy is not all that we have created. We have restored the competitiveness of Britain and so, by consequence, the competitiveness of British exports. Costs are low and burdens on business are kept to a minimum. In Britain, the average employer must add 18 per cent. to wage bills to cover social costs. In Germany, the figure is 32 per cent., in France it is 42 per cent. and in Italy it is 44 per cent. Those high costs mean low competitiveness, so it is no wonder that our exports are doing well. I shall say a little more about our inward investment record in a moment, but it is significant that foreign companies come to Britain in order to export. Some 40 per cent. of our exports are accounted for by inward investors.
Let us consider Cohline—a German manufacturer of automotive fuel lines and hydromatic components. It has built a new factory in Thanet for manufacturing and it exports 95 per cent. of its output back to Germany, where Cohline has important contracts with major German car makers such as BMW, Daimler Benz and Volkswagen. And 300 other German companies, including Siemens and Bosch, have also come to Britain to manufacture and export their goods. Our exports are booming as our burdens are low, and because we are becoming the enterprise centre of Europe.
Mr. Skinner: If everything in the garden is lovely, why, in the 17 years that the Tory Government have been in power, has the manufacturing base in Britain been reduced by nearly 40 per cent? Until 1983—shortly after a Labour Government were in power—we had a surplus of manufacturing goods in Britain. But now, despite the fairy story that this tin-pot Minister is trotting out this morning, his own statistics, from the Office for National Statistics, show that there was a current deficit on trade in goods in the third quarter of 1996 of £2.7 billion—those are the latest figures available. Over the past 13 years, the Tory Government have transformed the surplus on manufactured goods, which Britain proudly held during the period of a Labour Government, to one of continuing deficit, year after year after year.
Mr. Lang: Clearly, the hon. Gentleman did not hear the figures that I gave the House earlier. Is he aware that manufacturing industry has been growing in the past few years? We have increased employment in manufacturing by 150,000 jobs in the past three years. We now manufacture more than we ever did under any previous

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Labour Government in our history. That is the turnaround that we have achieved in this country. The Government play an active part in helping exporters into new markets.
Mr. Michael Stephen: Does my right hon. Friend agree that there is sometimes a problem of definition of what we mean by manufacturing? Is the creation and development of software regarded as manufacturing or as the provision of services?
Mr. Lang: My hon. Friend makes a good point. There has been a definitional change. Many manufacturers have now subcontracted many of their processes to outside industries that are regarded as service industries—one such industry is transport. Despite the change in the structure of the definitions, our manufacturing output has expanded dramatically, our productivity has doubled in the lifetime of this Government and exports are at an all-time record. That is the telling picture that we are now able to present to the British people.
We in government play an active part in helping our exporters into new markets. I and my ministerial colleagues have taken thousands of British business men, from large and small companies, on trade missions to open up new markets for our exports. Everywhere we go—from Mexico to Mauritius, from China to South Africa—we are welcomed with open arms and with respect for the new competitiveness and quality for which Britain is now renowned.
Our embassies and consulates abroad now know that promoting Britain's commercial interests is at the centre of their mission. Our best overseas embassies are true launching pads for British industry. We operate a joint export promotions directorate with the Foreign Office so that we can work together to best advantage. In the Department of Trade and Industry, we have specialised country desks for export promotion, where businesses that want to export to a particular part of the world can get rapid, expert advice, often provided by people seconded from top private sector companies who have particular knowledge of the market or industry that they are helping.
Small firms are a particular priority for us. The business links network operates a national network of export counsellors, who have a specific responsibility for helping small firms to boost their export effort.
I believe in small government and would not operate those schemes if I was not absolutely convinced as to their value for money, but that value is irreproachable. In April this year, the National Audit Office published its report on our overseas trade services. Analysing our work in four key south-east Asian markets, the report found that £4.5 million in public spending had helped to generate an extra £345 million of additional business—in other words, every pound we spent generated £77 in additional exports for Britain.
Britain's export performance is now nothing short of spectacular and the world knows it. It is clear that without those policies, that success would be a world away, as it was during the 1970s under the previous Labour Government. The world is backing Britain by buying more of our goods and services than ever before; but the world's business community is paying us an even greater compliment by coming to locate its businesses here and doing so in record numbers.
Since 1979, the Invest in Britain Bureau has registered nearly 5,000 separate inward investment projects, and the exciting point is that that trend is accelerating. An inward
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investment bandwagon is rolling for Britain as the reputation of this country grows and companies look enviously at the performance of their rivals that choose to locate here. Last year, for the third year running, we increased the number of inward investment projects into this country. We had 487 successes—more than one a day—all choosing to locate in Britain. The investment grows and flourishes. Today, two new inward investments are about to be announced—one in Scotland, and one in Wales.
We are top of the European league for inward investment. We win a third of all inward investment into the European Union from the rest of the world. We win some 40 per cent. of all Japanese and American investment into the European Union and 50 per cent. of investment into the EU from Canada. For the world's fastest growing economies—the Asian tigers, such as Korea and Taiwan—Britain is the investment base of choice: we have more than half of all their investments in Europe.
Indeed, two of the most spectacular investments of 1996 have come from Korea. In July, the LG group announced Britain's largest single inward investment to date in terms of job creation, with its plans to spend £1.7 billion on two manufacturing plants in south Wales and so create some 6,100 jobs. In October, Hyundai announced that it would spend £2.4 billion on two microchip manufacturing facilities in Scotland, bringing 2,000 new jobs. If I had time, I could give many more examples and describe how every part of Britain is benefiting from the surge in inward investment, but let me illustrate the point by focusing on the effect of inward investment on one sector—the motor industry.
Last month, I was delighted to be able to announce confirmation by the BMW group that its new generation engine, the NG4, would be built in the west midlands. That £400 million project will safeguard 1,500 jobs at Rover and 5,000 more in the components supply industry. It was magnificent news, ensuring that we have a vibrant, world-class car manufacturer in the midlands with the strategic capability to design and build engines—the first plant outside Germany to build BMW engines. Land-Rover's commitment to a new sports vehicle and Rover's to the new Mini, and the recent investment decisions by Nissan and Vauxhall and by Proton of Malaysia, reinforce that picture of success.
What are the benefits of the riptide of inward investment? First, it brings jobs: since 1979, inward investment has brought over 800,000 associated jobs and the pace is quickening. In the past three years alone, 289,000 jobs have been created or safeguarded and last year the figure was around 100,000. Jobs resulting from inward investment are making a big contribution to the fact that unemployment in Britain—just over 7 per cent. and falling—is more than 4 per cent. lower than the EU average.
Mr. Skinner: Is the Minister aware that a couple of weeks ago, on 17 November, an editorial in the News of the World—a Murdoch newspaper—said that the Government's figure of just over 2 million unemployed was totally false? The newspaper had carried out a survey, which showed that there were 4.1 million people out of work—about 2.1 million were claiming unemployment benefit, but a further 2 million were either claiming other forms of benefit or not receiving any benefits at all.

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The truth of that calculation is amplified by a survey in Bolsover, which discovered that 50 per cent. of the population were out of work in the ex-mining villages in three wards of my constituency, because not a single pit is left and there is hardly any work to be had. Not only are Labour Members saying that the Government's unemployment figures are false, but Tory newspapers are now saying out loud that the figures are false. There are more than 4 million people out of work but, sadly, only slightly more than 2 million receive unemployment benefit.
Mr. Lang: I can understand the hon. Gentleman's sensitivity about unemployment, given the previous Labour Government's appalling record on job losses. The unemployment count carried out in this country is supported by broadly comparable figures from other surveys, including international ones.
Jobs are not the only benefit of investment. Investment improves our capacity to compete in the future. More than £l1 billion of capital expenditure was brought to the United Kingdom by foreign investors in 1995. New techniques are introduced into British industry by foreign investors. Major projects give rise to a flurry of activity among small and medium-sized firms, which act as suppliers to larger companies. Competition is enhanced by expanding the number of players in the domestic market, leading to more choice for consumers. Whole swathes of the country have been regenerated by inward investment, which has often been based on redeveloping derelict sites.
Why do overseas companies choose to locate in Britain? They do so because, during the past 17 years, we have been building the enterprise centre of Europe here. In the words of Jan Timmer, president of that great Dutch company, Philips:
"The most competitive country in Europe today is the United Kingdom … The factories we have in the UK are the most changed factories in the world".
I spoke earlier about our flexible labour market, with low burdens on business; and about our stable economy, with low inflation and low interest rates. We have also transformed industrial relations in this country. Our strike record under the previous Labour Government was a national disgrace, but through a series of step-by-step reforms of our industrial relations law, we have brought order, and indeed harmony, to labour relations here. The number of days lost to strikes is now less than one twentieth of the level that we inherited from the previous Labour Government, and that helps to bring inward investment—and jobs—to Britain. One of this country's big inward investors has cited our improved industrial relations as one of the attractions.
Not only does Labour have a shameful record on strikes when in government; it has an equally shocking record when in opposition. The Labour party opposed each and every one of the trade union reforms that foreign companies endorse so warmly. If we had had a Labour Government during the 1980s, we would still have secondary action and flying pickets, the closed shop and car park mass meetings instead of secret ballots, and a strike rate way above that of our competitors.
More than 70 per cent. of strikes are now in the monopoly and public services. Last summer, millions of ordinary people suffered severe disruption at the hands of
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strikers in the London Underground and in the Royal Mail. What was Labour's response? A sponsored silence in support of the strikers—some comfort for the victims of those strikes, the general public, and some comfort for the potential inward investor attracted to Britain. The Government are prepared to ensure that such disruption does not plague Britain.
It is significant that many of our inward investors—an increasing number—are coming to Britain from continental Europe. They are fleeing from the burdens on business, the over-regulation and the high taxation that continental Governments are imposing.
Mr. Stephen: Does my right hon. Friend agree that the working time directive has nothing to do with a shorter working week, but is just an attempt by the unions to get more money for the same or even less work, and that such socialist and corporatist nonsense is making continental Europe uncompetitive?
Mr. Denis MacShane: Make them work longer—a 56 or 64-hour week.
Mr. Lang: My hon. Friend is right. The working time directive, like many of the other burdens on business, is not to do with health and safety but is to do with social engineering—[Interruption.]
Madam Deputy Speaker (Dame Janet Fookes): Order. If the hon. Member for Rotherham (Mr. MacShane) wishes to intervene, I am sure that the Minister will take account of that, but repeated sedentary interventions are not in order.
Mr. Lang: It is because continental Governments are imposing over-regulation and burdens on their business that so many of the companies from those countries are locating in this country.
Some hon. Members may be aware of the case of Mr. Olivier Cadic. He is a French business man who, earlier this year, announced that he planned to move his business—a high-tech graphics company—to Ashford in Kent. He said that high social costs in France were pricing him out of his market. He is not alone. The inward investment agency Locate in Kent has helped 33 foreign companies set up business in that county in the past year alone.
Continental employers know that burdens on business are destroying their competitiveness. They plead with their Governments to get rid of them. Hans-Olaf Henkel, president of the German employers federation, the BDI, said:
"we have too rigid labour laws. We have too high social costs and taxes. We work the shortest week in Europe. The German government spends 50 per cent. of GDP as opposed to 42 per cent. in Britain. No wonder we have a problem."
From our position of strength in the world—through trade and inward investment—we are able to be at the forefront in advocating multilateral free trade. The Government have the vision to recognise that globalisation—the increasing integration of economic activities throughout the world—means that the United Kingdom has no choice but to trade on a global scale. The growth in trade in goods has been phenomenal, increasing

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more than 14-fold since 1950. That has brought us enormous benefits, because about a quarter of our gross domestic product comes from trade in goods and services.
I want Britain, from that position of strength, to lead the world in promoting free trade. We did that in Europe; the single market was largely a British initiative and our leading role helped to galvanise other nations into action. Now is the time for Britain to turn evangelical in support of global free trade.
I am leaving for Singapore today, to pursue Britain's liberalising agenda, with more than 100 Trade Ministers from throughout the world, at the first ministerial conference of the World Trade Organisation.
Mr. MacShane: The President of the Board of Trade is now off, with a bevy of advisers, for a week in the sun in Singapore. We all wish him well on his trip and hope that he has a nice holiday, but is it not a scandal that Britain is being evangelical? A century ago, William Wilberforce took the lead in abolishing slavery, but the Secretary of State is going to the sun in Singapore to veto efforts to ban child labour in the context of World Trade Organisation discussions—efforts led by America, France and other progressive evangelical countries. It is a scandal that he is going there to veto efforts to place child labour on the WTO's agenda.
Mr. Lang: The World Trade Organisation is a trade organisation, not a social organisation. It is responsible for ensuring trade liberalisation, not for seeking to impose obligations on emerging economies. The best way to help economies that are emerging and that wish to raise their labour standards is to trade with them, so that prosperity spreads to those countries. I shall be in Singapore to support the agreed line of the European Union on trade and labour issues.
Our hand at the Singapore conference will be strengthened by our membership of the European Union. As members of the world's largest trading bloc, we have massive influence on international trade issues.
At next week's conference, I shall press for three priorities: first, a substantial work programme to carry forward trade liberalisation in the WTO; secondly, the completion, at least in outline, of an information technology agreement aimed at the progressive elimination of tariffs on IT products; and thirdly, real progress on negotiations to liberalise telecommunications services.
The information technology agreement will mean lower costs for users and manufacturers and it will help businesses to export. It is estimated that that agreement will benefit British industry by at least £200 million a year. That is a win-win objective in a sector of enormous importance globally, the backbone of developed and developing economies alike. Likewise, the potential gains from a world telecoms deal are huge.
We gain when both we and others open markets. For that reason, we want to secure a substantial work programme to tackle the barriers to trade that confront our companies in global markets. Our priorities offer the best prospect of real liberalisation for British industry and consumers. Let me expand on a few of them.
We want Government procurement to be opened up globally. That accounts for a substantial proportion of economic activity—as much as 10 to 15 per cent. of GDP
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in the European Union and in the United States—but large volumes of trade involving central and local government and nationalised industries are protected. We must ensure efficient use of what is, after all, public money.
We recognise that import and export regulations and procedures incur considerable costs for our businesses. The United Nations Conference on Trade and Development has estimated that compliance with regulations averages as much as 10 per cent. of the value of world trade in goods. We want work to take place to simplify such procedures and cut costs.
Business continues to tell us that one of its biggest worries is that standards and technical regulations often differ regionally and nationally. Again, we need to focus work at an international level.
EU exporters are losing an estimated £2 billion a year on piracy of software, books and compact discs, to name just a few items. We would gain from measures in the area of intellectual property rights and we shall seek to make progress there.
Our record of success in investment—inward and outward—means that it is vital for our companies to be able to make their investment decisions confidently, at home and overseas. We are committed to working for liberal and open markets in investment world wide. To both British business and the Government, work in the WTO on trade and investment is a priority.
I have spoken about our record on inward investment, but I want to make it clear that outward investment is advantageous, too. Recently, someone said to me, on a very public platform—she is not here today, so I shall not name her—that the fact that we have record flows of investment overseas shows Britain to be in a decrepit state. I was flabbergasted at the scale of that incomprehension, because nothing could be a greater endorsement of the success that Britain enjoys than the fact that our self-confident investors are buying and setting up businesses and making money throughout the world.
For free traders, trade is not one-way. Just as wishing to export but not to import is a sign of a protectionist mentality, wanting to be the recipient of investment without wishing to engage in it betrays a fundamental lack of understanding of the virtues of trade. People should be free to find the best opportunities, the best markets, the best investments anywhere in the world, without constraints. In that way, people can make the fullest use of their skills and resources; competition can ensure maximum efficiency; people can enjoy the choice and diversity that the whole world offers; and the quantum of economic activity, and thence employment, increases.
Britain does extremely well out of its overseas investments. Last year, British companies earned nearly £25 billion from the total stock of outward direct investment of £214 billion—an extremely high rate of return. In fact Britain receives more income, and more interest and dividends, from its ownership of companies overseas than it pays out to those who own companies in Britain. The surplus is approaching £10 billion.
Outward investment benefits Britain in other ways, including our exports. The Government commissioned a major study by KPMG to study the effects of outward investment. Its principal findings were that, for most companies, overseas investment is driven by market expansion and development. Other companies sought to

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improve service to existing customers overseas, or to establish a regional hub from which to expand further an existing overseas market.
One example that I came across recently on a visit to Mexico was that of a United Kingdom manufacturer of high-tech equipment. Having successfully built up an export market for its products there, that company is considering building a production facility in Mexico, which would enable it to expand its marketing effort to include north America and perhaps Latin America.
Such investment brings benefits to the British companies involved and, therefore, to the United Kingdom as a whole, in ways that could not be achieved simply through exporting goods. Closeness to one's market and the ability to respond to changing customer requirements, as well as local good will, are vital to success. The KPMG study concluded that, far from displacing trade, such investment enhances it overall.
The assertion by some that outward investment is simply "exporting jobs" is simply not true. The KPMG survey found that in only a very few cases of outward investment was production moved overseas to reduce input costs. It found no evidence that investment overseas displaced British production and employment levels, domestic and export sales, or quality of service to existing customers. Indeed, the evidence showed that many outward investments were accompanied by increases in sales and production from British facilities.
The benefits of a liberal international investment regime are palpable. But the core of my thesis today is the proposition that inward investment and outward investment, linked to an export drive, can help to form a golden triangle of prosperity for Britain, each interacting with and benefiting the other.
Another return from the high level of overseas investment is the establishment of a depth of experience in a wide range of markets. That has made a significant contribution to the success of sales of British financial and advisory services abroad.
In short, investment abroad, wherever there are opportunities that are not matched at home, enables British resources to be used more efficiently and increases our national income. So although attention is often focused on the success stories and benefits of inward investment, I want to make it clear that I regard outward investment, too, as a source of major benefit to the British economy. Cross-border investment brings advantages to both sides. That is why overseas companies come here and why British companies look overseas, as well as at home, for opportunities. Both forms of investment help our exports.
Mr. John Butterfill: Is it not also true that where we make overseas investments, which our Select Committee on Trade and Industry has been anxious to promote, British companies that manufacture overseas source their components and raw materials from here, thereby increasing our exports?
Mr. Lang: My hon. Friend is right. He makes an additional point in support of the general thesis that I am advancing. I am grateful to him.
Mr. Christopher Gill: Before my right hon. Friend moves off the question of investment, does he agree that there is a danger in always stressing inward investment as if it was the panacea for all ills? Does it not tend to send the wrong message to domestic investors if the Government and politicians talk all the time about inward investment? What the country should be talking about is investment of all sorts. As I hope to have the opportunity of saying later, not all inward investment is as good as it is cracked up to be. So I urge my right hon. Friend in his pronouncements to be even-handed between outward, inward and domestic investment.
Mr. Lang: My hon. Friend is right. That is the point that I have been seeking to make. Inward investment is important, outward investment is important and, of course, domestic investment is important. Indeed, some 60 per cent. of all the regional selective assistance grants that my Department makes go to domestic companies that are expanding or relocating their activities. The point is that investment of whatever kind can be encouraged only by the creation of a stable economic framework such as has been achieved by the Government.
We are negotiating in the Organisation for Economic Co-operation and Development to conclude the multilateral agreement on investment. It will be the first multilateral, comprehensive and legally binding investment agreement. It will break down barriers, protect the rights of investors and provide effective dispute settlement procedures.
We are rightly proud of our record in promoting competition. We see that it is necessary to begin looking at competition issues on a global scale. We would welcome exploratory work on trade and competition in the World Trade Organisation. The United Kingdom is also working hard to help clarify the complex relationship between trade and the environment, and wants work to continue.
Another issue for Singapore will be how we give direction to the WTO's work on services. We are working, therefore, for a new financial services agreement to involve all major players. We are also keen to achieve results on professional services.
So overall, we are determined to see a successful outcome from the Singapore WTO ministerial conference, setting in train a comprehensive work programme on the broad front of core liberalisation issues. That programme can then lead into the launch of a new multilateral trade negotiating round, which should be launched before the end of the century, to deliver a further substantial liberalising package before 2010.
The ultimate goal beyond that should be a commitment by WTO members to global free trade by 2020—a plan set out last month in the White Paper on free trade and foreign policy, published jointly by my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs and myself.
Global free trade will bring huge benefits to the world economy and raise living standards. Those benefits will be, for consumers, lower prices, wider choice and better-quality products; and for producers, open markets to allow our companies to expand their operations and increased competitiveness from access to competitive sources.

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Under the Conservative Government, Britain is riding high in the world. We have record exports; the world is buying our goods. We have record inward investment; the world is choosing to locate in Britain. We are leading the world in the cause of global free trade, just as we led Europe in the cause of the single market. Where once Britain was avoided lest the British disease of strikes and low productivity be contagious, today we set an example to the world.
The policies that we have pursued during the past 17 years have brought about that transformation. We took tough decisions. We reduced taxes and burdens on business. We improved industrial relations. We promised success, and we are delivering success. We are making Britain the enterprise centre of Europe.
The Government promised, and the Government are delivering, and we are the only party that can offer the United Kingdom continuing success, because we are the only party with the track record, the policies and the principles that can deliver it.
10.16 am
Mr. Stuart Bell: I am grateful to the President of the Board of Trade for the debate today on trade and inward investment. I apologise to you, Madam Deputy Speaker, to the President of the Board of Trade and to the House for the absence of my right hon. Friend the Member for Derby, South (Mrs. Beckett). She is unable to be here today, but I shall make some of the points that she would have made and, of course, I shall develop my own themes.
We have two Governments at the moment—a Government in situ and a Government in waiting. We have a Prime Minister who daily reconstructs the chaos theory of politics. We had a clear and precise statement on Tuesday from the Dispatch Box that the Government's policy on the single currency—I am glad to see that the hon. Member for Ludlow (Mr. Gill) is in his place and will seek to speak in the debate—would be unchanged: the Government would fight a general election with the offer of referendum to the British people. We were told that the Prime Minister would not rule out entirely the single currency, but hardly does he make that statement from the Front Bench than Back Benchers in the 1922 Committee meet upstairs and say clearly—
Mr. Stephen: The hon. Gentleman was not there.
Mr. Bell: I did not need to be there because they told me on television this morning what was said. The Prime Minister says one thing from the Dispatch Box and his Back Benchers say something else in the 1922 Committee. We know that prospective Conservative parliamentary candidates are against the single currency. I notice your stern gaze, Madam Deputy Speaker, so I will get to the point.
As we have a Government in waiting and a Government in situ, it was charitable and generous of Conservative Central Office to let me have its research document on trade and inward investment. I was glad to see the hon. Member for Ribble Valley (Mr. Evans) having a good read of it before he seeks to intervene later in the day. We enjoy the feeling of co-operation that exists.
Mr. Tim Smith: Read it out.
Mr. Bell: We will wait to hear whether Conservative Members read it out and we shall be sure that they stay with the document, with its myths, myths and shibboleths. It is remarkable that this document on trade and inward investment does not mention the single currency. As the President of the Board of Trade is discussing trade and saying that Britain is the enterprise centre of Europe. I should have thought that the single currency would be uppermost in the minds of researchers at Conservative Central Office, but they have not referred to it.
Mr. Skinner: The President of the Board of Trade did not refer to it either.
Mr. Bell: My hon. Friend is right. This will therefore be an interesting debate on inward investment, trade and outward investment, without a great deal of reference to either the single currency or the single market.
Mr. Tim Smith: I am not convinced that the single currency issue is important to Britain's trade. If the hon. Gentleman believes that it is so important, will he say what he and the Labour party think about it?
Mr. Bell: I am always grateful for interventions by the hon. Member for Beaconsfield (Mr. Smith). I have followed his articles in Accountancy Age over the years and he and I share a common interest in that subject. He will be pleased to know that, in a Friday debate when we all have time on our hands, I should be glad to go through the issue of the single currency and I shall do so as part of my speech. If he sits patiently he will hear the points that I have to make.
Naturally, the President of the Board of Trade spoke highly of the inward investment programme. I was amused at some of his language: he used the word "spectacular" at least three times and I thought that he was writing a Hollywood script when he went through our inward investment record.
I was grateful for the intervention of the hon. Member for Ludlow because he made a pertinent point. Although we welcome inward investment and will welcome the next two projects to which the President of the Board of Trade referred, the massive outward investment from our country has not necessarily been so helpful. The investment in manufacturing that the Chancellor announced in the Budget was some 6 per cent. of domestic investment in our economy. We need a balance, and the intervention of the hon. Member for Ludlow rectified that balance somewhat.
As I have said, we welcome inward investment. Indeed, it would be churlish to stand at this Dispatch Box and say that the Opposition do not welcome inward investment to this country. It is remarkable—the President of the Board of Trade did not refer to this—that massive inward investment coincided with our signing of the Single European Act 1986. The President referred to the fact that many of the manufacturers coming to this country and investing here are doing so to get the benefit of the single market.
Mr. Gill: The hon. Gentleman will be the first to recognise that a business man deciding to relocate or make a large new capital investment somewhere bears in mind factors other than whether the United Kingdom is

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in the European Union. Those may include the availability of a suitable work force, the motivation of that work force, the conditions that the Government have created whereby labour relations are better than they have been for 100 years, and whether managers can manage. If we are to have a free and frank, and also constructive, debate this morning, the hon. Gentleman will probably concede those points.
Mr. Bell: Far from merely conceding them, I agree with everything that the hon. Gentleman said. If he continues to make interventions like that, I may make him an offer that he cannot refuse. Perhaps he should come over here and sit next to my hon. Friend the Member for Bolsover (Mr. Skinner).
Mr. Gill: The hon. Gentleman tempts me, but essentially I am a capitalist and those who sit on the Opposition Benches are socialists. There is a huge difference in our philosophies. Our joint aim, however, should be the prosperity of this country.
Mr. Bell: I thought for a moment that the hon. Gentleman was going to call me a capitalist, which would have been a terrible sin against me and especially against my hon. Friend the Member for Bolsover.
Perhaps I may answer the specific point that the hon. Gentleman made. It was an excellent point and it anticipates my speech. I have before me the brochure of Toyota, one of the great inward investors, which says that its decision to locate its European manufacturing plants in the United Kingdom was influenced by many factors, including a reasonably sized domestic market, the tradition of vehicle manufacture, a substantial indigenous parts and components supply sector, good access to the rest of Europe, and the co-operative attitude of national and local government. So I agree entirely with the hon. Gentleman.
Mr. Butterfill: The hon. Gentleman may find that the Government's co-operative attitude was more important in that decision. The Library's figures—they were not supplied by the Conservative Central Office research department—show that when we took over from the Labour party net inward investment grew from £2.9 billion per year to £5.6 billion by 1986, which was before the decision to sign the Single European Act. So it had much more to do with the fact that we had created a benign environment than with the decision to sign that legislation.
Mr. Bell: The hon. Gentleman talks of the Government's benign attitude in relation to Toyota, but he should have mentioned the supportive action of the Labour-controlled local authority, which provided the framework and even a village to help Toyota invest in this part of the world. The hon. Gentleman should not rely too much on that research document; he should be a little more cautious.
I will use the figures given by the President of the Board of Trade—as he is here, he will not disavow them. He made it clear that our stock of inward investment is now more than £150 billion, up from £44.3 billion in 1985. We welcome that. Since 1986, therefore, there has
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been a massive increase and accumulation of inward investment, which is the point that I was making. The President referred to a statement by my right hon. Friend the Member for Derby, South on inward and outward investment. In a recent parliamentary question to the President of the Board of Trade, my right hon. Friend asked:
"what percentage of inward investment in 1995 was due to the acquisition. takeover or merger of a United Kingdom company by overseas investors?"
The President replied:
"In 1995, acquisitions, takeovers and mergers accounted for around 25 per cent. of foreign direct and portfolio investment into the UK, based on UK balance of payments data."—[Official Report, 12 June 1996; Vol. 279, c. 182.]
I am seeking to get a balance into this debate. The point is that 25 per cent. of that inward investment is simply money turning around and changing hands, not productive investment.
Naturally, we are not saying that we do not want that investment. We recognise that certain banks in the City of London, such as SG Warburg, Kleinwort Benson and even Barings, have been taken over by way of inward investment. Some believe that outward investment is a good philosophy. Barings invested £800 million of its money in the Singapore trading markets, with disastrous consequences for the company. Companies such as South Western Electricity and Northumbrian Water have been acquired by overseas investors, which have a firm role to play in our domestic economy.
Although the President of the Board of Trade mentioned some of the companies that have invested here, the list was clearly not extensive: Siemens, Fujitsu, Toyota, NEC, Samsung, Honda, Chunghwa and Nissan are but a few. My right hon. Friend the Member for Derby, South was the first to recognise Toyota's input into the local domestic economy, with the creation of 1,970 jobs and £700 million of investment.
We welcome that inward investment but—to return to the point made by the hon. Member for Ludlow—we want to encourage domestic investment as well. The Chancellor said that business investment has been growing at 6 per cent. a year, that he expected it to grow strongly and that he thought that it would grow to 10 per cent. a year.
Those are optimistic figures. We hope that they will be borne out by the results, but as my hon. Friend the Member for Bolsover remarked, manufacturing investment in the United Kingdom is still lower today than it was in 1979. It is also lower than it was in 1989.
More can be done in our regions. The White Paper referred to regional development agencies. We want to strengthen the roles of development agencies in Scotland and Wales, and to establish a series of regional development agencies which could co-ordinate economic development and encourage new technology by providing a conduit for new investors.
We congratulate the Invest in Britain Bureau on the work that it has done. Victory has a thousand fathers, as we know. The father of the Invest in Britain Bureau was a Labour Government, who set it up way back in 1977. The President of the Board of Trade likes to paint a bleak picture of what life was like in 1979—like a Flemish landscape in the middle of winter.
Mr. Skinner: We had a surplus then.
Mr. Bell: Indeed.
Mr. Tim Smith: If things were going so well in 1979, can the hon. Gentleman name one significant inward investor, apart from De Lorean, in the period of the Labour Government?
Mr. Bell: De Lorean was an inward investment in Northern Ireland, which was part of our policy of investment in our regions. Samsung was in our country at that time, as were Merck Sharpe and Dohme, the American pharmaceutical company, and Sony. Ford expanded. The litany goes on and on. The hon. Gentleman should be careful: we could spend the rest of the debate listing companies which invested in our country at that time. I am sure that the President of the Board of Trade would accept that the United States invests more money in the UK than anywhere else in the world, and it has been doing so since the 1930s at least. We are, have been and will be—under a Labour Government or even under a Conservative Government—a country with high skills in the work force which are always attractive to companies seeking to invest.
We congratulate the Invest in Britain Bureau within the Department of Trade and Industry which works closely with the Locate in Scotland office, the Welsh Development Agency and the Industrial Development Board for Northern Ireland. The intervention of the hon. Member for Beaconsfield helps me to refer to Northern Ireland. In debates such as this, we rarely mention it. We are the United Kingdom and I am often surprised that Government documents refer to Britain, which so far as I am aware means England and Wales. The United Kingdom covers Northern Ireland—[Interruption.] Scotland is part of Great Britain.
We welcome inward investment for Northern Ireland. We welcome the trading capabilities of Northern Ireland and want them to be further developed. We want to expand regional development organisations and the link with the Foreign Office. We are grateful to the President of the Board of Trade for telling us that the Government are implementing Labour party policy, in anticipation. In our documents to our party conference last autumn we stated clearly that we wish to strengthen the link between the Department of Trade and Industry and the Foreign and Commonwealth Office.
The right hon. Gentleman mentioned our embassies abroad as focal points for our exports and outward investment. I remind him that a month ago President Chirac brought every French ambassador to the Elysee palace and told them that they were ambassadors for their country not only in diplomatic affairs, but for trade. The French still export more than we do: they are the world's fourth largest exporter while we are the fifth.
Mr. MacShane: They have a trade surplus.
Mr. Bell: Indeed. France has a trade surplus of $18 billion, while the UK Chancellor of the Exchequer congratulated himself in his Budget because he thinks that we might be in balance on current account.
Mr. Lang: We are exporting at a faster rate than France. Does the hon. Gentleman concede that since 1981 we have closed the gap?
Mr. Skinner: We have not caught up with France.
Mr. Bell: I shall come to the figures in a moment, and I will refer to the intervention of the Chief Secretary in the debate on Monday and to his own statements.
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We welcome the work being done by the agencies and want to build on it. It is important to mention local authorities, whose role we often denigrate. In attracting inward investment, they have played a significant part.
Two weeks ago I had the opportunity of visiting Nissan, where I saw the vast strides that have been made in technology and in the ethic of the work force. In the 1960s I visited Longbridge as a young lawyer, hopefully coming up. When I asked to walk round the assembly plant, management suggested that I should walk quickly and purposefully. When I asked why, I was told that the work force might think that I was a time and motion man and the company might have a strike on its hands. I should point out that under a Labour Government—under Michael Edwards—we came to terms with the problems at Longbridge. Today it is one of the finest companies in the land and turns out a fine product.
At Nissan I saw skills, co-ordination—men and machines coming together, and robots too. The robots play a significant part and, I am happy to say, all have their union card. A new car is being produced. The plant employs 5,500 people and creates more jobs through dealerships and plant suppliers. It designs, manufactures, markets and sells its cars in the United Kingdom. It is a worldwide company with a strong European base.
Nissan Sunderland works closely with other Nissan installations in Europe—a test track and a plant in Barcelona, a new Nissan Design Europe styling centre in Munich and testing facilities in Belgium. Those are all within the European Union and the single market, showing that a global company operating within a global economy can use Europe as a home-from-home base.
Mr. MacShane: Does my hon. Friend agree that one of the great worries for inward investors is the growing tide of voices in the Conservative party calling for a withdrawal from Europe or a semi-detached status? It is deeply alarming that the Cabinet is giving no lead in making it clear that Britain's future lies in playing a full part in Europe.
Mr. Bell: I am grateful for my hon. Friend's intervention. One of the worrying aspects of the debate on a single currency is the way in which it is being converted into a debate about whether we should be in the European Union. In the White Paper the Government make it clear that being part of a single market is entirely different from being part of a free trade area. The single market, with its powers of enforcement, is a much more significant concept for our trade than being part of a free market. I fear that the question whether we stay in Europe will become a major issue as the debate progresses.
Mr. Butterfill: I remind the hon. Gentleman that a Conservative Government initiative created the single market. We recognise absolutely the vital role that it plays in our national interest.
Mr. Bell: On television this morning I saw at least one Conservative Member recommending our departure from the European Union. As she is not in the Chamber, I shall not mention her name—but perhaps I have assisted the House by referring to her gender. A Conservative Government signed the Single European Act 1986, but we are now witnessing a change in attitude.

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There were some interesting omissions from the speech by the President of the Board of Trade. He did not refer once to the social chapter—that was quite remarkable—and the White Paper mentioned it only fleetingly.
Mr. Gill: Before the hon. Gentleman turns to the social chapter, does he recognise that the most important consideration for industry in this country is whether we can continue to import the necessary raw materials and convert them into products that we can sell at home or in export markets at a profit? So long as we continue to do that—we have managed it in the past few years with floating exchange rates, as my right hon. Friend the Secretary of State pointed out—why on earth should we adopt fixed exchange rates? It might not be possible to import the necessary raw materials at competitive rates and convert them into products within the straitjacket of fixed exchange rates.
Mr. Bell: The hon. Gentleman raises two issues. First, he mentions a pertinent fact in relation to trade: most trade is in component parts—they are flying all around the world—which are converted into finished products. Secondly, he points out correctly that we do not require a single currency in order to be part of a trading area, as the north American free trade agreement proves. A single currency is not a prerequisite of a free market, but great benefits may be derived from price stability and currency credibility. It is an advantage for businesses to be able to plan ahead in an essentially inflation-free economy. Those issues are connected with the single currency. I shall examine that subject more carefully in a moment—Friday morning provides a good opportunity to debate such matters, as we can take our time.
The President of the Board of Trade did not mention the social chapter in his speech. Why? Nobody mentioned the social chapter when I visited Nissan. No one said, "We are very worried about a future Labour Government implementing the social chapter". They were glad to hear that our macro-economic policy would be strong, that we planned to meet our target for low inflation rather than relying on forecasts as the Government do, that we would have sustainable growth and that we are committed to the so-called "golden rule" of public finance—that the level of borrowing should cover only investment over the economic cycle. They were more concerned about the macro-economic framework and stability so that they could get on with business. No one mentioned the social chapter.
Samsung's operations are based in Teesside in my part of the world. I am reminded of the comments of the former President of the Board of Trade who, speaking in Seoul, tried to give the impression that Samsung had located here because we do not have a social chapter. Samsung did not say anything of the kind: it had been here for 10 years—before the social chapter was dreamed of—and it had a strong record of sales success, it was pleased with labour productivity and infrastructure, familiar with the English language and happy with the success of its operations. Samsung is so looking forward to a Labour Government that it has invited my right hon. Friend the Leader of the Opposition to visit its plant to open a training centre.
Mr. Skinner: Before the election at Christmas?
Mr. Bell: My hon. Friend anticipates a Christmas election, but I do not know whether Santa Claus will come down the Prime Minister's chimney on Christmas day. The fact is that Samsung is happy about the prospect of a Labour Government.
I think that all hon. Members agree—it is in the White Paper—that we must improve our education and training skills.
The President of the Board of Trade asked me about trade. Britain is a trading nation—Aneurin Bevan described Britain as an island surrounded by fish and filled with coal. The coal may remain in its anthracite veins, but there are not many coal mines left. When the Government boast of their proud record, they never talk about how they cut a swathe through not only our mining industry but our mining villages. Although my hon. Friend the Member for Bolsover and I now represent Her Majesty's Opposition, he began his career in the pit and I began mine in the colliery office. We have a long history in that industry and we understand the way in which the Government's policies have ravaged our mining communities. The President of the Board of Trade did not mention that today.
We accept that we are a trading nation and we embrace our role in that regard. During the debate on Monday, the Chief Secretary to the Treasury intervened on my right hon. Friend the Member for Derby, South to say that the 1980s was the first of many decades when the United Kingdom maintained its share of world trade. However, my hon. Friend the Member for Bolsover pointed out earlier by way of intervention that in the 1980s we also had a trade imbalance in manufactured goods—our manufactured imports exceeded our manufactured exports.
If we look beyond the golden horizon and the Hollywood sunsets that the President of the Board of Trade described, we can see that our share of world trade has steadied. However, the United Kingdom's share of world exports fell from 5.2 per cent. in 1979 to 4.9 per cent. in 1995 and it is projected to fall again to 4.8 per cent. in 1996–97. They are not the Opposition's figures: they are the projections of the Organisation for Economic Co-operation and Development.
I wish to be fair to both the President of the Board of Trade and the Chief Secretary: they are visible exports and we have a strong account for invisibles. The right hon. Gentleman said that about £25,000 million returns to this country from abroad. As I said earlier, we are fifth among the world's trading nations—we rank behind the United States, Japan, Germany and France. We often look to the French economy and base our arguments upon the inflexibility of its labour market. However, we must not forget France's trading surplus or the fact that, together with Germany, it has the lowest interest rates in Europe and the third lowest long-term interest rates in the world. In his Budget Statement, the Chancellor of the Exchequer forecast a rise in export values of more than 7 per cent. this year and 6 per cent. next year. That anticipates an increase in world exports of about 7 per cent. As John Fitzgerald Kennedy said:
"All boats lift on a rising tide."
We may be holding our own but we are not doing anything more than that.

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The White Paper makes it clear that free trade and foreign policy combine to make a global vision. It was Sir Ronnie Hampel, the chairman of ICI, who said recently that men and women who think global are men and women of vision. A book was written recently by Eniche Oaftiah—I have the right spelling, so Hansard need not worry about that—called "The End of the Nation State", meaning that we live in a global village and a global economy. The concept of global trading within a global economy has meant, for example, that the United States, and we as part of the same business cycle, have enjoyed a prolonged period of sustained growth.
The President of the Board of Trade talked of how we have been catching up on the French since 1981. It is not necessarily the case that that is happening but it is a case of business cycles. We are linked into the American cycle and the French are locked into the European cycle. There are cycles and movements in these areas. We are behind the French in world trade, and the French are pushing hard, as they often do. I agree entirely with the President that we should continue to push as well.
If we link global vision with our foreign policy, it is clear that there has always been a political dimension to our trade with Europe. The European Union is now the largest marketplace in the world. Its share of world trade is greater than that of the United States and even of Japan. The more that we trade with one another—the more that we take in one another's washing—the more successful we are likely to be, and the more we are likely to work together throughout Europe rather than to find ourselves in the conflicts of the past on the so-called vieux continent.
We are saying that trade is a successful instrument of policy, serving the national interest and adding to the well-being of people throughout Europe so that we can reach the end of the century and face the next millennium looking outwards towards Europe and a trading bloc in which we play a major role. The single market consists of 370 million people with 16 million enterprises.
The President of the Board of Trade uses his own soundbite in referring to the enterprise centre of Europe. I think that it was the former President, who is now the Deputy Prime Minister, the right hon. Member for Henley (Mr. Heseltine), who invented that phrase. It did not come from Saatchi and Saatchi. But we must be not merely an enterprise centre, we must be at the heart of Europe. That is something that the Prime Minister says sometimes when he feels in a pro-European mood, but ignores on other occasions.
We are saying that we must be genuinely at the heart of Europe. It is a major trading post for us that should be enhanced to increase economic growth and employment prospects, and higher levels of prosperity for our citizens. It is significant that the United Kingdom will have the presidency of the Union in the first half of 1998. I am glad that the hon. Member for Ludlow is with us, because I shall take up the point that he made on the single currency. The hon. Member for Beaconsfield made the same point.
Britain's presidency of the Union from 1 January 1998 to 30 June will be an historic one. There is no doubt that the EU will decide at that time how it proposes to go forward to its single currency, who has met the convergence criteria and who will be on the first Euro train. The significant fact for us all to remember is that
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the date of 1 January 1999 for a single currency is written into the Maastricht treaty. The treaty does not state that a single currency can come about on 2 January; it makes it clear that it must come about on 1 January. That does not necessarily mean that the United Kingdom must be a part of it. If a single currency does not come about on that date, the entire treaty will have to be amended and all member states will have to ratify the amendments.
It is rather significant that we have not heard a great deal from the President of the Board of Trade about the completion of the single market, which is one of the major issues for us. The single market should be properly completed, and we should make that an aim for us in the presidency from 1 January 1998. We want to say, "Yes, the single market exists, and yes, it should be completed." I welcome the White Paper and the "action single market" and "trade barriers" initiatives, whereby we shall try in our own way to complete the single market by overcoming trade barriers and other difficulties.
There are many areas where the single market is not complete—for example, gas, telecommunications, information technology, biotechnology, public procurement, insurance and financial services. Many directives have been adopted within the single market programme which are not being properly enforced. Some have not been transposed into national law within member states. That is not to say that progress has not been made, if I may use a double negative.
By the end of 1995, 93.2 per cent. of the required national measures had been adopted by member states. We do not underestimate the task of completing the single market and we perceive the identification of problems as one way forward. We have described the problems and we can define them as follows: the persistence of technical barriers to trade; serious gaps in the transposition of directives; over-bureaucratic application within member states of approved directives; failure of the European Council to agree on enabling directives; the need to strengthen competition policy. These are all major matters and no doubt the Government will seek to do something about them through the intergovernmental conference, and I hope will support the Commission's call that the Dublin summit of the heads of state should renew their commitment to the single market and their commitment to complete it as early as possible.
The White Paper is entitled "Free Trade and Foreign Policy: a Global Vision". I read the call for a world of free and open markets by 2002, with international stability based on economic prosperity. I should have said 2020. I accept that 2020 vision is probably a better way of describing the next millennium and the Government's aims, which include international stability based on economic prosperity, improved living standards for all through increased trade and investment and a leading role for the United Kingdom as the champion of free trade.
I was reminded of a Labour party pamphlet that we turned out in the early 1980s in which we called for jobs, peace and freedom. At the time, The Guardian commented that that was a great deal better than unemployment, war and slavery. There is something in that. The Government's list of objectives sounds very good and reads well, but there is not much substance behind it. When we read 2020 together, one Tory cynic said, "That may be the first year of a future Conservative

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Government since 1997, and it may be the year of the first Budget of a Conservative Chancellor." We all say amen to that.
The President has referred to the closer co-ordination of the Foreign and Commonwealth Office and the Department of Trade and Industry, which is to be welcomed. I have mentioned our support for the Invest in Britain bureau. An entire programme of work is required, however, and the President touched upon it slightly today, but kept returning to his 2020 vision.
We must ensure that there is a free flow of trade and investment through the World Trade Organisation, the single market and the enlargement of the single market, about which we have not heard much this morning, to the east of Europe, with all the problems that that will bring in terms of agriculture policy, for example. It will also bring problems for our pharmaceutical industry—I mentioned Merck Sharpe and Dohme earlier, which will face serious problems with parallel imports from countries that do not have patent protection.
There is also the impact of the single currency. The Government have not set out in the White Paper—nor has the President today—what studies have been made on the impact of the single currency on inward investment. What is its impact likely to be on our trade? The White Paper tells us that 58 per cent. of our manufactured goods trade is within the single market and that 37 per cent. of our financial services are traded with that market. What will be the impact on that trade as a consequence of the single market turning to a single currency? What will be the impact if we do not join the single currency? That point was made by the hon. Member for Ludlow.
Those studies have not been made. If they have, we have not heard about them. It would be nice to know that the Department of Trade and Industry was examining these issues, forming a view and assessing where our trade would be whether we were in the European single currency or out of it. I look forward in the months ahead to debating and clarifying how it would or would not impact on our trade, and the course that we should take in relation to the economy. No doubt the political decisions will be based on other criteria.
My hon. Friend the Member for Rotherham (Mr. MacShane), who follows these debates, was a little ungracious in suggesting that the President of the Board of Trade was going off with officials to a warmer climate in his visit to Singapore. My recollection of the far east is that it is dangerous to stay out in the sun, so I am sure that the President will not spend much time in it while there. In his White Paper, he calls for a new round of comprehensive, multilateral negotiations to produce results for implementation by 2010. The likelihood of yet another Uruguay round, before the last one is properly concluded in all its finery, is ambitious. The unfinished business of the Uruguay round covers various service negotiations, the report of the Committee on trade and the environment, and information technology.
A journey of a thousand miles begins with a single step, in the words of Mao Tse Tung; the journey towards free trade began in Uruguay in 1986, but it did not end in Marrakesh in 1994. I am sure that the Minister who will reply will be patient and listen to our views on the WTO. In their White Paper, the Government acknowledged that
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Work is required, but it is always a risky business to make one major venture dependent on the completion of another. Thus to complete the Uruguay round in itself may be sufficient by way of ambition rather than launching of a new Uruguay round to be completed by 2010.
" …reach should exceed his grasp,
Or What's a heaven for?"
Mr. MacShane indicated assent.
Mr. Bell: My hon. Friend nods his head, for which I am grateful. Usually when I quote Karl Marx, Mao Tse Tung or, in this case, Browning, he corrects me, so on this occasion I must be right.
Signing up to a new comprehensive round of multilateral negotiations with so much unfinished business in the world of trade and commerce is more likely to ensure that the unfinished business stays as it is—unfinished.
The Government always like to look for clear blue water between us, but on the single currency they are very worried that, having agreed to a referendum, there is no clear blue water. Conservative Back Benchers are desperately trying to persuade the Government that a decision should be taken to rule out a single currency in the lifetime of a new Parliament under a possible but fictitious Conservative Government. But there is clear blue water between us on social rights and a proper social clause in the international community in the WTO. The President said, when asked by my hon. Friend the Member for Rotherham, that the WTO was a trading organisation, not a social body. But that is not the view taken by the United States Government, the French Government, or many of our members.
The President said today, as did the Minister for Trade the other day, that there was some harmony and unity in the European Union on this issue. That is not the case as I see it. Perhaps the President will correct me. I understand that there will be a Council of Ministers meeting in Singapore to discuss these issues, and the position will then be taken on 10 December at a special meeting of the Council of Ministers, which will consider the European Union's negotiating position.
It is our view—we state it very clearly here—that world trade cannot be built on the back of human rights. It cannot be built on the back of forced labour. It cannot be built on the back of exploitative child labour. There has to be a right to organise in countries that wish to trade and export, and a right to bargain collectively. We believe that those elementary human rights and trade liberalisation are not—to use a lawyer's phrase—mutually exclusive.
I repeat that the majority of our European partners agree that the Singapore ministerial conference should examine how the WTO may be used to promote core labour standards. On this issue in Europe, as on other issues, we are becoming increasingly isolated within the Union by opposing any attempt to link trade policy with labour standards and by resisting any meaningful discussion of this issue in Singapore. Therefore we urge, even at this stage, the Government to accept the principle of a working party within the WTO to examine these issues.
I end as I began, with a reference to the chaos theory of politics and how it runs up and down the Conservative Benches like mice scampering up and down the Benches

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opposite. The same mice must awaken Ministers of the Crown in the night. It will be a relief, no doubt, for the President of the Board of Trade to fly off to Singapore for the beginning of the WTO conference.
Mr. MacShane: He can have lunch with journalists first.
Mr. Bell: My hon. Friend, from a sedentary position, talks about a lunch with journalists. The essence of parliamentary democracy is to stay thin, stay on a diet and stay away from lunches with journalists.
No doubt the President will enjoy his flight. I wish him well on behalf of our country as he goes to negotiate the first ministerial conference of the WTO, which will be an historic event. He will represent our interests as best he can in the twilight zone that exists between the Government in situ and the Government in waiting.
11.6 am
Mr. John Butterfill: I shall have to rather disappoint the hon. Member for Middlesbrough (Mr. Bell). Although I am aware that nothing emanates from the Opposition without being approved by the hon. Member for Hartlepool (Mr. Mandelson) and the Labour spin doctors, I shall not quote from a central office brief today. In fact, I have not even read that brief. My speech relates entirely to my own research and statistics provided to me by the House of Commons Library.
It is right that we should dwell on inward investment, not because it is the only worthwhile form of investment, but because the extent to which foreign investors are prepared to invest in our economy is very much a reflection of their confidence in the way in which it is being run. It is very telling to remember what the position was when we took over government in 1979. At that time, inward investment was a mere £2.9 billion a year. Under the Conservative Government, it peaked in 1989–90 at £17 billion, although, of course, it fell off during the world recession. Despite that recession it continued at around £10 billion a year throughout 1991–94. Last year, it had grown back to £14 billion a year. That is an amazing reflection of the confidence that overseas investors have in the economy as run by my right hon. Friend and his colleagues.
I pay tribute to the invest in Britain initiative, but in particular to the ways in which that initiative has been developed under the Government and the much closer links that now exist between our initiatives and the activities of not just the DTI but the Foreign and Commonwealth office. They are essential if we are to maintain our export progress and our success in encouraging inward investment.
Inward investment has been helped by regional assistance. The fact that grants are available for those who want to invest in this country undoubtedly plays a part. It is interesting to note that the level of regional assistance that we are able to give under EC rules is much lower than many other EC countries are able to give. Despite that, we continue to attract a disproportionate amount of overseas investment.
In 1995–96—which is the last year for which figures are available—regional assistance was only £159 million, but that attracted projects worth £2.69 billion. The reward
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that we receive for the limited amount of assistance that we can give is out of all proportion to the performance of our European competitor countries.
Last year, our share of total world inward investment was 9.5 per cent. Between 1984 and 1993, the United Kingdom gained 43 per cent. of all world direct investment in the European Union. By contrast, Germany received 3 per cent., France received 15 per cent., the Netherlands 9 per cent. and Spain 9 per cent. Our share of inward investment into the European Union is so much greater than that of other countries that it gives us enormous hope for the future of our economy, provided that we maintain the policies that have managed to attract that level of investment.
This country is attractive for various reasons. It is attractive for people to live in, and the English language is an important factor. Financial assistance and the financial expertise that is available in the City of London are important factors. Our labour skills are particularly important: we are developing a better trained and better educated work force than hitherto. A third of our young people now go on to higher education compared with one in eight when the Labour party was last in office. The single market is an important factor. Our unit labour costs give us a great advantage. That does not mean low wages. It means that we do not impose on employers the burdens that exist elsewhere, as a result of which—according to the Library—our unit labour costs are less than half those in Germany, and less than two thirds those in Japan.
Our net earnings from inward investment—not the capital—have risen under the Government from £3.99 billion a year in 1979 to nearly £12 billion in 1995. The United Kingdom economy has benefited enormously. A great deal of that would be thrown away if the Labour party's policies were adopted. If we took up the social chapter—as Labour would like to do—we would have the same constraints as they have in other European Union countries. Instead of 43 per cent. of inward investment, we could go down to Germany's figure of 3 per cent. That is why it is essential to maintain our policy of remaining outside the social chapter, and that a Conservative Government are re-elected at the next general election.
11.13 am
Mr. Archy Kirkwood: I welcome the debate on this extremely important subject. It is an important time to be looking at the problems facing all western economies because of increasing globalisation. I welcome the fact that the President of the Board of Trade and the Government have seen fit to introduce the debate, especially as he is going to Singapore. The Singapore meeting is extremely important, and much valuable work will be done there. The hon. Members for Rotherham (Mr. MacShane) and for Middlesbrough (Mr. Bell) were obviously angling for postcards from the Secretary of State while he is there. I would settle for a statement in the House after he comes back telling us what progress has been made.
The hon. Member for Bournemouth, West (Mr. Butterfill) made a statistically based speech. I cannot find fault with the statistics that he used. I, too, have taken advantage of the work that has been undertaken by the Library. I think that some of his conclusions are a bit iffy, but the statistics that he used are beyond reproach.
As the hon. Gentleman said, inward investment in the past 10 years peaked in 1989–90, and it has fluctuated since. It must be recognised that it has increased recently.

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We will receive more accurate figures for 1995 on 17 December, but the provisional figures make it clear to my satisfaction that direct inward investment will increase to about £14 billion, and outward investment is also likely to increase sharply in 1995 to £27 billion. I welcome that. It is partially the result of work done by the Department of Trade and Industry, Locate in Scotland and the Invest in Britain Bureau. I have no hesitation or compunction in recognising that openly—long may it continue.
I want to ask about the circumstances that we may face in the future, and to be reassured that the DTI, working with Locate in Scotland and the Invest in Britain Bureau, is carefully monitoring the effect of inward and outward flows of investment on our manufacturing base. I have anecdotal evidence that much of this incoming investment is going in directions that do not assist manufacturing industry.
There were previously some concerns that companies were merely building assembly units in this country. An article in The Economist said that there was now evidence that research and development was beginning to flow more systematically than in the past, so some of the fears may be out of date. I would be reassured if the Department were carefully monitoring the effect of the investment. It is not only the value of the money coming in that is important, but the productive use to which it is put. I am concerned that we should develop our manufacturing base to make good some of the shortfalls that, I would argue, we have had in our manufacturing sector in the recent past.
I hope that the Minister will tell us—if not now, perhaps in correspondence later—what work, if any, is being done to assess the impact of inward and outward flows of investment on the important manufacturing sector. I refer to outward flows and the manufacturing sector, because I have evidence from world-class companies, such as the knitwear manufacturers Pringle of Scotland in my constituency, which are at the highest end of the market. There is an enormous temptation for companies such as Dawson International, Pringle of Scotland, Ballantyne and other well-known international names in knitwear to outsource their manufacturing. I hope that the DTI will not be complacent, will watch what is happening and will do everything in its power to keep the manufacturing base, as much as is possible, within the shores of the United Kingdom.
Inevitably, commercial and competitive pressures may require some companies to look to low-cost countries to outsource manufacturing. That has a debilitating effect and in the long run, between now and 2020, it could be worrying. The least that the DTI could do is to monitor that, look at what can be done and offer assistance within the competitive rules of the European Union.
The Library briefing mentions a useful 1991 survey by the Invest in Britain Bureau. It surveyed 200 manufacturing and research and development companies that had invested in the United Kingdom and asked them to state their main reasons for doing that. The situation may have changed since 1991 because, like everything else in this modern world, the processes of trade and industry change exponentially. The pace of change is frightening.
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I should like to have the answers obtained in the 1991 survey refreshed. At that time, 45 per cent., nearly half the companies surveyed, mentioned the need for a UK presence. Some 29 per cent. mentioned the need for a European base; and 25 per cent. maintained that their market in the UK warranted local manufacture. It is important to me to know whether that 25 per cent. in particular has been sustained or whether it is dropping. Other reasons quoted in the survey included the English language, which was mentioned by 16 per cent. of the companies. The hon. Member for Bournemouth, West (Mr. Butterfill) mentioned that. Some 14 per cent. mentioned financial assistance; labour skills were quoted by 10 per cent. and 10 per cent. mentioned the European single market. Finally and perhaps significantly, 6 per cent. mentioned labour costs.
The thesis by the President of the Board of Trade, supported by the hon. Member for Bournemouth, West, is that labour costs and whether we are in or out of the social chapter are crucial to inward investment. But that is not supported by the 1991 survey. It will be useful to the House in terms of studying the global market and its development and inward investment and how it is affecting manufacturing, to have such a survey regularly. It would be sensible to consider revisiting these questions once every five or six years. I do not know whether it is in the Minister's powers to direct that.
I have some thoughts for the President of the Board of Trade and his entourage as they wing eastward on Singapore Airlines, or on whatever airline they are using this afternoon. The Uruguay round was difficult. It took an inordinate time to put together an agreement, but we must not forget that there is still some unfinished business in the agreements that were struck there. Perhaps the Minister will address one or two—just one or two—of the agreements and commitments.
First, does the evidence show that there have been further significant tariff reductions since the Uruguay round? We are about halfway through the round and it would be useful to see the evidence of success in achieving tariff reductions because that is important to our exporters. Secondly, has there been significant progress on getting dispute settlement mechanisms properly organised? Have they protected our domestic industry from dumping, anti-competitive practices and the other actions that occurred all too often before the agreement? Thirdly, has there been a further tightening of disciplines on unilateral protection? That is important, as is the commitment to set up a wide-ranging framework for reviewing the agreements and further negotiations in the Uruguay round.
It is necessary to know the Government's view. I know that they have to negotiate through the EU in the ministerial meeting, but what information or evidence will the UK delegation at Singapore present in these important areas? That is crucial to the knitwear industry which struggled to achieve the multi-fibre arrangement. My constituents are interested in that because China is the monopoly supplier of cashmere yarn—the essential raw material from which the knitwear industry in my constituency makes high value-added exports for world markets.
Former state trading nations such as China give all sorts of support, hidden and explicit, to the producers of cashmere and to their manufacturing industries, and in that context it is essential that the multi-fibre arrangement

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is adhered to, monitored and reinforced. At the time of the negotiations the knitwear industry asked for review periods to be built into the Uruguay round as it progressed to make sure that monitoring was being successfully undertaken so that dumping and other such anti-competitive practices could be stamped out.
The Singapore meeting is important in terms of issues other than merely checking how far the Uruguay round commitments have progressed. I was slightly concerned by the emphasis in the White Paper, which was reinforced by the President of the Board of Trade, on the Government's rather unfettered free market, laissez faire approach. That approach is no secret: it is one of the Government's unique selling points. However, I take a slightly different view.
I am concerned that in the globalisation of the world economy—it is a horrible term but I cannot think of a better one—there are few checks and balances and no proper regulation. I do not mean regulation that imposes burdens because I am in favour of competitiveness and free trade, but some matters have to be carefully watched.
The President of the Board of Trade mentioned environmental factors. Global economic sustainable development is essential and I hope that the considerations in Singapore will include that and will try to make sure that the increase in competition and trade will not be at the expense of the environment. Sustainability should be built into the plans that are formulated in Singapore. I am worried that the third world will be frozen out of a fair share of what trade is going. There is evidence that some African economies have been badly served in the past few years. I hope that Ministers in Singapore will examine that.
Mr. Tim Smith: The hon. Gentleman mentioned the third world and especially African countries. Has he seen the three-dimensional chart on page 18 of the White Paper showing the clear relationship between the trade orientation of different countries and growth in hiving standards? Is it not important that those countries should be outward looking and not protectionist because that would enable them to benefit from growth in world trade?
Mr. Kirkwood: Of course I accept that, and I hope that I did not give the impression of suggesting anything different. Some of the International Monetary Fund and World bank constraints aimed at making such economies more efficient have had a harsh impact on their economies and their primary producing industries. Some evidence suggests that, financially, they are suffering severely. The Government have been taking the lead on some of those issues and I welcome that. Debt reduction for some African countries would help their economies through the transitional process of becoming more efficient and I am in favour of that.
There is real concern about the extent to which counterfeit labels are being put on such items as textile jerseys, although the problem is not limited to the textile industry. If they do their work properly, that problem can be dealt with in Singapore.
I should like to mention briefly the domestic trade situation and the need to assist local UK manufacturers to compete in the world marketplace. I get a bit nervous about the situation, because I wonder to what extent some of our small and medium-sized businesses are being
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squeezed out of that marketplace by the volume of inward investment. That is why I said that the DTI should examine carefully the effect of inward investment flows on our manufacturing sector. I hope that the DTI will give proper consideration to small and medium-sized businesses.
Coming from my part of south-east Scotland, I am particularly interested in the knitwear, textile and electronics industries, which are potentially not only European-level but world-class export players—but only if they receive increased support in marketing, training and modernising. The textile industry also requires more assistance in diversifying. I hope that the DTI will riot spend all its time on big projects—which I have already acknowledged that I welcome—at the expense of smaller and medium-sized businesses.
The textile industry will have to slim down its labour force if it is to survive. Communities such as Hawick, which is in my constituency, are almost entirely dependent on the textile industry. In the travel-to-work area around Hawick, for example, it accounts for 80 per cent. of manufacturing employment. The industry requires help in modernising, additional capital input, more flexible work patterns and help with marketing initiatives. It needs some assistance to help it bridge the gap into the next century, so that it can compete effectively.
I shall understand if the Minister, in the time available to him, cannot deal with all the points that have been raised, but he might arrange to reply by correspondence. The Industrial Development Act 1992 allows for occasional reviews of regional assistance areas, and the decision on which areas are eligible for assistance and when reviews are undertaken is within ministerial gift. I know that the Department is considering the boundaries of individual travel-to-work areas, and that a new regional assistance map cannot be produced until the boundaries have been determined. Will the Minister tell us when that work will be completed, and when the Government—irrespective of who is in government—will be able to reconsider eligibility?
In south-east Scotland, travel-to-work areas are excluded from any regional assistance, basically because the headline unemployment levels are not sufficiently high. The current method of collecting unemployment statistics in sparsely populated areas is unsatisfactory, because of dodgy statistical methods in assessing employment levels. Other criteria should be examined when a review of regional selective assistance is conducted. I should like to persuade the Government that low GDP per head—in addition to population sparsity, size of the cohort over retirement age and lack of job opportunities—should be a significant factor in determining eligibility for assistance. Rural areas generally, and not only my own area, are concerned that regional development assistance is failing them and not providing any type of support.
Locate in Scotland has been very successful in bringing Chunghwa to north Lanarkshire. I certainly concede that that community faced substantial problems after the closure of Ravenscraig and other events, and that those problems had to be dealt with. However, they should not have been dealt with exclusively and at the expense of rural areas.
There is a suspicion—I put it no higher—that the provision of assistance through the big investment decisions that are necessary to bring in companies such as

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Chunghwa will mean that the limited resources available to local authorities and local enterprise companies north of the border, although it is not a problem only there, will be siphoned off and diverted, and that other areas must pay the price. However much the assistance is needed in north Lanarkshire, it is needed elsewhere, too. The Government should be very careful to ensure that others are not losing out from some of their big headline successes.
There should be better co-ordination of the help provided by the European Union in social and development fund programmes. My region has access to objective 5b funding, which is of some help. However, there is concern that there will be no more funds after the programme ends, in 1999. That is a real worry, because we have been able to make use of the European regional assistance. It will be difficult for areas such as mine to prosper if we lose that assistance and continue to have difficulty in obtaining access to regional development assistance.
Mr. Gill: Is not there something slightly inconsistent or contradictory about the hon. Gentleman's remarks? Initially in his speech, he said that he was an advocate of free trade, but he has spent five or 10 minutes with the begging bowl out, saying to Government, "Please, can we have more assistance on this, that and the other?" Does not he realise that it is much more effective in any economy to keep taxes low and to leave people with more of their own money to invest? He is advocating more public expenditure—meaning higher taxes, and successful companies having to pay higher corporation tax—which prejudices their investment plans. Does he realise that the Government want to go in the other direction, reducing taxes and leaving money in investor's pockets—so that they can do the investing, rather than allowing him and other politicians to make those decisions?
Mr. Kirkwood: I am merely arguing for—although I hate the phrase—a level playing field. The Government believe in a free, laissez-faire, devil-take-the-hindmost market. I do not support that. I am in favour of competition and free trade, but there must be some market regulation. In my area, the local authority and local enterprise companies are working hard to try to attract inward investment, but we find ourselves with one arm tied behind our back. Other areas have access to assistance. The assistance may be a small amount of overall public expenditure, but it is a vast amount of money compared with the size of the economy in south-east Scotland.
I do not mind which way it goes. It would be fine if we abolish, or if we keep, regional assistance—but it should be more evenly distributed. I am arguing, as best I can—and I hope coherently—that it should be distributed more fairly.
So far as I can see, there are three main needs. I am speaking of them in relation to my constituency because it is the area that I know best, but they have to be borne in mind in rural areas the length and breadth of the United Kingdom. First, we need regional selective assistance to enable small and medium-sized companies in rural parts of Great Britain and the United Kingdom to invest,
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acquire funding and benefit from technology transfer so that they can properly stimulate productivity and process development. Secondly, we need to invest more in people.
Thirdly, we need investment in integrated rural initiatives. If I could see evidence that the DTI or the Industry Department in Scotland were pursing that aim with as much fervour as they are pursuing bigger, headline projects such as gaining investment from Chunghwa and Taiwan and China, I would be much happier. If such evidence exists and I am missing it, I would be delighted to hear about it either this morning or later, in writing, when the DTI has had a chance to reflect on these issues.
I hope that the Invest in Britain Bureau and Locate in Scotland will consider carefully what can be done to support the electronics industry throughout the United Kingdom. I should like the DTI and their colleagues with responsibility for industry at the Scottish Office to examine the possibility of ensuring the spread of high bandwidth communications in rural areas. Of course, it is now possible to use radio and satellite links and land line cables, but we need some basic infrastructure investment. The Government should be stimulating and promoting such investment to develop an information society in industry in rural areas so that our businesses can compete properly on the global stage.
We need modest extra public expenditure to be made available through regional development assistance. We need to provide local authorities and local enterprise companies with better resources and more flexibility so that they can help their own local economies. We also need to integrate the grants that are available from the EU, which are, if anything, likely to become scarcer in the immediate future. That is a cause of some concern.
The textile and electronics industries in my constituency are potentially world-beating industries in the export market. They are often small and medium-sized businesses located in rural settings and are, as a result, currently being overlooked for the investment that they need to prosper. The Government need to consider such issues as a matter of urgency.
11.42 am
Mr. Nigel Waterson: I am delighted to have the opportunity to participate in this timely debate—as we heard earlier, my right hon. Friend the Secretary of State for Trade and Industry is leaving this very day for Singapore and the World Trade Organisation summit.
Like other hon. Members, I was amused by the hon. Member for Middlesbrough (Mr. Bell) brandishing the Conservative research department's brief on trade and inward investment. Such briefs from both main parties have an alarming habit of getting into the public domain. I hope that, instead of simply brandishing the document at the Dispatch Box, the hon. Gentleman will have the opportunity to read it, as he clearly has not done so. Had he read the document, his speech would have reflected some of the pearls of wisdom embedded in it. Perhaps on his way back to Middlesbrough he will manage to read it.
I have been glancing through the document and have to say that it is excellent. No Conservative Member should feel at all abashed about reiterating some of the points, statistics and quotations to be found in it. It sets out the Government's success in the sphere of trade and inward investment. Before I move on, I should like to spare a thought and some sympathy for the poor Labour

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researcher who might have sat down earlier this week, looking at an empty computer screen with the unenviable task of drafting the Labour party's brief for this debate. Sadly, that document has not found its way into my hands—perhaps it never appeared at all. In any event, I have great sympathy for the Labour researcher faced with that Herculean task.
We are debating a great British success story—trade and inward investment. Britain is nothing if not a trading nation. That has been true throughout our history. We are the fifth largest importer and exporter of goods and services in the entire world. Especially under the Conservative Government, Britain has been firmly committed to free trade. The aim is global free trade by 2020. The WTO summit in Singapore will be an opportunity to give the process a welcome boost. We wish my right hon. Friend the Secretary of State all the very best and every success in his endeavours in Singapore.
British industry and British business have proved time and again that, given a clear run and less interference from Government, they can compete with anyone anywhere in the world. Much of today's debate has rightly turned on the fact that a Labour Government would fetter and obstruct the ability of our business men and women to compete in world markets.
On inward investment, I want to read out one quotation that sums up our position. It is from Kumar Bhattacharyya—I hope that I am pronouncing his name correctly and do it justice—who is professor of manufacturing systems at Warwick university.[Interruption.] I hope that hon. Members will listen because it is a quotation from a dispassionate academic commentator on Britain's economic success. In what is colourful language for an academic, he says:
"Britain is becoming Europe's Pacific Rim. The industrial-relations framework, the cultural and linguistic environment, economic deregulation, and political stability have changed the face of British manufacturing".
Mr. MacShane: Would the hon. Gentleman cite the present Conservative party as an example of political stability?
Mr. Waterson: I assure the hon. Gentleman that I expect this party to be in power not only after the next election, but in 2020, so that we can usher in the millennium of global free trade, which, I am sure, we all heartily desire. I may not be here to see it with him—although Sir Charles Taylor, one of my esteemed predecessors, represented Eastbourne for 39 years, I do not expect to serve quite so long. By 2020 a successor will possibly have taken my place but will, I hope, be making a similar speech from the Government Benches.
I shall reiterate one or two of the statistics mentioned by my right hon. Friend the Secretary of State. Britain attracts one third of all inward investment in the European Union and more than 50 per cent. of Korean and Taiwanese investment. Those statistics deserve repetition—
Mrs. Barbara Roche: They certainly do.
Mr. Waterson: Let us consider some recent inward investment successes. We have already heard some of
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them and far more of them than I would be permitted to recite now are set out in the brief. We have heard about the LG Newport project, which will create 6,100 jobs as a result of £1.7 billion investment. That is amazing investment in the production of semiconductors. The Jaguar project at Castle Bromwich will create up to 1,300 new jobs. We have already heard about Honda in Swindon, where £330 million has been invested in a car plant—[Interruption.]
Madam Deputy Speaker: Order. Hon. Members making sedentary comments, which, as I have already made known, I deplore, may find it rather difficult to catch my eye when they want to make a speech.
Mr. Tim Smith: On a point of order, Madam Deputy Speaker. As reference has been made to the excellent document on trade and inward investment, published by the Conservative research department, would it be possible, for the benefit of hon. Members who are not present, to have the entire text printed in Hansard as an appendix to the debate?
Madam Deputy Speaker: The hon. Gentleman well knows that that is not a point of order. Nor can it be carried out.
Mr. Waterson: I endorse the sentiments of my hon. Friend's remarks. It would certainly be of enormous assistance if in future such briefs were made available not only to my hon. Friends but to Opposition Members. If the Opposition have a brief at all, it is clearly a pretty inadequate document.
I was referring to Honda, and I should like to cite one final example. IBM in Winchester is expecting to create 1,200 new jobs. Such developments are exciting. I notice that when those announcements are made, Opposition Members are very quick to go on the media to take their share of the glory for such successes. That seems particularly hypocritical when one considers what effects their policies would have on such trade and inward investment were they ever to have any control over the running of it.
The effect that a national minimum wage would have on hotels and the tourism industry is a particular concern in my constituency. We have already heard a great deal about the reasons why business men from the far east, France and elsewhere are deciding to move manufacturing and other operations to the United Kingdom. The Opposition are rightly defensive on the subject. They are certainly very unwilling to give us a firm commitment on a figure for a national minimum wage.
The crucial point about the social chapter, which is often misrepresented by Opposition Members, is that decisions can be made to extend its effect by qualified majority voting. That is extremely important, especially to business men who might be considering inward investment in this country.
One of the issues that the right hon. Member for Livingston (Mr. Cook) has raised in recent speeches is what he calls the European social model. It appears to mean intervention, but we might hear a little more about what it means in the winding-up speech of the hon. Member for Hornsey and Wood Green (Mrs. Roche). It seems to mean interference in the freedom of

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companies to operate in this country and elsewhere and the introduction of that social dimension into the WTO, for example, as the hon. Member for Middlesbrough clearly spelled out earlier—all credit to him for doing so.
Opposition Members do not seem to realise that precisely such burdens add non-wage costs to the costs of employing people in places such as Germany and elsewhere, and are forcing companies to relocate across national borders. At the moment, we are a major beneficiary of that process, precisely because we reject the social chapter and such interference. That is rightly why the Government take such a strong line on the working time directive.
The conclusion of the White Paper, "Free Trade and Foreign Policy: a Global Vision", under the heading "Raising the United Kingdom's Game", describes how competitiveness depends on many factors. To pick just one, the document's penultimate paragraph says:
"education, learning and the right skills are a key part of the process."
I think that hon. Members on both sides of the House will agree with that. The White Paper continues:
"Government and business share a responsibility with individuals to ensure that education and training equal the best anywhere."
Anyone who has been to places such as Singapore will know of the extremely impressive level of training and education that applies in the far east.
Only the other day, I was privileged to be present in my constituency at the launching of the Bell project. It is a partnership for lifelong learning between Bishop Bell school, Langney county primary school and Eastbourne college of arts and technology. Working with local business, they will provide a seamless educational experience almost from cradle to grave for people in my constituency. Such a process is extremely important and I shall be writing to my colleagues in the Department for Education and Employment about it. It encourages the skills and education that will make this country at least as competitive in the future as it is now.
I refer now to how inward investment affects my constituency. Contrary to popular belief, Eastbourne has a thriving light industrial and service industry sector. We are constantly looking to attract new companies, whether from abroad or otherwise. There are some major world-beating companies in my constituency—Anglo-Dutch Meats. Nobo, Goldwell and Edwards High Vacuum, to name but a few. The latter in particular is very successful at exporting to Japan. I know that those companies are all looking for a lead from the Government and the sort of encouragement that we heard from my right hon. Friend the Secretary of State and will hear from my hon. Friend the Minister for Small Business, Industry and Energy later.
I should like to make a particular plea on transport infrastructure. It is no good at all having everything else in place—the lack of a social chapter, no minimum wage, and so on—without being able to say to companies that they can easily get raw materials into their plants and get finished products out again. We have a major problem in Sussex with a lack of decent roads. I have raised the matter with my hon. Friends in the Department of Transport and hope that my hon. Friend the Minister will take the point away from this debate.
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This debate really concerns whether one is to continue with success, which is encouraged and supported by the Government, who are firmly and genuinely committed to free trade and do not just pay lip service to it like Opposition Members, or whether one looks to the Labour party, which is obviously committed to introducing new social burdens on employers, which would increase unemployment and undermine competitiveness. At the end of the day, it is a matter of new Labour, new burdens on business.
11.56 am
Mr. Denis MacShane: I enjoyed listening to the speech of the hon. Member for Eastbourne (Mr. Waterson), especially his animadversions on the minimum wage. It struck me that the United States, which enjoys the highest level of inward investment of any major economy, has just raised its statutory minimum wage significantly, to no detriment to its economy. If the hon. Gentleman had been present in the debate on tourism last week, he would have heard hon. Members point out that we have a balance of trade deficit in our tourism industry because British people prefer—it seems—to visit European countries, where the minimum wage ensures that hotel and tourism industry workers are adequately remunerated and other regulation ensures that the level of training and skills is such that employees provide the kind of warm welcome that attracts our people.
This debate is taking place on a cold December morning. I do not know whether the Secretary of State will be able to return to the House or whether he has to jump on a plane to leave for his week in sunny Singapore. My hon. Friend the Member for Middlesbrough (Mr. Bell) quoted Browning, and there is no doubt that, for the Conservative party and the Government, it will never be "glad confident morning again!" It is all over: I think that this week shows that the game is up. Whether or not we have a general election before Christmas—that would certainly be a Christmas present that the British people would like—it is clear that the Government are now sinking fast.
Mr. Stephen: If the hon. Gentleman's remarks were based on reports of proceedings in the 1922 Committee, I can tell him that I was at that meeting and I do not recognise the newspaper reports as being anything like the truth.
Mr. MacShane: I am grateful to the hon. Gentleman. but my analysis was based on being present in the Chamber yesterday afternoon and on Tuesday afternoon. I doubt whether many hon. Members, even those with long experience in the House, can remember a Prime Minister being so utterly weakened, humiliated and destroyed by the anger of the House at his incompetent policies.
We are here to discuss not the death agonies of the Conservative party, but trade. I am glad that the debate has been called, because it allows us to nail some of the myths that we heard in the Secretary of State's opening speech. The right hon. Gentleman referred to our inflation record. We are not first in the inflation league table in Europe, but 11th. The right hon. Gentleman referred to the record of investment in our country. The French, Germans and Japanese invest, on average, £7,000 per worker, whereas United Kingdom companies invest only

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£4,000 per worker. Private investment—the key to economic growth—has grown by just 6 per cent. since the recession. That is slower than in the mid-1980s and slower than under Labour in the mid-1970s; it is slower, even, than during the recovery of the 1930s.
Reference has been made to productivity, but if we look at the official figures, we see that productivity growth in the United Kingdom is collapsing. The figures for the increase of output per head show that there was 1.3 per cent. growth last year. The monthly data to September 1996 show a negative increase in productivity for nearly every month. Those figures are based on House of Commons Library figures.
The interesting question is: if the economy is doing as well as the President of the Board of Trade said it is, why have investors in this country so little faith in it? Why are they not putting their money where the President of the Board of Trade's mouth is—as it were? This debate will, to quote the Chancellor of the Exchequer, turn into a boomerang that will fall back on the Government.
Much reference has been made to the Conservative central office document—you, Madam Deputy Speaker, correctly but gently rebuked me for quoting from it from a sedentary position. But if we look at page 12 of that document, we see that it is poorly written. It states:
"Labour reject free trade in four of protectionism".
The grammar is wrong and the text is written for illiterates. I can understand why Dr. Julian Lewis, deputy director of research for Conservative central office., has just resigned. I thought it was because he wanted to join the campaign to lead Britain out of Europe, but he is more likely to have resigned because, as a man with a PhD, he is horrified at the shoddy, illiterate standards of writing at Conservative central office. I have found, after long experience, that bad writing often reflects bad thought and bad thought reflects bad ideas. The absence of a coherent set of ideas to guide our country into a happier and richer future has led to the paucity of the Conservative party's policy contributions.
The main reason for the lack of investment in our country is the collapse of manufacturing under this Government. In 1979, manufacturing accounted for 30 per cent. of national output and employed more than 7 million people; by 1995, it had fallen to just 20 per cent. and employed only 4 million people. Industrial production has grown at a slower rate than in 11 other European countries. According to the Budget figures, our trade deficit—particularly in manufacturing goods—will worsen. While other countries are concentrating on achieving a balance of trade surplus, our trade deficit is, according to the Red Book, to rise to £4 billion next year.
It was not 12 years ago that the United Kingdom's balance of trade in manufactured goods went into deficit for the first time since the industrial revolution. The party of Pitt, Peel, Chamberlain, Baldwin, Churchill, Macmillan and Heath, which once ensured that we exported more finished goods than we imported, has turned Britain into a country that has to import finished manufactured goods—not raw materials, as the hon. Member for Ludlow (Mr. Gill) said. Our share of world trade has slumped to its lowest level this century and is now less than the shares of Italy, France, Germany, Japan and the United States.
That might help to answer the question that I ask myself constantly: if we have such a successful economy, why do our own investors have so little confidence in it? I am,
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of course, delighted at any investment that comes into the UK, but Britain has always been a home to inward investment. In the 1920s, Ford and General Motors came here. Those of us who know west London will be familiar with the great Hoover factory which was opened in the 1930s—perhaps the hon. Member for Beaconsfield (Mr. Smith) passes it when he drives out along the A40. This nation has for centuries been open to inward investment and long may it continue to be so.
If we look at the figures since 1979, we find that in only one year was there more inward investment than outward investment. I have no problems with British firms and financial institutions investing overseas—it is their duty to search for the best return possible on the money they are charged with investing—but, again, I have to ask why they will not invest in their own country. Since the current Prime Minister entered office, for every pound that has been invested in the UK, between £2 and £3 has been invested outside the UK, producing jobs and creating wealth in other countries. Some of that money—£25 billion—has been repatriated as rents, but that shows that we are becoming a rentier economy, not a productionist one.
Until we create stable conditions and end the roller-coaster ride in inflation, in the value of sterling and in interest rates, we will continue to face that imbalance between inward and outward flow. To do that, we need a new Government—a Government who will reform corporate taxation and ensure that real investment and real money are put into skills training; a Government who are not committed to promoting only the interests of an SW1, EC2, EC3 and EC4 elite; and a Government who will rebalance the economy, so that the regions of Britain, which are wholly unrepresented on the Conservative Front Bench, can play their part in a dynamic and balanced economy.
Let us turn to some of the reasons adduced for inward investment. As I said, I strongly welcome such investment in the UK. I have been to Taiwan to try to encourage Taiwanese companies to invest in Rotherham and, earlier this year, I was pleased to be at the opening festival—a wonderful morning of Chinese firecrackers—for the new Rexon factory in my constituency. Indeed, under the Chinese calendar, this is my year—the year of the rat—and I pointed that out as a good sign for inward investment in Rotherham by all the Chinese economic communities of Asia. This morning, as a rat—in the sense of being born in that year, according to the Chinese calendar—I invite them all to come and join the skilled work force of Rotherham and locate their factories in my constituency.
The question of the minimum wage and the social chapter has nothing to do with the levels of inward investment. In fact, inward investment, in terms of pounds sterling invested in the UK, peaked in 1989, well before the opt-out, social chapter, minimum wage debate started.
The Invest in Britain Bureau conducted a survey of 200 manufacturing, assembly and research and development companies that had invested in the UK. They were asked their reasons for having done so. Twenty-nine per cent. of the organisations attributed their choice to the need for a European base; the other reasons quoted were the English language, financial assistance, the European single market and—lastly—labour costs.

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The scientific evidence shows that by far the most important reason for inward investment into the UK is the English language. I am convinced that, under a Labour Government, the ability to speak English, which has deteriorated markedly under the Conservatives, will he reinstated as a major educational skill.
The second most important reason for coming to the UK adduced by those companies is that of being in Europe. The tidal wave of demands from the Conservative party—"Withdraw from Europe", "Cut off from Europe", "Detach from Europe", "Have nothing do with the next stage of European construction"—sends a message throughout the world that Britain under the Conservatives, far from being the Pacific rim of Europe, seeks to become the Albania of Europe, detached from the next stage of European construction.
I believe that the Minister for Small Business, Industry and Energy is committed to Europe. I am not sure of the position of his boss, the President of the Board of Trade, but until members of the Cabinet who are interested in British prosperity have the guts to stand up for themselves and say clearly, "Britain will be a strong and continuing member of the European Union, playing its full part in the next stages of construction," the British economy will be on hold.
The other pro-European members of the Cabinet cannot leave it up to the Chancellor of the Exchequer. I pay tribute to him. He is a political opponent of mine, but at least he has the courage to stand up and be counted on the European question, and he is a rock of Gibraltar in the Cabinet, being harried by political opportunists who want to take Britain out of Europe. As the President of the Board of Trade could not find it in his heart to spell out in his speech a pro-European future for Britain, I hope that the Minister will do so.
I turn briefly to the important point that the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) made about regional assistance. A fair amount of that inward investment is determined on a large cheque being signed by the Government to investing companies—reportedly, £200 million for Samsung and £40 million for Jaguar—and such subsidies can distort markets.
As I represent a South Yorkshire constituency, I am worried about the decision by the Northern Ireland Office to offer a £2.4 million grant to the YG group, a Korean cutting tool manufacturing company. The company has already opened part of a factory in west Belfast to export cutting tools—part-made in Korea and shipped for finishing in Northern Ireland—to the UK and elsewhere in Europe. In the opinion of cutting tool manufacturing firms in my constituency, as well as in Sheffield and South Yorkshire, that will have a devastating impact on their market share. At least 250 to 300 jobs will be lost in exchange for the gain of fewer jobs in Belfast. I understand why the Northern Ireland Office seeks any possible inward investment, but £2.4 million might be better spent if it were used to upgrade and promote existing indigenous British factories in the cutting tools industry.
There is some irony in the fact that British Steel, a company which has a strong presence in my constituency, fights strongly in Europe and asks the Government to fight strongly in Europe against subsidies that European
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Governments give to their steel companies in some instances. British Steel is right and I support its stand. However, a Government Department is unfairly subsidising a Korean company to come into the United Kingdom and, in effect, destroy British jobs. That issue needs to be looked at, and I hope that the Under-Secretary will assure the House that that unfair subsidy to YG, the Korean firm, will not be allowed to continue.
The President of the Board of Trade flies to Singapore later today. We wish him well. May the sun shine on his works. He will be visiting a country which is in social terms one of the most regulated in the world. It has a massive programme of social investment in housing. Compulsory savings are levied on all workers to provide for their future, which also provides a huge source of capital for investment and development in Singapore. All that was undertaken by Lee Kuan Yu, a distinguished statesman who, some hon. Members will remember, was secretary of the Fabian Society at Cambridge.
In many ways, Singapore represents the Fabian Society re-created on earth—a world of the Webbs with slightly better food and drink. Whether one wants and whether the British people would be prepared to put up with Singapore's level of regulation on smoking, drinking and crossing the road, I wonder. I hope that the President of the Board of Trade will enjoy his week in that wonderful Fabian city state of Singapore and learn what lessons he can from it.
The President of the Board of Trade will go out to Singapore with one of the most shameful missions that a British Cabinet Minister has ever undertaken in our name. He intends to use his authority to block the efforts of our great ally, the United States, to place child labour on the agenda of the World Trade Organisation.
In the past 15 years, we have seen a great liberalisation of world trade, which I welcome. It is not accompanied in all parts of the world by a fair share of the wealth created and value added for those who create that wealth and add that value. As we look around the world, we see ever greater income equalities, no more clearly than in our own country. We only have to walk a few hundred yards before we start stumbling across beggars in the street—a quintessential hallmark of the Conservative economy. The Government have reintroduced begging as a mass economic activity into Britain. That is also true in too many other countries.
What is most surprising of all is the extraordinary increase in child labour. The theory of pure free trade is that everyone gets richer. Someone mentioned earlier the concept of the rising tide that lifts all boats, but we are seeing a massive increase in child labour. In a debate a few weeks ago, I quoted figures of about 110 million children identified as working around the world. The International Labour Organisation has just produced an authoritative report which shows that 250 million children are in waged work. This is real work. I am not talking about newspaper rounds or helping out on farms. It is waged work, often as bonded or slave labour.
More than 1 million children are commercially exploited for sexual purposes in the sex trade. Children working in agriculture are more likely to die from pesticides or organic chemical poisoning than from childhood diseases. It is the new scandal of the modern world economy. We are increasing, year on year, the number of children forced to work under those conditions.

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That is why the United States and France, and Sir Leon Brittan, among others, have argued that the World Trade Organisation must build the discussion of child labour into its deliberations.
It is shameful to this country that the Secretary of State will seek, next week in Singapore, to veto the discussion of child labour in the WTO. If for no other reason, let us welcome as soon as possible a Labour Government, who will join the United States and other mature democracies to place the child labour issue on the WTO agenda. The Secretary of State said that he was an evangelist for free trade; I am a great supporter of free trade, but free trade that does not allow all who participate in it to get a fair share will increase protectionism. We are seeing that backlash throughout the world from the excluded, the poor and the out-of-work. If we do not construct our trade relationships and economies so that all who participate in them gain from them, and so that children are at school rather than sent out to work for their parents, we shall see a rising tide of protectionism.
Even at this late hour, I urge the Secretary of State to think again as he flies to Singapore, and to join President Clinton in recalling the good name of Wilberforce and those in British history who eradicated evil working conditions. He should tell his ministerial colleagues at the World Trade Organisation next week that he wants child labour on the WTO agenda. In that way, the WTO arid all the other forums can be used to eradicate child labour by 2020.
12.21 pm
Mr. Michael Stephen: I welcome the opportunity to contribute to this debate as I am an officer of the all-party export group and an adviser to the Ricardo Engineering group, whose scientists and engineers do excellent work to keep Britain at the forefront of the technological revolution and whose skills and expertise are exported every day to earn foreign currency for Britain.
We need to export for two reasons: first, to earn the foreign currency to pay for the goods and services that we have to import; secondly, to provide a buffer for businesses and employees in this country against the inevitable economic cycles to which all economies are subject.
The world has changed. Only a few years ago, we were the world's workshop and just about everybody else was either our low-cost supplier or our customer. More and more of those countries are now our competitors —and very effective competitors they are, too. They are competitive not just in low-tech industries but in the highest technology imaginable.
There has been a computer revolution in the past 10 years, and more and more of our national effort, brains and expertise are being devoted to computer-related industries rather than to tangible metal-bashing manufacturing industries. As I said in an intervention, that tends to distort the trade figures. There is a difference of opinion as to whether the development and creation of software is a manufacturing or a service activity. That industry is becoming increasingly important in all the developed economies.
The construction industry is a major export earner for Britain and we should salute the efforts that it makes throughout the world. Bidding for a large construction
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contract in a foreign country is an expensive and risky business, and Britain's construction industry is grateful for the overseas project fund that the Government offer. The OPF contributes 50 per cent. of eligible costs of British companies tendering for major overseas contracts. Those grants are repaid, plus a supplement of at least 20 per cent., if the company succeeds in winning the contract.
That assistance is available only for high-risk marginal projects, for which the companies concerned would not otherwise have bid. A company making an application must show that the contract will generate substantial UK content, usually at least £50 million. The figures for 1992-93 show that for an outlay of £3 million by the OPF, British companies won contracts with a total UK content of no less than £550 million. That is a good investment by any standards.
Unfortunately, the amount of money that my right hon. and learned Friend the Chancellor has been able to devote to the OPF is now not enough to support the potential opportunities that British construction and other major companies have identified in world markets. Even at a time when budgetary constraints are tight, as clearly they are at present, the fund represents not a drain on our resources, but an investment opportunity. I urge my right hon. Friend the President of the Board of Trade to take account of that and to convey the point to the Chancellor.
Asia is a major area of export opportunity for British companies. The aid and trade provision has been enormously helpful to British companies seeking to profit from those markets. Unfortunately, there is a moratorium on Asia because the budget for that part of the world is overspent. I urge the Government to restore the budget as soon as possible, as that is the part of the world where the greatest opportunities exist for profitable business for British companies.
I also urge the Government to shift more of the money available for overseas aid out of multilateral programmes into bilateral programmes, which can be focused much more carefully on those areas where British companies are likely to benefit than is the case with multilateral programmes.
During the debate several hon. Members referred to Britain's relations with Europe. Britain's future in Europe is central to a debate on how Britain earns its living in the world. Conservative Members agree that Britain must be at the heart of Europe. As my hon. Friend the Member for Bournemouth, West (Mr. Butterfill) observed, we were the architects of the single market. My right hon. Friend Lady Thatcher was in the forefront of European leaders arguing for a single market within which all European companies could compete on a level playing field. She did more than any other European leader to create the single market, and her successor, my right hon. Friend the Prime Minister, has continued that crusade.
But we in the Conservative party have some problems with the single market, and we reflect the divisions that exist within our country on that great issue. The press have made us appear to be a divided party, but we are articulating the differing views that exist out there in the country. Our constituents have sent us here to express their views and to debate those great issues.
We have some difficulty with the social chapter, not only because, as has been pointed out, it would be damaging to Britain's competitiveness in the world —as it

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is already damaging continental Europe's competitiveness in the world —but because we see it as running flatly contrary to the doctrine of subsidiarity. Matters with which the social chapter deals, such as how many hours may be worked in a week, are essentially not matters for supra-national regulation. They are issues for each member state to decide, having regard to its culture and economic conditions. This House must take those decisions on behalf of the people whom we represent.
We also have some difficulty with the European Court of Justice —I speak now as a lawyer. We and the Irish are the only member states whose legal systems are based on common law: all other member states' legal systems are based on the civil law. When a common law lawyer examines the words of a statute or a treaty, he construes them strictly. A civil lawyer does not do that: he looks at the preamble to the Act or the treaty and says, "I know what the small print says, but my job is to interpret the spirit of the treaty which I derive from the preamble."
Therefore, a judge can interpret a treaty to mean just about anything he likes. That is the difficulty that we face: we sign international obligations on the basis of our common law understanding of their meaning, but through a process of creative interpretation the European Court of Justice then imposes on our people obligations to which we have never agreed. That causes serious concerns for all our constituents.
Mr. MacShane: Has not Britain won more cases in the European Court of Justice as a result of that interpretive, purposeful method of lawyering, which benefits Britain more than those European countries which have sought to halt our exports, for example?
Mr. Stephen: It is not a quantitative analysis: we cannot say that because we have won 50 and lost 30 we are necessarily better off. I would rather lose cases that are not firmly based on the wording of the obligation to which we agreed. I want to see certainty in our relationship with the European Union: I do not want to be exposed to a system which is totally unpredictable and will tell me tomorrow that the agreement that I signed yesterday does not mean what I thought it meant. That grave difficulty must be addressed at the intergovernmental conference —although I have no confidence that we shall make any meaningful progress there.
The House and the nation must send a clear message to the European Court of Justice that if it does not take account of the fears that I have expressed it risks losing the confidence of the British people. The same can be said for the European Court of Human Rights. I am glad that my right hon. Friend the Lord Chancellor visited the court recently and, in the tactful manner for which he is renowned, told the judges of our concerns about the way they perform their duties.
There is also a problem with the single European currency. In view of the fudging that is going on in France, Italy and other countries which are trying to squeeze a quart into a pint pot and to conform to economic criteria that they clearly do not satisfy, I do not see how a properly based, workable single currency can be created within the next five years. It is most unlikely that this
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country will consider it appropriate to join, even on economic grounds. If business men in the City of London or in our constituencies were to say, "You must get into the single currency; it is absolutely vital and we must have it," and if it were clear that we would derive economic benefit from it, I might be prepared to tell my constituents, "Here is a huge economic prize for us: let's forget about historical concepts, cultural differences and constitutional theories of sovereignty and go for it." But I am not in a position to say that. Instead, everyone I speak to —economists, business men and political colleagues —says, "It is not proven whether it would be a benefit to us to join the single currency." Is it worth giving up the sovereignty that would be involved in joining a single currency to reap some intangible and rather peripheral benefits? At present, I am not so persuaded.
No one says that we should not give up some sovereignty. Whenever we enter into an international treaty we cede some sovereignty: we give up our legal right to act in a way that is inconsistent with the treaty. There comes a time, however, when the process of giving away our rights begins to invade the very core of sovereignty. I fear that if we were to join a single currency we would go beyond that point. From what I know about my constituents' views and the country generally, I do not feel that our country is ready to do that. What our children and grandchildren may decide to do is a matter for them, having regard to world economic conditions at the time, but that is not for us to decide.
It appears that of 3.6 million companies in this country, only 100,000 export regularly. Sixty per cent. of medium-sized companies do not export at all. In a recent survey conducted by the Association of British Chambers of Commerce, 45 per cent. of companies stated that they do not export because of fear of the unknown.
That is where the Government, chambers of commerce and organisations such as the Confederation of British Industry and the Institute of Export can help. It is essential that small and medium-sized enterprises are given information about market opportunities. It must be a proactive process. We cannot sit and wait for them to ask for information. Information must be made available to them on the Internet.
Our posts abroad are doing an excellent job to promote Britain throughout the world. I had the great pleasure of meeting the staff of some of them this year in Singapore, Malaysia, Thailand, Syria, Lebanon and Sweden. They all impressed me as people who saw it as their role to promote Britain. They were doing an excellent job and I congratulate them. We must remind them from time to time, however, that they must be proactive. They must get on the phone to British companies or British trade associations and say, "Do you know about this opportunity that is just about to come up?" I can assure the House that that is what the French are doing, and the Americans. To a large extent, the British are doing that as well, but our posts abroad must be reminded of the need to take that approach.
Exporting is an exciting business, but it can be a risky one. A role that the Government can play is to help potential exporters to benefit from the mistakes of those who have already exported. Export clubs are an excellent idea and something that the Government should encourage.

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Much training could also be undertaken with the use of modern technology. I should like to see CD training packages provided for small and medium-sized enterprises so that they can educate themselves in their own time using their own computers.
The ECGD does an excellent job, but as an officer of the all-party export group I have heard complaints that it sometimes bases its assessment of a certain country on out-dated information. I hope that my right hon. Friend the President of the Board of Trade will ask the ECGD to examine its database and satisfy itself that it is acting on the latest information.
British banks are much criticised. The criticism is largely unjustified, but there is one area in which they could be more helpful to business. If one compares the terms on which banks are prepared to lend for residential purchase with the terms on which they are prepared to lend for a commercial operation, one finds that even if the loan is for exactly the same amount, on exactly the same security, loans for business purposes will be on much less advantageous terms than those for residential purchases. To my mind, the financing of British business is much more important than the financing of British bricks and mortar, because if our businesses do not succeed and we do not succeed in paying our way in the world we shall not be able to afford bricks and mortar. Banks really do need to get their priorities right.
The best form of investment comes from businesses' own money. That is why I support my right hon. and learned Friend the Chancellor's intention, put into practice in each of his Budgets, to lower taxes on business. I do not approve of gimmicks such as investment allowances, which tend to distort the market: it is much better to give businesses an overall lower rate of taxation. That should apply not just to national taxation, but to local taxation as well.
I am sure that every hon. Member will agree that one of the biggest burdens on small business is the uniform business rate and national insurance contributions, neither of which takes any account of the ability of the business to pay: both have to be paid whether or not the business is making a profit. I welcome my right hon. and learned Friend the Chancellor's recent Budget announcement of further relief to small businesses from business rates, but we must try to shift the burden of taxation from uniform business rate and national insurance contributions, which do not take account of ability to pay, to taxes like corporation tax and income tax which do.
I conclude by congratulating the Government on the general thrust of their economic strategy, which is giving British business more and more opportunity to do what it is best at —doing business free from the restraints of regulation and free from the crushing burden of taxation to which it has been subjected in recent years.
12.42 pm
Mr. Ken Livingstone: Much claptrap is talked in the west about the need for free trade. I am not aware of any current, modern, capitalist economies that ever allowed the principles of free trade, or market principles domestically, to determine their policy when national interests could be best preserved by intervention or tariffs.
Britain built its own tremendous economic advantage at the beginning of the industrial revolution by barring most of our foreign competitors from trading in the British
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empire. A third of the world was exclusively reserved for trade on our terms. I do not know how Britain can now argue for free trade given its own record. America built its industrial supremacy behind massively high tariff walls so that it could create its own sound domestic industry.
In the middle of the last century, the forerunners of what has since become Germany created high tariff walls because their economists warned them that if there was genuine free trade, German industry could never establish itself against the much stronger American and British competition. In the post-war period, we have seen Japan, informally and formally, operate the most rigorous rigging of the market to exclude western, European and American imports to protect its own domestic base, and it is still doing it on a grand scale.
We heap great praise on South Korea, Taiwan, Singapore and so on, but they have all built their own domestic strength behind tariff barriers. If they simply allowed anyone to import and export they would not be able to establish a sound domestic base.
Still today, nations that praise the concept of the World Trade Organisation —the powerful nations of Britain, America and Japan —insist that that organisation should, effectively, force the rest of the world to buy their high-quality finished products on their terms, but should restrict them in selling their agricultural products to us on equal terms. If we were really interested in free trade, we would allow agricultural imports on a massive scale, but we do not allow that, because Europe, Japan and America know that it would wipe out what remains of our farming industries and employment.
Behind the rhetoric, the reality is that nations intervene whenever possible to protect their domestic markets. It is hypocritical for the west to lecture African and Asian nations that are not economically successful, and insist that they must trade on our terms and cannot intervene to protect their domestic markets, given that every successful capitalist society has built its success on exactly those policies.
I am delighted that the Secretary of State will take part in the World Trade Organisation rally in Singapore, but let us recognise the hypocrisy of it. If we were really serious about free trade, we would shift the balance of protectionist measures in Europe, Japan and America, which prevent third-world countries from achieving their full potential. We would lift the burden of debt that has been saddled on third-world countries by the high interest rate policies of President Reagan, when he took over in the White House in the early 1980s.
Mr. MacShane: Is my hon. Friend aware of the row about the import of bananas into Europe? The German Government insist that bananas produced in Latin American countries, such as Colombia, should be imported at low cost, whereas France and Britain believe that bananas should come from countries where wages are slightly higher. According to my hon. Friend's theory —if I understand him rightly —we should all eat low-cost bananas, whereas bananas from countries where wages are protected should not be allowed into Europe.
Mr. Livingstone: I am merely pointing out the reality. I believe in managing trade. It is nonsense to talk about free trade, because I believe that the world needs to manage trade, otherwise one industry after another in one

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nation after another would be completely wiped out by low-cost foreign competition. I realise that the quid pro quo is that rich nations should transfer wealth and investment to poorer nations. I see no point in one industry after another being wiped out all over the west, with the social upheaval that that would create. We need to manage trade, and that requires a consensus to emerge. At the moment, the poor nations of the world have no impact on that debate whatsoever.
I shall deal with the Government's Budget, and what it will do to improve our trading performance. Our exports have grown tremendously since we were evicted from the exchange rate mechanism —it is irrelevant whether we call it black Wednesday or white Wednesday. The simple fact is that that dramatic reduction in the exchange rate opened the way to a huge export boom, which fuelled most of the growth in the British economy until 18 months ago. Unfortunately, in the past year we have seen the real value of the pound go up by 10 per cent., which makes it more difficult for British firms to export.
I would like to get back to a system of fixed exchange rates. The important thing is to fix them at a realistic level, and not to repeat the nonsensical mistake of the Conservative party when it took us into the ERM at a grossly overvalued rate. Perhaps that was not a mistake. The Economist and the financial pages of the press in the run-up to the decision of the then Chancellor of the Exchequer, now the Prime Minister, to take us into the ERM at DM2.95, told us that we should join at a rate so high that it would make British industry squeal. It was not a mistake; it was a deliberate policy to use an overvalued pound to force a shake-up of competitiveness in British industry. The result was that 10 per cent. of British industry closed during that period. We lost jobs, and we lost exports. We should state clearly that we want a real rebirth of British industry and a recapturing of trade. I have not seen the Conservative central office briefing to Conservative Members but I look forward to seeing it later. I have not been given a briefing by my own Whips so I am completely unbiased.
People talk about the Government's great trade triumph, but we continue to lose our proportion of world trade year by year. We are not capturing markets or expanding. Conservative Europhobes drone on about the need to move away from European entanglement towards trade with the far east. But the trade statistics show that we are improving our trade with Europe and losing it in the far east. Those who think that Britain has a future outside Europe trading with the far east should look at the figures because they show that we are losing ground in those markets. We benefit substantially from the trade inside the EC, which has had massive growth.
What choice did the Government face in the Budget in terms of continuing to increase exports and strengthen our industrial base? It was that the British economy could be managed either to benefit our industry or the City of London. Consistently over the past 18 years the interests of the City have taken precedence over those of our industrial base. In the Budget the Chancellor committed himself to further increases in interest rates rather than going for increased taxes. That is the balance. He has chosen to manage the economy by constantly using interest rates although that has the most damaging effect on our industrial base.
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We are told that in view of the great triumph of the past 18 years a Government borrowing requirement of £billion is no problem on top of all the others that we have had. Over the past five years, Government debt has virtually doubled and we are pushing against the 60 per cent. Maastricht ceiling because I do not believe for a minute the Government's figure of £19 billion for next year. The amount will be £22 billion, £23 billion or perhaps even £24 billion, which will take the Government over the 3 per cent. borrowing limit.
As the figures continue to come through, the international money markets will see as the year rolls by that the Government's Budget projections were optimistic and there will be increased pressure for interest rises. Eddie George will trundle backwards and forwards, almost wearing out the carpet in the Chancellor's office, demanding a further increase in interest rates to restore confidence. The alternative way to restore confidence is to recognise that Britain is wildly undertaxed. In tax terms we are 14th of the 15 nations in the EU. My voters will find that breathtaking because individuals in Britain are painfully highly taxed. The rates are punitive, higher than at any time apart from during the war.
There has been a shift in the balance of taxation from the corporate sector to individuals, most of whom—through income tax, VAT and council tax —are paying more tax than they have ever paid. They cannot believe that this is an undertaxed society. However, corporation tax is almost voluntary and, effectively, that is why Britain is undertaxed. We tax much less than any of our major competitors and the rate is lower than in any European nation except Portugal. Has that strategy succeeded? Throughout the debate Conservative Members have said, "Industry will survive and invest if we keep taxes low." Corporation tax is lower than it has ever been in real terms and company profitability is higher than ever in real terms, but have companies invested? They have not: investment is limping along.
The statistics are disturbing. Since the Government came to power in 1979 personal investment as a proportion of GDP has increased by 0.1 per cent. Government investment has decreased by 1 per cent. During this Conservative Administration, company investment —one must say "company investment" because so many companies have moved from the public to the private sector during the period —has declined by 2.2 per cent.
So, having given companies all that they demanded on low taxation, in dramatic reductions of trade union rights and increased working hours, the Government have not produced the result that they set out to achieve. They have presided over a decline, as a proportion of GDP, in investment in the British economy. As Labour party propaganda makes absolutely clear, that is why Britain has slipped from 13th place —when the Government took over —to 18th place.
Britain is about to be overtaken by Ireland. Is it possible to imagine Mrs. Thatcher, in 1979, standing on the steps of Downing street and saying, "Vote for us, and within 20 years Ireland will have overtaken the British economy in terms of per capita GDP"? On current projections of British and Irish economic growth, Ireland will overtake

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us within the next three to four years. Out of the 15 members of the European Union, we are still ahead, in GDP per capita, of only Portugal, Greece, Spain and Ireland. Ireland will overtake us in the next two or three years —unless my hon. Friends on the Opposition Front Bench can turn round the situation very damn quickly after next May.
Furthermore, some of the most advanced regions in Spain have equalled British levels of GDP per head. On those trends, soon only Portugal, Greece and Britain will be at the lower level of GDP per head in the European Community. It has been an appalling record of failure, because, on every occasion, the Government have benefited the City and neglected industry. One overlooks the need for industry at one's peril.
I am all in favour of a successful financial sector, and I accept that we should be selling insurance and all those other things. I am delighted that there is a successful service sector and that people work in catering, hairdressing and all of that. But those industries rest on a sound industrial base, and they become vulnerable without a sound, high-tech manufacturing base.
I should like the Government to make a dramatic shift. If they were serious about trade and industry, they would not have passed their most recent Budget. But I am opposed to people who slag off the Government and do not say what they would do in their place. Therefore, I shall spell out exactly how the situation should be turned round and which taxes should be increased. I know that I shall say it at my peril, because, under the Labour party's new code of conduct, a Labour Member will be found guilty of having brought the Labour party into disrepute if he or she is found in possession of a tax policy. Nevertheless, I shall spell one out.
I have not the slightest doubt that it is right that Labour should proceed with its windfall profits tax on the utilities. We are batting that proposal around. I know that my right hon. Friend the shadow Chancellor has not been too specific on its details, but it seems to have slipped into the public domain that we are thinking about a £5 billion tax. However, we have overlooked all those independent city studies that tell us that a windfall tax could produce £10 billion without any discomfort to the companies concerned. Therefore, if we are facing a Government borrowing requirement —which is claimed to be £19 billion next year, but most probably will be closer to £23 billion or £24 billion —a £10 billion windfall profits tax would provide a good start to restoring sound finances in Britain.
What about income tax? I said earlier that the average, ordinary voter in Britain —middle-class and skilled working-class people —are being highly taxed. They are. I am opposed to a tax increase for them, which is why I was quite happy not to oppose the 1 per cent. reduction in the basic rate. I hope that Labour goes further and starts to reduce the tax on some middle-class and skilled working-class families. But higher income earners —people earning over £50,000 a year—are woefully undertaxed. We could easily say that those earning over £50,000 will have to come up with another £3 billion or £4 billion, to make a contribution to restoring the competitiveness of the British economy, because they are the people who have done best in the past 18 years.
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A combination of three other taxes would help restore Britain's financial position, and immediately reduce the pressure for interest rate increases. I am not saying that we should increase taxes because it is fun to do so —I am still waiting to hear from my right hon. Friend the shadow Chancellor who in the past taxed and spent just for the fun of it. I am in favour of structuring our tax system to increase investment and industrial competitiveness.
First, I should like there to be a two-tier capital gains tax. Capital gains realised over a short period should be taxed at a higher rate than those left in a company for longer, which would be an incentive for long-term investment. It could turn out to be completely neutral in terms of any tax change if we reduced the tax burden on capital gains in order to encourage long-term investment.
Secondly, we should examine dividends. When Mrs. Thatcher became Prime Minister, dividends were 1.5 per cent. of gross domestic product; they are now running at 6 per cent. A tax on dividends, or dividend controls, could produce literally billions of pounds. If there were a dividend tax structured in such a way as to encourage investment, and if there were a reduction of dividends, we would massively increase our export base potential and increase long-term investment.
Finally, corporation tax has become almost voluntary, which is why Britain is undertaxed. The Government have given the corporate sector exactly what it asked for —weak trade unions, a large pool of unemployed people in order to bring down wage rates, massive profitability and low taxation. There has thus been no investment. There should be a substantial increase in corporation tax, to bring in something of the order of £10 billion, and generous incentives to encourage investment so that companies which increased their current levels of investment —I emphasise the word "increased"—would get most, if not all, of it back.
1 pm
Mr. Tim Smith: I hope that you enjoyed that speech, Mr. Deputy Speaker. It was clear that the hon. Member for Brent, East (Mr. Livingstone) not only had not got hold of a copy of the Conservative research department's briefing, but had not obtained any briefing from the Labour party's Front-Bench team either. Had he received any briefing at all, it might well have been from the Referendum party. It struck me that the hon. Gentleman's views on world trade were pretty well 100 per cent. consistent with those of Sir James Goldsmith. Perhaps more people should be aware that the hon. Gentleman and Sir James have views in common on free trade. I certainly disagree with the hon. Gentleman.
I noted in an intervention that the White Paper on trade and investment points at paragraph 12 on page 18 to the relationship between the trade orientation of developing countries and the growth in their living standards. It states:
"The evidence has persuaded more and more countries that cutting themselves off from the world economy is a recipe for stagnation. Increasingly, developing countries are seeking greater integration by switching from inward-orientated to outward-orientated economic strategies and opening their markets."
In the globalised world economy in which we live today, no country —rich or poor, large or small —has any real choice. We all have an interest in free trade and we shall all benefit from it in the form of rising living standards.

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The White Paper also deals with agriculture, which the hon. Member for Brent, East mentioned. Of course, he is right about agriculture —world markets in agriculture need to be freed up and opened up. The White Paper recognises that and states on page 28:
"Efforts to achieve free and open agricultural markets are particularly important to long-term world prosperity and development; resources are significantly mis-allocated in both the developed and developing world."
I agree with that. I do not believe that we shall have genuinely free world trade until we have free trade in all goods and services, including agricultural products.
I wish my right hon. Friend the President of the Board of Trade every success as he leaves today for the World Trade Organisation ministerial conference in Singapore. Although the hon. Member for Rotherham (Mr. MacShane) was rather inclined to talk about my right hon. Friend scarpering off to the sun, everybody knows that Ministers, like everyone else who travels overseas on business, work extremely hard. I personally know many people who spend a great deal of their working life travelling overseas to sell British goods, to invest there or to encourage investment here. It is not an easy life; international travel is not some kind of holiday. Such people work extremely hard in Britain's interests —as do Ministers who travel overseas —and we should pay tribute to them for the work that they do.
The most significant fact that underlies Britain's improved economic performance since 1979 is the quite dramatic improvement in manufacturing productivity. By whatever measure, we have closed the gap between us and other countries in manufacturing productivity. Of course we have more to do, and we should and must catch up with Germany, but we have bridged more than half the gap already. My hon. Friend the Under-Secretary of State might be able to give me the exact figures, but I believe that we have closed as much as two thirds of the gap. That is the Government's single most significant economic achievement, because it underlies so many of the successes to which my hon. Friends have pointed in the debate.
One factor that has contributed directly to improved manufacturing productivity is inward investment. Inward investors simply would not tolerate the level of manufacturing productivity that prevailed in this country in 1979. They brought with them new techniques and technologies and better-quality management, and insisted that they were introduced not just at the plants that they established in the United Kingdom, but among their suppliers. They were not prepared to source in the United Kingdom unless UK component suppliers also raised their productivity and the quality of their goods to the standards to which the investors were accustomed in the countries from which they came.
Short Brothers plc exemplifies how inward investment has improved manufacturing productivity. It was owned by the Government until about 1988. The Treasury refused to invest in the business and the business ran up huge debts. The shop floor was like something out of the 1930s. The company was bought by Bombardier of Canada, which has since then invested hugely on the shop floor. Today, Shorts has some of the most advanced manufacturing technology in the world.
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The most important point for the Northern Ireland economy is that Shorts worked hard to ensure that it was able to subcontract engineering work and buy many of the components that it needed from local manufacturers. It did so to ensure that it was able to meet its requirements, and it has led to an increase in manufacturing productivity in Northern Ireland. Although that activity concerns a small part of the United Kingdom economy, it has been replicated throughout England, Scotland, Wales and, indeed, Northern Ireland, as inward investors have insisted on higher productivity and higher-quality goods.
The hon. Member for Middlesbrough (Mr. Bell) mentioned Northern Ireland, and as I have spent the past couple of days over there, I am glad to be able to say that inward investment into Northern Ireland is still going pretty well —notwithstanding the termination of the ceasefire. Existing investors are increasing their investments. Seagate is investing at Limavady, with the creation of another 760 jobs, and Daewoo, which already invests heavily in the Province, is also increasing its investment, with the creation of a further 330 jobs. I asked Daewoo, a Korean company that invests in the United Kingdom, why it chose to come to the United Kingdom. It told me that it was, first, because this country was part of the single market —it sees it as a platform for exporting to other member states. But it also chose this country because of our labour market.
There are many aspects to the labour market. We have a reliable and skilled work force, and outstandingly good industrial relations compared with those of 18 years ago. We have relatively low non-wage labour costs. The Department for Education and Employment produced an excellent booklet entitled "Jobs", which set out the precise the non-wage labour costs in France, Germany, Spain and the United Kingdom. They are much lower here than in any of those other member states, which is an important consideration for companies that invest here.
It therefore follows that any attempt to impose extra burdens on employers —whether through the social chapter, a minimum wage or any other idea that the Labour party may have for imposing extra costs —must act as a disincentive to inward investors into this country and must make other member states more attractive. That is why any such attempts should be resisted. Companies are also impressed by this country's standard of education and training, the training that can be provided to inward investors and the advantage that we have through our use of the English language.
It may be true that when inward investors first arrive in this country, they are largely assembly operations, importing a large proportion of the components that make up the finished product —a point mentioned by, I think, the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood). But once they gain confidence in this country, they start to reduce the level of imports and undertake research and development work. Long-established American companies, such as Ford and General Motors, eventually started to produce products designed exclusively for the European market. That is already starting to happen with our more recent inward investors; it will continue to happen because they have confidence in the market in which they have invested.
In an earlier intervention, I mentioned the remarkable turnaround in our balance of trade with Japan. In his speech, my right hon. Friend the President of the Board

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of Trade said that we now have a balance of trade surplus with Japan of, I think, £1 billion. If that is the figure, it shows a remarkable transformation from the position only a few years ago, when we seemed to import almost every high-tech electronic product from Japan and it seemed almost impossible —whether for protectionist reasons or whatever —to export anything to Japan. That position, which is apparent in the far east markets, has been replicated in many other countries.
We are producing an outstandingly good trade performance. Many forecasters would have predicted that, during a period of economic recovery, our trade performance would deteriorate. That has happened previously —as the economy has started to grow, we have sucked in more and more imports and the balance has started to deteriorate. We have now had three or four years of economic growth, yet the balance of trade has not deteriorated —in fact, the balance of payments is roughly in surplus, as would normally be expected. That is an outstanding record.
My sole concern relates to the European single market, which was established nearly five years ago. We are still not making the progress that we ought to be making in some internal markets —I am thinking particularly of insurance, telecommunications and public procurement, but there might be other markets in which more progress ought to be made. Deutsche Telekom has recently been privatised, but I do not believe that that privatisation has been accompanied by the same deregulation of Germany's telecommunications market that in this country accompanied the privatisation of British Telecom.
British companies must be able to compete in continental markets, and German, French and other companies must be able to compete in ours. We have already complied with our half of that deal and we have an extremely open market in telecommunications, but the Government must work hard in Brussels to open up the markets that are still effectively protected and ensure that British companies —many of which are now world leaders because of the opportunities that liberalisation gave them —are able to expand accordingly.
The record on international trade is outstanding, and that is vital because this country is, always has been and always will be hugely involved in international trade. We are the fifth largest exporter, and exports account for a quarter of our gross domestic product. Although it may be true that we have had some difficulty in holding our share of world trade, we have done better than previous Governments in preserving our position. As other economies grow at higher rates of growth from a much lower base, they tend to take a larger proportion of world trade, so it becomes increasingly difficult for a developed country such as ours to maintain the same market share. We nevertheless have a good record, which is why I conclude by wishing my right hon. Friend the Secretary of State every success in his discussions in Singapore.
1.16 pm
Mrs. Barbara Roche: All hon. Members will agree that this has been a good, high quality debate and that many important points have been made by hon. Members on both sides of the House. I hope that the debate will have given the President of the Board of Trade food for thought on his way to Singapore today.
The President of the Board of Trade referred in his opening speech to the whole question of regulation and
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how deregulation was especially important in relation to small firms, by reducing compliance costs and the burdens on business. I absolutely agree with him. What makes that all the more surprising is that at Question Time on Wednesday the Minister for Small Business, Industry and Energy, who will be winding up today's debate, had to admit that he had introduced three times as many regulations relating to the Department of Trade and Industry as had been revoked.
If we look at the Government's overall record, we find that since 1994 approximately 13 times as many regulations have been introduced as have been replaced. I remind the Minister that 19 Conservative Back Benchers, including a former Minister for Trade, have criticised the Government's laconic record —their words, not mine —on removing the burdens on business.
The Institute of Directors, in its recent report on small business and also as a result of the "Your Business Matters" conference, noted that in the past few years
"The government has talked a lot about deregulation but has not achieved enough. Around 3,000 regulations have been removed over the past few years but over 10,000 new ones have been introduced."
The Minister may like to dwell on that this afternoon, especially as it was mentioned by the President of the Board of Trade in his opening remarks.
The President mentioned the fact that Britain is a trading nation and the importance of exports, especially to small and medium-sized enterprises. That theme was also echoed in a thoughtful speech by the hon. Member for Shoreham (Mr. Stephen).
The President mentioned the work done by business links. Although we welcome their work, it is at an extremely early stage. In Britain we still have no database of exporters, unlike our competitor countries in the European Union. It will be interesting to hear what the Minister has to say about that.
The hon. Member for Shoreham made the extremely pertinent point that we needed to ensure that our high commissions and embassies abroad were using all the latest technology, were using the Internet and were acting as a selling point for British goods and services. This morning there has been much talk about the Conservative briefing paper that was made available to Conservative Members and also, by a happy coincidence, to Labour Members. In that context, I wondered whether the hon. Member for Shoreham had been privy to several things that we had said in the public arena about exports. It seemed to my hon. Friend the Member for Middlesbrough (Mr. Bell) that the hon. Member for Shoreham was parroting Labour party policy on the subject. We speak about an enterprise zone for exporters—
Mr. Stephen: I assure the hon. Lady that when a good idea appears it does not matter to me where in the House it comes from. All good ideas for the benefit of the nation should be adopted. I do not concede, however, that this idea was originated by the hon. Lady or her colleagues.
Mrs. Roche: I will respond to that intervention in the spirit in which it was made, by saying that I agree with the hon. Gentleman. We are talking about what is

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in the interests of our country, and good ideas that are in the interest of the whole nation should be warmly welcomed from both sides of the House. However, we are delighted with the hon. Gentleman's endorsement of our policy on exports.
The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) asked important questions about investment and about the Invest in Britain Bureau survey. He raised a potentially extremely important point about counterfeit trade, which I am sure will be mentioned in Singapore and which is of great interest to businesses in Britain.
The Tory briefing document was mentioned. The hon. Member for Eastbourne (Mr. Waterson) claimed only to have glanced at it, but proceeded to quote from it in detail. It is an interesting document. Later I shall talk about the skills gap. From the language in which the document is couched and its grammatical format, one might conclude that the writer would benefit from a Labour Government and what we intend to do to improve skills and rebuild our economy.
My hon. Friend the Member for Rotherham (Mr. MacShane) made pertinent points about the condition of the economy and investment from Britain abroad. The 1995 United Nations report showed that $30 million was invested in Britain by foreign firms while $38 million was invested by Britain abroad. When the Minister talks about the amount of outward investment going out from Britain, he may wish to refer to that. My hon. Friend also made some pertinent points about the scandal of child labour and the importance that the United States Government attach to that.
This has been a good debate. It has put firmly on the agenda the importance of inward investment to Britain. We pay tribute to local authorities, regional development organisations, the staff of the Invest in Britain Bureau and others who have helped to achieve the success that we have so far seen. Inward investment is important not only for the jobs that it brings to Britain but for the effect that it has on local economies, including the knock-on effect of workers investing their pay locally, improved opportunities for new and existing supply companies, many of which are small and growing companies, and the possibility of small company spin-offs. The helpful effect that investment can have on small and medium-sized enterprises —truly the backbone of the economy —can be of assistance.
There are certainly questions to be asked about Ministers' actions and record on investment. Listening to the President of the Board of Trade and his Back-Bench colleagues today, one would have no idea of the sharp divisions within the Cabinet on the policies on inward investment. Critics have described the current situation as a Dutch auction, with potential investors being offered financial incentives of as much as £37,000 per employee to move to a particular area.
In the last debate on inward investment two years ago, the hon. Member for Falmouth and Camborne (Mr. Coe)—he is certainly an honourable Member of the House because before he moved to the dizzy heights
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of the Whips office he was my pair—described the experience of a potential inward investor in his constituency. He said:
"halfway through negotiations with the Department of Trade and Industry in Bristol, he finds himself the subject of an approach from a Welsh council to relocate there, supported by the Welsh Office and underpinned by the local training and enterprise council, two jobcentres and the local councils. He is now in a Dutch auction, with offer and counter-offer being made with public money." —[Official Report, 28 October 1994; Vol. 248, c. 1145]
If we needed further proof, The Economist recently described this inter-agency rivalry as:
"A collection of bell boys tripping over each other to grasp a guest's baggage, and then tipping the customer for the pleasure of carting it to his room."
To put it kindly, Ministers have not been singing from the same hymn sheet.
It is well known —again, I look forward to the Minister's response on this —that the Department of Trade and Industry and the Treasury recently backed down in a row with the Scottish Office and the Welsh Office over control of campaigns to attract foreign investment. I understand that the DTI lost its argument that rival bids from the Welsh Secretary and the Scottish Secretary to attract the South Korean electronics company LG group, which eventually agreed to relocate in Newport, gave a rather bad impression to foreign Governments and could lead to the United Kingdom being forced into greater subsidies. Again, I look forward to the Minister's reply.
I gather that the DTI has retired from the lists and given up its attempt to have such bids handled by an interdepartmental agency, even though it is commonly agreed that inward investment appears to be going to those parts of Britain with the best equipped development agencies rather than where it is most needed. When the Defence Secretary was Chief Secretary to the Treasury he said:
"I believe we need to distinguish carefully between enhancing business competitiveness and getting embroiled ourselves in competition with foreign governments to pay market distorting subsidies. Much of our regional spending runs this risk."
The Opposition support inward investment, but an interesting debate is clearly going on within the Government about how they see inward investment. In the present turmoil—the daily dilemma, the "Coronation Street" and "Brookside" that we see enacted in the 1922 Committee and in Cabinet, on the "Today" programme, on "Newsnight" and in the daily pages of our national newspapers—perhaps the Minister can tell us how the Government are faring on inward investment.
As my hon. Friend the Member for Middlesbrough (Mr. Bell) ably pointed out—my right hon. Friend the Member for Derby, South (Mrs. Beckett) also said this—not all inward investment creates new plant and employment. A United States utility buying a British utility counts as inward investment. While it is clearly investment in Britain, it is a bit rich for the Government to count it in the way that they do. The Government should be clear about what they mean by inward investment when they boast about what they are doing.
As was rightly said by a number of hon. Members, including the hon. Member for Bournemouth, West (Mr. Butterfill) in a short but interesting speech, one reason why foreign companies come to Britain is because of the English language. I hope that when the Government

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try to take credit for other people's work they are not also seeking to take credit for our language. Michael Cassell, writing in the Financial Times during the summer, said:
"The use of English as the international language of business has always been a critical factor"—
in inward investment in Britain—
"for which even the most brazen politician has been unable to claim responsibility."
I would never think of accusing my opposite number, the Minister for Small Business, Industry and Energy, of being a brazen politician and I am sure that he would not describe himself as such.
We should also look at Britain's own record on investment. As Dr. Lyons, chief executive of DKB International, said recently in Sunday Business:
"while such investment is welcome, it begs the question, why can't we do it ourselves?"
The figures on investment in British industry tell a sorry tale. Despite the Chancellor's upbeat forecast last year that investment would rise by 10 per cent., he was forced to admit in the Red Book that manufacturing investment
"fell from the fourth quarter of 1995 to the second quarter of 1996".
It also fell by 14 per cent. in the last quarter compared with the same quarter a year ago and is still 6 per cent. in real terms below the level that it reached in 1979.
Since 1979, the UK has invested less as an average proportion of GDP than any of the other 24 countries of the Organisation for Economic Co-operation and Development. Is it any wonder that when the Government talk about how much our manufacturing sector has caught up in the past few years they do not reveal the incredibly low base to which they let it run down in the 1980s and the fact that they are now attempting to redress that record. I hope that the Minister will deal with that when he replies.
The whole House wants to attract inward investment for Britain, but we must try to envisage our future as we seek to do that. The Confederation of British Industry has identified three weaknesses which hold back Britain's inward investment performance. The first is our "image as poor Europeans" —those are not my words but the CBI's. [Interruption.] I hear the President of the Board of Trade and the Minister muttering among themselves. They should take those matters up with the CBI when they next meet it.
The Minister for Small Business, Industry and Energy (Mr. Richard Page): The hon. Lady says that the Government are holding back inward investment into this country. As we literally have the world record, how can she say such a thing?
Mrs. Roche: The Minister must not go on living in the past. The CBI is looking to the future and how we will progress. I have mentioned the interdepartmental rivalry and the scepticism of some of his governmental colleagues about inward investment, which is often acquisition based, rather than entailing the attraction of new plant and machinery and job creation, as the Government like to portray it.
The second factor highlighted by the CBI was Britain's lack of infrastructure, and especially its transport problems. The third factor, and possibly the most
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important for our competitive edge, was our skills base and the qualifications of the work force. Those are clearly key issues.
As the CBI stated that
"the UK's continued participation in the Single Market is of major importance to manufacturing investors, guaranteeing access to large markets. For companies making decisions about the location of a European Head Office, the country's ability to be at the centre of economic and political development of Europe is of critical importance. This may detract companies from choosing the UK".
This week's shenanigans do nothing for our image as good Europeans, but they will continue this weekend and every day of the short time that the present wretched Government remain in office.
Our congested and crumbling transport infrastructure is a huge problem for business. As I travel around Britain meeting business people, they tell me that that is one of their main difficulties.
The CBI is not alone in identifying Britain's low-skill economy as a problem for inward investors. Last month the Financial Times described Britain's
"worrying skills gap which inward investors have been quick to experience."
As I go around the country employers tell me about bright young boys and girls whom they would like to take on but who do not have basic literacy and numeracy skills. The Labour party is determined that Britain will have an educated and skilled work force. It is no wonder that employers are concerned, when one third of teenagers cannot reach even the basic NVQ level 2 for literacy and numeracy, and Britain ranks with Turkey near the bottom of the European league for the numbers of 17 and 18-year-olds staying on in full-time higher education. When the President of the Board of Trade visits Singapore, he will have an opportunity to see how skills training is undertaken there and to bring back some valuable lessons.
If hon. Members want evidence from inward investors, perhaps they should heed the words of the chief executive of Siemens' UK company. Mr. Jurgen Gehrels made some important comments on the skills base. He said that any belief that the way forward for Britain was as a
"low skill and therefore low wage economy"
was totally unfounded.
Mr. Tim Smith: Can the hon. Lady name one hon. Member or one serious political commentator who has ever suggested that the way forward was for Britain to be a low-skill, low-wage economy?
Mrs. Roche: I would name every hon. Member on the Conservative Benches. The entire purport of the Government's economic policy is to imply that Britain can compete as a low-wage, low-skill economy. Mr. Gehrels, whom I quoted, speaking on behalf of one of our major inward investors, said that that was the wrong road for Britain to go down.
Britain deserves a Government who can put matters right. We deserve a Government who will encourage inward investment and create a structure that supports business operations. We pay tribute to the Invest in Britain Bureau —an initiative established in 1977 by a Labour Government. Labour local authorities have played a decisive role in attracting inward investment. For example, Labour-controlled local authorities in the

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north-east have encouraged inward investment to replace industry that has been devastated by years of Conservative economic mismanagement. Siemens' investment in north Tyneside and Nissan's move to Tyne and Wear are good examples of such investment. That is why our programme of skills training for young people is so important. Our university for industry, "learn as you earn" accounts and high quality apprenticeships and traineeships will transform the skills of the British people.
Labour will create the right economic environment for attracting inward investment and encouraging long-term domestic investment. Our economy will not be modernised properly until Britain's investment record improves. As businesses up and down the country are discovering, Labour is serious about business. Under Labour, Britain will truly be open for business.
1.40 pm
The Minister for Small Business, Industry and Energy (Mr. Richard Page): The President of the Board of Trade began his speech by comparing the world attitude to the United Kingdom in the 1970s with its attitude today. I came to the House in 1976 and I remember travelling abroad and meeting foreign Members of Parliament and industrialists who regarded us almost with pity, coupled with puzzlement that a great nation could behave in such an incredible fashion —I refer to the strikes, 26 per cent. inflation and the fact that we were viewed as the sick man of Europe.
As a Minister, virtually every week I see some overseas delegation —this week it was a delegation from India, last week from the Kansai region of Japan and the week before that a Swedish delegation. Every delegate asks, "Please tell us how you are doing it? What can we learn to take back to our countries?" That is the judgment that counts —not that of the Opposition or the media, but the world's judgment. It is why overseas companies are flocking to the United Kingdom to take advantage of the Government's open and free approach to trade and commerce. Those companies are producing quality British goods at a competitive price and selling them extensively throughout the world. It has reversed the down-trend that has plagued us for decades.
Trade and inward investment are two sides of the same coin. For Britain to have the right formula to spawn good business, we must have the right policy. When our trade and investment policy is right, business has the right attitude and assistance to enable it to succeed. My right hon. Friend referred to his aims for the Singapore ministerial meeting, and I am sure that all hon. Members wish him success. Success in opening up free trade will bring success for British industry which will be translated into jobs throughout the length and breadth of this country.
My right hon. Friend referred also to some of our inward investment successes. I shall mention only a small fraction of those as I do not have time to recite the whole list. BMW is not the only company to recognise the advantages of investing in the west midlands. Unipart, for example, recently announced another investment in Coventry that will create 150 new jobs in that area. In July this year, Unipart, Honda and its Japanese affiliates announced a joint venture programme worth £63 million.
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Another 150 jobs will be created at the new technology site at Coventry business park which will manufacture precision-engineered body components and sunroof assemblies for Honda. Those parts will be used on all new models of Honda vehicles manufactured at the Swindon plant and sold progressively across Europe from 1998.
The list continues. Indeed, it is a roll call of success. As sponsor Minister for Yorkshire and Humberside, I go to the region regularly. Whenever I go there I open more factories and more extensions. There is more growth and I announce more jobs coming into the region.
In October, K and L Microwave, an American company, announced plans to invest £4.6 million in a factory at Bridlington, east Yorkshire. This investment will create more than 170 new jobs over the next five years. Companies from Korea and Germany have also decided to invest in the region over the past 12 months.
My right hon. Friend the President of the Board of Trade, in his few words, said that he felt that there were two other announcements coming today. Literally hot off the press —this will be good news for the hon. Member for Bridgend (Mr. Griffiths) —is the news that Sony will be announcing an expansion of its operations at Bridgend. It will be a £50 million investment, and promises the creation of almost 1,000 new jobs.
The 11 Members who represent Glasgow will be delighted to know that Polaroid will set up an international shared service centre in Glasgow which will create another 150 new jobs over the next three years. It is success, success and success.
Our success in attracting such investment is a tribute to the dedicated work of the Invest in Britain Bureau, regional development officers and the efforts of staff in overseas posts. I am glad that the hon. Members for Middlesbrough (Mr. Bell) and for Hornsey and Wood Green (Mrs. Roche) both paid tribute to the work that is done by our overseas posts. We, the Government, see at close hand what they do. They have achieved magnificent results over past years and I am confident that they will do even better in the future.
That is only part of it. We must also have the ability to take advantage of inward investment. That means that we must have a good supply system from our smaller and medium-sized companies. That is why we have set up 10 regional supply offices in England. The organisation was set up in April 1995, and it is starting to produce more and more work for small and medium-sized businesses when they become involved in a supply chain that comes from inward investment.
The RSOs have an in-depth knowledge of their local supply base. They work closely with purchasers to identify precise purchasing needs and to match those needs with validated suppliers. The RSOs, therefore, can give independent and expert help on sourcing. They will help companies that are looking to set themselves up in operations in England. They will continue to help after their involvement is up and running.
I shall give an example. Samsung was looking to set up operations in the north-east. The local RSO helped to compile profiles on potential suppliers and organised some extremely well-attended seminars to brief local firms on how to do business with Samsung. As a result local firms won supply contracts worth £2.4 million.
There is another example of a United States company that was looking to set up a plant in the UK. It was helped by the east midlands RSO. That led to suppliers in the

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region securing business worth £2.7 million. There is a similar story involving the west midlands RSO, which has projects that have amounted to supply opportunities 'worth £3 million.
As a result of a great deal of activity inward investment has undoubtedly been able to source from the United Kingdom components that otherwise would have been imported. That has benefited inward investment companies and the UK economy. That is vital because we have a company profile that I wish to see changed.
We have a few large, well-run companies, but thereafter we come down to a broad base of about 3.6 million small companies. We must create larger small businesses. We must create a middle ground so that we have a company profile that is more of a triangle rather than an upturned golf tee. That is what I, as the Minister with responsibility for small businesses, want to happen. I have a keen interest in the work that we must do to encourage small businesses to export.
In business development in general, not just in terms of promoting export success, the role of the business link is crucial and is becoming ever more so. Business links act as local one-stop shops where businesses can go to access all the support programmes offered by the Government. To quote the Trade and Industry Select Committee:
"the establishment of Business Links is likely to be seen as one of the most important reforms of the 1990's. The creation of the network within a short space of time is a considerable achievement, and the potential for improving competitiveness is enormous".
Out of 87 partnerships nationwide, 48 now have their own export specialists. Export development counsellors enable business links to give tailored support to companies that have the motivation and ability to succeed in export markets. At present, 53 export development counsellors are in post and we have received bids for a further 20. We will grant those bids. Those counsellors will be recruited from the private sector, and they will have practical first-hand experience of exporting. EDCs see business people locally. They are familiar with local commerce and industry and speak business people's language.
Export development counsellors not only add value in their own right, through the specialised advice that they provide to companies, but help companies to plug into the whole range of overseas trade services, whether from DTI market desks or commercial posts overseas.
One of the best ways to make a case is to quote firm examples. Last December, Aston Fittings, a small company in Birmingham, contacted its EDC at its local business link. At the time, it was exporting very little but wanted to expand. After discussions with the company's director, Mr. Brown, the EDC suggested a three-pronged attack, making best use of all the resources available: to commission a market information inquiry from the relevant post to look into Malaysia and Indonesia; attend a DTI trade mission to Iran; and attend any FCO commercial duty officer visits that were relevant.
Following on from the market information inquiry, Mr. Brown contacted the companies listed and now exports regularly to Malaysia and Indonesia. The amounts involved are not vast, as it is only a small company —only £75,000 between them —but business is building. Aston Fittings hopes that exports to these two locations will exceed £120,000 in the next 12 months.
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Having been on the DTI mission to Iran, Mr. Brown made several useful contacts, and Aston Fittings now has several regular export contracts with orders valued at more than £20,000 each and growing.
Two months ago, Mr. Brown was asked to meet a visiting officer from Kuwait. The officer gave him contacts in Qatar and Kuwait, as a direct result of which Mr. Brown has subsequently appointed distributors in both areas.
Since contacting its local business link, that one company, has had some £20,000-worth of help towards new CNC equipment, a £10,000 regional selective assistance grant and a £10,000 regional enterprise grant.
The business link was also able to direct the company to a local scheme run by Aston university —the teaching company scheme —whereby the company can employ a graduate for three years at approximately £10,000 per annum, the balance being paid for by the scheme. That is just one example of the way in which business links operate throughout the country.
Thousands of Mr. Browns are helped every year, and their increased export success is instrumental in ensuring the continued growth of our economy. Jobs will be created by small businesses growing into bigger businesses, thanks to our export policy. We want small companies to develop, to export, to train, to spread best practice, all on their own, and help to set standards and take their rightful place in the supply chain. My hon. Friend the Member for Ludlow (Mr. Gill) quite rightly stressed the importance of home-grown investment. I want United Kingdom companies to take advantage of the supply chain opportunities created by inward investment. It is no good hundreds of companies creating work and making a particular product, if small businesses do not take advantage of that supply chain, and do not supply those companies with goods and products that can, in turn, he sold abroad.
I shall deal with some of the points raised during the debate. I look the hon. Member for Middlesbrough (Mr. Bell) straight in the eye when I say that he made his usual, delightful, friendly but rambling speech. At one point he referred to Chairman Mao, gave a little touch of Browning at another, and ended up with scampering mice. He tried to muddy the waters when he dealt with our success on inward investment. I shudder to think what message he was trying to send to any would-be investor in this country. In a moment of desperation he tried to pray in aid De Lorean as a Labour success with inward investment. Looking him straight in the eye, I have to say that that was a bridge too far.
Mr. Bell: We rewrite history quickly, even within hours. I certainly did not say that.
Mr. Page: The hon. Gentleman led us to believe that De Lorean was a gleaming jewel in the crown of Labour policy on inward investment.
I can help the hon. Gentleman on inward acquisitions and their effect on the volume shown by the figures. Inward investment acquisitions represented 13 per cent. of last year's total. That will add 1,178 new jobs —I am suspicious of the exactitude of that calculation —to the 16,797 jobs that will be safeguarded by those acquisitions.
The hon. Gentleman's enthusiasm for the social chapter was evident. Businesses up and down the country will take note of what he said. Continental employers know

1347
just what burdens that puts on business, and how those burdens destroy competitiveness. They are pleading with their Government to get rid of them. Hans-Olaf Henkel, president of the BDI, the German employers federation, said:
"we have too rigid labour laws. We have too high social costs and taxes. We work the shortest week in Europe. The German government spends 50 per cent. of GDP as opposed to 42 per cent. in Britain. No wonder we have a problem."
He is absolutely right.
A week ago, I was in the north of England. A British company had bought a German company, had taken all the equipment from that company, and had established it in the north. The 100 jobs that will be created there will be lost to Germany, because of the high costs of operating in Germany. By his enthusiasm for the social chapter, the hon. Gentleman promises, with unerring naccuracy, what will cause the most damage. The Labour party is in favour of imposing those burdens.
The Labour party would sign up to the social chapter immediately. It would enthusiastically accept the working time directive. It would roll over, and say yes to the burdens on business that the social chapter and the working time directive would impose. Coming down the bulging pipeline is the directive to shift the burden of proof in sex discrimination cases. An employer will have to prove that he or she has not discriminated against any individual. Apart from being a huge burden on business, that is a breathtaking breach of natural justice as practised in this country.
EU Commissioner Flynn is up front about his social action agenda. As a first step, he wants to remove the derogations that we have succeeded in including in the working time directive. As a result, offshore workers would be unable to work in the way that they are used to, and, dare I say it, in the way that they want to work.
Labour claims that it can pick and choose from the social chapter, that it can take what it wants and reject what it does not like. It is either misinformed or is being misleading because that cannot be done. The proposals that I have mentioned are covered by qualified majority voting and Britain, under a Labour Government, would be powerless to stop them. The social chapter is not an a la carte menu: the tariff must be paid in its entirety or not at all. If it is accepted the bill would be high and it would send our inward investors running for cover, as would the minimum wage. That is another dish on Labour's menu without prices. Labour menaces British employers with it but it is too ashamed to say at what level the minimum wage would be set. However Labour knows that it would cost jobs.
My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) said that he had a fixed constituency engagement and would have to leave before the end of the debate. He came to the House clutching his Library brief rather than a Conservative central office brief —both of which are good, solid documents. My hon. Friend hammered out the realities, which bear repeating time and again. Some 43 per cent. of investment into the European Union is to the United Kingdom while Germany gets 3 per cent. Which country has the social chapter and which has a free and open approach? As my hon. Friend said, 9.5 per cent. of total world investment comes to this sceptred isle. We should be proud of that and blazon forth the accolade at every opportunity.
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My right hon. Friend the President of the Board of Trade will be far too busy to send the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) a postcard from Singapore. If I endeavoured to answer the hon. Gentleman's host of questions, time would soon run out. He was right to ask about the effect of inward investment on our manufacturing base. In addition to my comments about regional supply and how it will help small and medium-sized businesses to grow, I can tell the hon. Gentleman that one fifth of manufacturing output and two fifths of our exports are produced by overseas-owned manufacturers. Some 40 per cent. of our manufactured exports are by companies that have come to this country. That is an astounding figure and it reinforces the importance of the Government's inward investment policy and justifies it.
My hon. Friend the Member for Bournemouth, West rightly spoke about the powerful message in the much-quoted research brief. I looked at my hon. Friend as he was speaking and saw no reason at all why he should not still be here in 2020 giving the House an update on present programmes. He mentioned another matter that is not often quoted. In this country we have a hang-up about taking pride in our successes. Inward investment is a huge success and we should be prepared to say so time and again. Let us shout it from the rooftops.
The hon. Member for Rotherham (Mr. MacShane) is a civilised man. He was able to complete the quotation that his hon. Friend the Member for Middlesbrough could not remember. In his few comments, he allowed his journalistic training to take over.
Mr. Tim Smith: He is a rat.
Mr. Page: The hon. Member for Rotherham is a Chinese rat; he is not a British rat. However, his journalistic training took him a little too far. Calling us the "Albania of Europe" was slightly extreme.
The hon. Member for Rotherham said that we are on a "rollercoaster of inflation". For a few moments, my breath was taken away. I was elected to the House in 1976, in a by-election in Workington. The only reason why that rock-solid Labour seat was returned to a Conservative Member is that the then Labour Government had established a 26 per cent. inflation rate. For the past four or five years, we have had the lowest and most stable inflation rate for decades, yet the hon. Gentleman refers to it as a "rollercoaster". As I said, it is journalistic exaggeration.
The hon. Member for Rotherham took refuge in figures of a selective if not —dare I say it —a dodgy nature. He was critical of the Government's performance on inflation. He then raised, and skated round, the issue of a minimum wage. He prayed in aid what was happening in the United States, and the "massive rise" in the minimum wage level there.
Mrs. Roche: No, he did not.
Mr. Page: He did, although I am sure that he did so accidentally. I have it in my notes. He accidentally omitted to mention that the "massive rise" in the United States took its minimum wage to £2.84. Wow —what a large increase! I should have liked for him to come clean and to tell us exactly what the Labour party's minimum

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wage would be. I am waiting to hear that answer. I see that he is counting up his figures, but I can tell him that the figure for the United States is $4.75, which would translate to £2.84.
Mr. MacShane: I did not want to speak again in this debate, but I must correct that error. The figure is $5.15. When it was set, the exchange rate would have made the value in sterling about £3.10 —if the Minister wants the exact figure. Since then, however, sterling has been shooting upwards, making it even more difficult for our exporters.
Mr. Page: As I understand it —I should again like to help the hon. Gentleman —that is the figure that will apply from September 1997; it is not the current figure. However, regardless of whether the pound has appreciated, the rate is set at a very low figure in the United States. I leave it to the hon. Gentleman to remember, when next he wishes to pray in aid the United States minimum wage, just how low that rate is —it is low enough to be irrelevant —and to have the courage to quote the Labour party's policy on a minimum wage.
My hon. Friend the Member for Shoreham (Mr. Stephen) —unfortunately, I had to pop out of the Chamber while he made his speech —mentioned the importance and value of the aid and trade provision. He rightly said that we should concentrate ATP on bilateral trade. About half of our £2 billion aid budget is bilateral. The other half, obviously, is multilateral, which enables us to fulfil many of our international obligations.
The hon. Member for Brent, East (Mr. Livingstone) is not a political soulmate of mine —or of most Conservative Members. But his call for higher taxation was —in civil service language—"courageous, brave and breathtaking." He was absolutely right to mention our level of trade with the rest of the European Union and how important that trade is for our industries. Many hon. Members could firmly take on board that message.
My hon. Friend the Member for Beaconsfield (Mr. Smith) made the case for free trade. In doing so, he touched on a vital point that had not been mentioned before in the debate: the issue of productivity, and of how inward investment is made in the United Kingdom, improving quality and productivity. That is absolutely vital if we are to take our place in the world markets on a competitive basis. I am glad to be able to tell him that, whereas we were something like 100 per cent. or half as unproductive as the Germans, the latest figures show that the gap has closed. We have improved by some 80 per cent. or 40 per cent., depending on where one puts the baseline. My hon. Friend's figures are therefore already out of date —we have already started to move up the tables.
I deal now with the remarks of the hon. Member for Hornsey and Wood Green (Mrs. Roche), my alter ego in terms of the small business world. She spoke about deregulation, and I concur with much of what she said.
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Small businesses do suffer from over-regulation, but the Government are doing what they can to remove any burdens. The deregulation unit is doing sterling work in trying to ensure that any regulations are the least burdensome possible.
We live in an increasingly complex world, however. While something in the region of 1,000 regulations will be gone by the end of this year, we have to have some regulations. In response to a question on Wednesday, I mentioned the regulation to stop carcinogenic materials going into babies' dummies and the regulation to make sure that gas and electrical appliances are safe. However, in order to show the spirit of co-operation that I bring to all things, if the hon. Member for Hornsey and Wood Green would like to tell me of any regulations that she would like removed, I would be only too willing to give them my active consideration. In view of her comments about extra regulations, she must have a huge list of them which will no doubt be on my desk at 9 am on Monday.
Mr. Stephen: You'll be lucky.
Mr. Page: I always travel in hope.
The hon. Member for Hornsey and Wood Green was slightly confused about our policy on inward investment and the fact that we give parts of the country a choice. We do not believe in the corporate state or in telling companies that they have to go to a certain area and cannot go anywhere else. If the hon. Lady looks back in time to a period under a Government who did get involved in directing companies to which areas they should go, she will find a list of failures.
Most of the problems in the steel industry were caused by the steel companies being directed to go to certain parts of the country. The failure of the Bathgate plant shows how the motor industry was interfered with. The same is true of the Fort William pulp mill and the Invergordon smelter. I remind the House of the huge success of the policy of giving direction when the Government of the day got involved in the National Enterprise Board —what a disaster. I do not believe that a single project made any money.
This has been a valuable debate. I hope that hon. Members will take away one key message —the recipe for success is to let enterprise flourish at home and abroad. That is how we will keep our economy dynamic and competitive and help British companies become world beaters in overseas markets, and it is why we shall keep the world's investors knocking at our door. Our agenda for trade liberalisation is a vital component of that. When my right hon. Friend the President of the Board of Trade goes to Singapore today, I, the House and the country will be looking to him to press that agenda and advance our goal of global free trade. I am confident that British business, now set free, will be able to do the rest.
Mr. Bowen Wells (Lord Commissioner to the Treasury): I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.

Trade and Inward Investment

  SCOTTISH GRAND COMMITTEE
  Ordered,
  That the Order of the House [15th November] be amended, by leaving out paragraph (2) and inserting—
  '(2) at the meeting of the Committee on Monday 9th December—

  (a)notwithstanding the provisions of Standing Order No. 94D(2)(b) (Scottish Grand Committee (ministerial statements)), proceedings on any ministerial statement which may be made relating to E. coli in Scotland shall be brought to a conclusion not later than three-quarters of an hour after their commencement and proceedings on any ministerial statement which may be made relating to public expenditure in Scotland shall be brought to a conclusion not later than half an hour after their commencement;

  (b)proceedings on the substantive Motion for the Adjournment of the Committee shall lapse at a quarter past Two o'clock; and

  (c) notwithstanding the provisions of paragraph (3) of Standing Order No. 94E (Scottish Grand Committee (bills in relation to their principle)), the Chairman shall put any Question necessary to dispose of any Motion which may then be made in relation to the Scottish Legal Services Ombudsman and Commissioner for Local Administration in Scotland Bill at a quarter past Three o'clock, if not previously concluded'. —[Mr. Wells.]

  PROTECTION FROM HARASSMENT BILL
  Ordered,
  That, in respect of the Protection from Harassment Bill, notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a second time. —[Mr. Wells.]

  CONSOLIDATED FUND BILL
  Ordered,
  That, at the sitting on Tuesday 10th December, any Consolidated Fund Bill ordered to be brought in and read the first time shall be proceeded with as if the Second Reading thereof stood as an Order of the Day, and Standing Order No. 54 (Consolidated Fund Bills) shall apply. —[Mr. Wells.]

Emergency Medical Arrangements (Edgware)
Motion made, and Question proposed, That this House do now adjourn. —[Mr. Wells.]
2.14 pm
Sir John Gorst: The Government's plans for dealing with emergency arrangements in the Edgware district came on to the agenda shortly after the 1992 general election, and they have been there ever since. The issue has broadened from one relating to the facilities provided by a hospital to the local population, and now encompasses the whole question of how individual Members of Parliament can represent the unanimous wishes of their constituents to Ministers. Above all, it raises the question: what can a Member of Parliament do if, having received assurances from Ministers, and made them public, he discovers that such assurances will not be honoured or have been seriously distorted?
The matter goes to the heart of the relationship between a Member of Parliament and the Government of the day. Over broad swathes of public policy, Members of Parliament are expected to defer to the power of the Executive because of the Executive's greater knowledge, superior resources and wider strategic grasp. On the other hand, it has always been acknowledged that, in understanding and interpreting local sentiment, a Member of Parliament has a unique authority —one that no Department can ever match. When, in addition to that, Members of Parliament have negotiated a settlement with a Minister that safeguards their constituents, it is no light matter to discover that the Executive proposes to misconstrue —let alone ignore —the terms of that settlement.
No Member of Parliament can retain a shred of legitimacy with his constituents if he is prepared to accept such a one-sided relationship. To do so would render the constituency Member of Parliament a redundant species. One might as well have a bureaucrat, nominated by the Government —a cipher who would see it as his duty to sacrifice the interests of his constituents to the convenience of the Executive.
The facts of the matter that I am raising are plain. From 1992 to 1994, I argued privately with local health authority officials against their plans for Edgware general hospital. The plans enjoyed no local support whatever—and that is universally conceded. I also took delegations to see Ministers, and I had a comprehensive Adjournment debate on the subject on 18 March 1994. I left no stone unturned to explain the special features that justified the pleas being made to Ministers.
At that stage, Ministers took refuge in the doctrine of the unripe time. Repeatedly, over many months, Ministers claimed that the matter had not reached their level for a decision and they would not intervene. Then, in the spring of 1995, after less than a week's reflection, brushing aside all protests and arguments put to her, the then Secretary of State, my right hon. Friend the Member for South—West Surrey (Mrs. Bottomley), sanctioned the closure of the accident and emergency department. The time had become ripe to ignore my constituents' wishes and needs completely. Naturally, I then voted against the Government.

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When a new Secretary of State was appointed, my hon. Friend the Member for Harrow, East (Mr. Dykes) and I, who have never accepted the foolish decision, headed another delegation to Richmond house. My right hon. Friend the Secretary of State was reassuring, and emollient; he promised to look again. The necessary adjustments, although significant and vital for my constituents, required only a modest change by the Government.
Six months elapsed. Nothing seemed to be happening; so my hon. Friend the Member for Harrow, East and I, conscious of the rapid approach of the safe waters of the summer recess —safe waters, that is, for the Government —had another meeting with the Secretary of State. This time, we received specific assurances and promises: there would be a casualty department capable of saving lives. In June this year, we had at last obtained promises that a potentially life-saving casualty unit would replace the existing A and E department when it closes early next year. Alas, that is not, unfortunately, the end of the story. Less than another six months later, we are now told something entirely different. We are informed that we are back to a MATS —a minor accident treatment service —unit. We are back to a service that will do little more than bandage cuts and bruises.
I cannot see how, in honour, the Government can deny any of this. Indeed, I assume that they will be reduced to claiming that my hon. Friend and I have deluded ourselves; that we have got into a semantic muddle, that, although promised merely a MATS unit, we mistakenly supposed that the Secretary of State was promising us a casualty unit; or, least plausible of all, that if a MATS unit is sufficiently embellished with frills, such as GPs, longer hours and extra funds, it somehow upgrades itself —in short, that it becomes something that it is not. I am afraid that none of that will wash. The range of our discussions would make such an elementary confusion illogical and implausible.
I do not rest my argument purely on an appeal to logic. I made careful and detailed notes of what the Secretary of State promised us in our talks with him during that evening of 11 June. I propose to quote from the notes that I made immediately after the meeting, only pausing to say that the Secretary of State will, no doubt, have his own record of the meeting. One of his officials was present and taking notes. I have little doubt that, if the two versions were published, they would prove to be virtually identical.
From my notes, the crucial point of the discussion is clear. What I noted is as follows:
"Having referred throughout to 'emergency service', 'emergency unit' and so on the Secretary of State concluded by saying that 'casualty department' was his preferred phrase to describe what we had been discussing. It was best understood by everyone. He also favoured the phrase because it distinguished between an A and E Trauma Centre and a MATS Unit".
I shall repeat the last passage:
"the Secretary of State concluded by saying that 'casualty department' was his preferred phrase to describe what we had been discussing …because it distinguished between …Trauma Centre and a MATS Unit".
Not only did the Secretary of State promise us a casualty unit; he was also thoughtful enough to caution us against any possible confusion between a casualty unit and a MATS unit. Indeed, that distinction appears again and again in subsequent letters that I have sent to him.
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On 3 August, I wrote:
"May I emphasise once again: a MATS unit dealing with minor injuries would be completely unacceptable and contrary to what was understood between us in June. MATS units are not for saving lives: emergency casualty units are."
Two months later, on 4 October, I wrote:
"All along Hugh Dykes"—
my hon. Friend the Member for Harrow, East—
"and I have made it clear that we are arguing for a casualty service which is capable of handling emergencies".
On 25 November, I reiterated that point:
"Throughout our discussions on 11th June we talked about an emergency unit: about an 'enhanced emergency unit' —but never about 'enhancing a minor accident unit'. Both Hugh Dykes and I agree that enhancing a MATS unit with doctors and more hours cannot possibly be construed as turning it into an emergency unit in the sense we discussed with you."
Only in the past few days has the Secretary of State taken the trouble to dispute that. A cynical observer might say that, if one is leading someone up the garden path, one does not tell that person what lies at the end of it —but I acquit my right hon. Friend of such deviousness. Nevertheless, I am still at a loss to find a convincing explanation for the yawning gap between his perception and ours.
The position is, therefore, blindingly clear. My hon. Friend the Member for Harrow, East and I asked for a casualty unit and we were promised a casualty unit by the Secretary of State. We were told that the Secretary of State drew the clearest possible distinction between a casualty unit and a MATS unit; yet we now have a MATS unit; and not the casualty unit that we were promised.
There can no confusion about the fact that that is a straightforward example of breaking a pledge. It is not something to be brushed aside as a matter only of my injured feelings. Naturally, my constituents are indignant too —and so they should be. They have been misled and it would not be surprising if many of them thought that their Conservative Member of Parliament had deliberately deceived them.
How do the Government wish me to defend myself? Do they wish me to say that I told my constituents what I believed to be the truth, but that the Conservative Government deliberately took my hon. Friend and me for a ride? Do they want me to tell my constituents that, despite the fact that they understand as clearly as does the Secretary of State the difference between a MATS unit, which they do not want, and a casualty unit, which they do, they should put up with the former because they cannot expect the Secretary of State to keep his promises in the face of administrative pressure on him not to do so?
This matter is one of the gravest concern to our whole system of constituency representation, because, unless the Government can tell me that they are prepared to honour the pledges they made to my constituents through me, I must take the view that the mutual obligations that exist between us are at an end. The Government will have abrogated them unilaterally. They will have done so to the discredit of every Back Bencher in the House —and to their own shame.
2.28 pm
Mr. Hugh Dykes: I am grateful for the opportunity to speak in this debate. To follow my hon. Friend the Member for Hendon, North (Sir J. Gorst) is an honour and it gives me great pleasure to be able to do so —pleasure in the sense of being able to pay tribute to him for having taken the lead in this campaign and for having responded to the finest duties that a local Member of Parliament can carry out for his constituents. That is the extent of the pleasure —the rest of it and the Government's response throughout have been nothing but pain.
I shall probably be regarded as thick-skinned —one has to be in order to be a politician in these febrile and turbulent times —in respect both of national policies and of many local and constituency issues, but I agree with every word that my hon. Friend said in this important Adjournment debate. We have had a good number of such debates in this painful period. I pay tribute to his leadership; I have taken a lesser role. We have doggedly stuck to our objectives in this matter, with full justification.
I feel profound disillusionment, and bitterness and resentment, at the crass and incompetent reactions of my right hon. and hon. Friends the Health Ministers, whatever the reason for them —it remains a mystery. My bitterness, disillusionment and resentment at such prolonged incompetence, despite the force of our arguments, of the local campaign and of justified objective medical opinion in respect of the insistence that there should be a casualty department—
It being half-past Two o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn. —[Mr. Wells.]
Mr. Dykes: The resentment that I feel is reinforced by the latest letter that we have received —yesterday evening, I believe —from the Secretary of State. I shall not weary the House by going through it in detail. There is no need to do so, because, although it has two pages, it says nothing; I shall place it in the Library as a record of a wonderful "Yes, Minister" response. I remember the validity of some of those underlying arguments about the behaviour of civil servants and Ministers, despite the humour of the programme.
Sir John Gorst: May I draw my hon. Friend's attention to the fact that, in the last sentence of the letter, there is a little bit of hope? The Secretary of State writes:
"I trust that following your adjournment debate tomorrow we shall be able to make some progress on these issues."
Mr. Dykes: I am grateful to my hon. Friend. That would be so, but for the preceding paragraphs, because they are the most wonderful officialese attempt to resist any of our reasonable requests. I quote from the third paragraph on the second page:
"Against that background"—
the long-running argument on the subject—
"I have sought to respond to the concerns expressed to me on behalf of local people by all the MPs of the area".
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We had several of our colleagues with us at the start of the campaign, but the pressures made them melt away, for one reason or another. I hope that they will rejoin us. The letter continues:
"as well as by other representative voices from the community. The demonstrator project which I have detailed represents a significant commitment of central resources to the Edgware area, and a serious attempt by the NHS to respond to the concerns which have been expressed."
That and other parts of the letter are outrageous, unacceptable and untrue and they do not meet the wishes of the local population and of their two parliamentary representatives, and, I believe, of all the local councillors and almost all the members of the community health council in my hon. Friend's constituency —but it is not my constituency, so I must be careful not to misquote.
I fully share my hon. Friend's indignation. In his letter to me of 20 November, he kindly asked to take the lead in this campaign, as he has done ably in the past. I respect that and I respect his need to be in the vanguard of the campaign, in response to legitimate local public opinion. The idea that we should be deaf to local opinion and contemptuously dismiss it on the national and local scene is an absurd notion of our collective and individual role in politics.
As my hon. Friend did in his letter to the Secretary of State of 25 November, I draw attention to the crucial reference in the notes that he took, thoroughly and with great skill. I testify to the absolute exactitude of those notes and thank my hon. Friend for taking them and for allowing me to have the original copies. He wrote in section 4 of the additional notes:
"Throughout our discussion,"
the hon. Member for Harrow, East
"and I"—
my hon. Friend—
"made it clear we were asking for something more than a 'minor accident treatment service', even if it was less than a full-scale 'accident and emergency Department'."
The Secretary of State
"accepted this, and we talked about 'acute needs', 'motorway accidents', 'heart attacks', 'severe allergies', and so on.
The phrase 'enhanced emergency unit' was used repeatedly, so I think he got the message as to what we were after. Indeed, he was emphatic that he would be able to agree to this. The only reservation he expressed was that a serious motorway accident would be most likely"—
logically, of course—
"to go straight to the nearest A & E unit in an ambulance, and we accepted that."
I earnestly repeat, although I will not spell out, what my hon. Friend the Member for Hendon, North has just said in his detailed speech. Indeed, his speech was a detailed submission in the high court of Parliament, because all that he said was evidential and it is on the record as what was agreed.
We have shown some good will, despite the resentment and disappointment since the summer and the feeling that the Government were going back, cynically or perhaps for some other reason which has still not been explained, into old territory and promising only a very limited facility, not that in the original undertaking. Those prolonged discussions between me, my hon. Friend, the Secretary of State and other Ministers in the Department ended in deadlock on Tuesday night. That was the end of the road

1357
as far as we were concerned, unless the Government were prepared to make a proper, thorough, comprehensive, written response to our reasonable requests.
There are pressures on the local community from other elements in politics —legitimately or not, as other people may judge. This is an opportunity for the Government and the Department of Health, because the Opposition have merely said that they will review the closure of the existing accident and emergency unit. They do not go significantly beyond that. The issue shows the value of the Government thinking again about the cynical departure from their pledge of 11 June.
My hon. Friend the Member for Hendon, North and I tabled almost identical parliamentary questions for priority written answer on 3 December. My right hon. Friend the Secretary of State replied that the health authority had proposed that
"The casualty service at Edgware, originally planned as a nurse-led service open 13 hours a day, should instead open 24 hours a day and be staffed by doctors;" —[Official Report, 3 December 1994; Vol. 286, c. 29.]
That is not a casualty unit in the genuine sense of the word, only a minor accident treatment service unit. I believe that I am right in saying that a new MATS unit has recently been opened nearby at Wembley. The last thing we need is two MATS units and fully qualified doctors on duty 24 hours a day to treat people coming in for cuts and bruises —the walking wounded with mild wounds indeed. This makes me extremely angry and I expect a proper, honest and thorough response from my hon. Friend the Minister today.
I am sorry that the Secretary of State or perhaps even the Minister of State is not here to answer the debate; but I admit that this is a Friday Adjournment debate, so we accept the Under—Secretary of State for Health, my hon. Friend the Member for Orpington (Mr. Horam) —provided that he comes up with the goods and gives us a proper answer.
I have sent my right hon. Friend the Secretary of State a letter today. I hope that he will receive it today, but he may do so later because of the Friday delays in the internal delivery service between Departments and the House. The letter insists and asks with justification —those two verbs go together —that the Government respond to the request of my hon. Friend the Member for Hendon, North. It is not necessary to read it out, but I say two crucial things about it. The letter belongs to him, as it had a private and confidential notation. It is therefore his property. To allay any residual doubts about what was undertaken in the summer, why does my right hon. Friend the Secretary of State not publish the letter to my hon. Friend and me of 11 June, which promised a casualty emergency services facility? I wait for my hon. Friend the Minister to respond on that specific point. I hope that he will do so today or as soon as possible.
I wish to give my hon. Friend the Minister time to respond to the weighty points that we have made on behalf of our local public. We are waiting for a clear answer today, not further procrastination, bureaucratic postponement or further studies agreeing with the district health authority, which has behaved so badly. We are waiting for action and a decision now.
In that context, the Minister may be tempted to repeat the implausible and dubious assertion that the Secretary of State cannot do much once the local entities and
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agencies —the district health authorities and the others —have come to their decision, after the legal process of consultation. That is not so and I remind my hon. Friend the Minister that the Secretary of State has the necessary reserve powers in the legislation, if circumstances justify invoking them. I believe that these circumstances justify doing so.
The proposal for a MATS unit is totally unacceptable. The congestion in that area makes the distance of the new Barnet facilities, the Northwick Park hospital and the Royal Free hospital too far for people with life-threatening emergencies to be conveyed there in time. It is an extremely congested zone with many elderly residents, so we need the emergency facilities to remain at Edgware, albeit in their new form if the existing A and E unit closes —may I say, in parenthesis, that I recommend that the Government consider postponing the closure of that A and E unit anyway?
Section 17 of the National Health Service Act 1977, as amended by the Health Authorities Act 1995, provides the Secretary of State with reserve powers to take the action necessary. Sections 1 and 3 of the 1977 Act emphasise that the Secretary of State has the legal duty to provide a comprehensive service to meet local needs. I emphasise that section 13 empowers the Secretary of State to devolve functions to health authorities, but the specific provisions of section 17 empower him or her to make directions specifying how those functions are to be carried out —in other words, how the services are to be provided, with detailed specifications. Section 17(2) highlights the duty of any health authority to comply with the Secretary of State's directions, which can be as detailed as the circumstances require.
Time is now getting short. There are already disturbing signs of a collapse —or at least a severe fall —in morale among members of staff at that hospital, an erosion of the quality of services for which Edgware general was famous, and a deepening psychological crisis within the accident and emergency unit. It is therefore the duty of any Government, particularly if they assert repeatedly that the national health service is safe in their hands, to do something about that. We await the Government's response.
2.41 pm
The Parliamentary Under—Secretary of State for Health (Mr. John Horam): As my hon. Friend the Member for Harrow, East (Mr. Dykes) said, we have had a number of Adjournment debates on this matter. As he will recall, I have already replied to one of those, which he initiated. Until today, however, I had not had the pleasure of replying to an Adjournment debate initiated by my hon. Friend the Member for Hendon, North (Sir J. Gorst), but I know of his continuing concern about the issue.
My hon. Friend the Member for Hendon, North dealt, centrally, with the issue of emergency medical care. I should like to consider for a moment the original consultation carried out by Barnet and Brent and Harrow health authorities in 1994. My hon. Friend started the debate by mentioning the history of the project. We have been considering that consultation exercise, on which the changes in service at Edgware were based.

1359
The consultation document made some important points. It said that there is a growing acknowledgement that fewer centres, with a larger population base and a higher number of emergency cases attending them, provide an improved service. That is not just what Barnet and Brent and Harrow health authorities thought; it is what the evidence shows.
That evidence is substantial. A report by the Royal College of Surgeons in 1988, called "The Management of Patients with Major Injuries", said:
"there are far too many small units treating serious injuries and we consider that smaller departments should be closed or have their ability to treat major injuries restricted."
In March 1995, the Department of Health published a review of the literature on accident and emergency departments and clinical outcomes. I am sure that both my hon. Friends are equally concerned about clinical outcomes. The review stated that
"existing research …has been enough to mould a consensus, shared by many professional staff and by health authority managers, that larger accident and emergency departments offer better care to seriously ill or injured patients."
That was the context for proposing that there should be a new accident and emergency department at Barnet general hospital, and that the accident and emergency department at Edgware general hospital should close when the new unit opened. The then Secretary of State for Health approved that proposal in April 1995. Since then, matters have moved forward.
Sir John Gorst: All that my hon. Friend says is fair, but one important thing that he leaves out is the social factor. The facilities were to be removed from an area that was deprived in many ways —in terms of income, old age and an immigrant population —but the most important factor was the transport that would take people in an emergency to a nearby A and E department. That problem is not solved by anything that my hon. Friend has said.
Mr. Horam: I shall deal with transport in a moment. My hon. Friend the Member for Harrow, East also raised the matter in the debate that he initiated.
I have described the situation with regard to Barnet general hospital. Edgware will have a new type of local hospital —one that provides a wide range of services for local people. Its services will include a casualty service. The unit at Edgware will be open 24 hours a day. It will have doctors in attendance.
Those are not the features of the original proposals put forward by Barnet health authority, which were for a nurse-led service open only 13 hours a day. Thus, the original proposals have been revised and improved, which represents a real commitment to listening and responding to local wishes. The proposals are in line with my right hon. Friend's assurances to both my hon. Friends. The words were explicitly mentioned in the letter of June this year, which my hon. Friend the Member for Hendon, North mentioned.
1360
I should say to my hon. Friend the Member for Harrow, East that, although I cannot speak for my right hon. Friend in this debate on this particular matter, I do not believe that he would have any objection to publishing the June letter.
Mr. Dykes: The letter refers —I can give the paragraph reference, if my hon. Friend wishes —to the provision of a casualty service and specifically not to a minor accident treatment service.
Mr. Horam: Indeed, the letter uses the word "casualty". My hon. Friend refers to the distinction that I have just made —the uprating of the existing proposals along the lines that I described.
Sir John Gorst: My hon. Friend the Minister has made an important change in the position because of what he has just said to my hon. Friend. As recently as the night before last, the Secretary of State declined absolutely to permit the letter to be published. Is my hon. Friend now saying that my right hon. Friend has had second thoughts? That is an important factor in demonstrating to a wider public exactly what we were promised.
Mr. Horam: As I said, I cannot speak for my right hon. Friend in this debate, and I have not been privy to any conversations that might have taken place between my two hon. Friends and my right hon. Friend. I do not know what was said on those occasions, but I am saying off the cuff that I do not believe that my right hon. Friend would object to the publication of the letter on his own account. I am merely stating that opinion.
Obviously, transport is a matter of concern —in a sense, access to services is as important as the services themselves. Under the new arrangements, no Barnet resident will need to travel more than six miles to an A and E department. The Wellhouse trust provides a bus service for patients, visitors and staff between the Barnet and Edgware sites. The service, which supplements existing public transport links, will be maintained and improved.
In addition, the Department of Health has commissioned a survey to provide reliable information about journey times and optimum travel routes for people travelling by car from the Edgware hospital catchment area to each of the hospitals that they may need to travel to —that is, Barnet, Northwick Park and the Royal Free. The survey will also provide comparative information about public transport travel times. The survey data will be used to assist the health authorities in providing information to the public about travel times and optimum modes and routes of travel for Edgware residents to the other hospitals.
There has also been work by a project group comprising the health authorities, trusts and local authorities along with London Regional Transport, community health councils and disability groups. The group has identified areas for action in both public transport and special needs transport. A particular aim is to ensure that there are reasonable public transport routes for people who may have difficulty changing buses. As a result of the group's work, discussions are taking place with London Regional Transport with a view to implementing improved bus services between

1361
Edgware and Barnet. Work in that area is progressing. I stress that the public transport services will be in addition to the existing Wellhouse trust free bus service from Edgware to Barnet.
The group will undertake a further review and evaluation of the adequacy of transport services in the six months after implementation of the planned changes —including a survey of the transport needs of hospital users and visitors and their level of satisfaction —which will provide an opportunity to initiate more action if that is required. I also draw to my hon. Friends' attention the fact that health authorities are spending no less than £320,000 on improving the London Ambulance Service in their area. I understand that they will provide two extra ambulances and crews to help meet demand in the immediate area.
I have already mentioned that Edgware will have a new type of hospital, and I shall now enlarge on that statement.
Mr. Dykes: My hon. Friend has accepted that there should be a full casualty service, and we are grateful to him for making that promise on the record. In order to avoid any future doubts and procrastination, will he list specifically the conditions that will be treated by the new casualty emergency service at Edgware general when the old unit is closed?
Mr. Horam: I am about to do precisely that.
The hospital will include general out-patient services and a diagnostic and therapy service —for example, radiology. It will also provide day surgery; a breast-screening service; elderly and rehabilitation services; and a range of mental health services, including in-patient units, outreach and assessment services, a base for community mental health teams and a brain injury rehabilitation unit. There will also be children's services, including specialist out-patient clinics and an education and information centre.
That is not all. As my hon Friends know, Barnet health authority is submitting an application for central funding for a demonstrator project at Edgware general hospital, with a number of key elements. First, the casualty service will be open 24 hours a day —I have mentioned that already —and, secondly, a low-risk maternity unit will be provided to allow mothers to give birth close to home. Thirdly, there will be a GP-type admissions unit to provide in-patient beds, to meet the immediate needs of elderly people living locally.
Mr. Dykes: What injuries will be treated by the casualty unit? What services will it provide?
Mr. Horam: It will provide a normal casualty service. My hon. Friend should understand that it is not an A and E department: it will treat the injuries normally dealt with by a casualty service.
Mr. Dykes: What does that mean?
Mr. Horam: As I am not a doctor, it is difficult for me to distinguish between which injuries will be treated by a casualty service and which will be treated at an A and E department. I think that my hon. Friends will be aware,
1362
however, that an A and E department would be dealing with trauma, life-threatening accidents and emergencies of that sort while a casualty service would be dealing with something less. That is the distinction that we are making.
Mr. Dykes: We are going backwards.
Mr. Horam: We are not going backwards.
I refer again to the assurances that were given by my right hon. Friend the Secretary of State to my hon. Friends. My right hon. Friend said clearly in June that a casualty service would be supplied with doctor cover. That was the essence of the promise, and that is exactly what we are talking about. My hon. Friends will be aware that that was set out in a statement made by Barnet health authority on 25 September. The statement was welcomed by my hon. Friend the Member for Hendon, North. He will recall the press statement that he issued at that time, in which he specifically welcomed the casualty service that Barnet health authority then stated clearly would be provided. That is the health authority service that I am talking about.
Sir John Gorst: Will my hon. Friend give way?
Mr. Horam: I do not want to mislead my hon. Friends in any way.
My hon. Friend the Member for Harrow, East asked specifically what the service would include. It will include precisely what was indicated in the statement of 25 September.
Sir John Gorst: The statement in which I welcomed the casualty department to which my hon. Friend is referring was before it was made perfectly clear by the local health authority that it would not be dealing with anything other than MATS placements. That made all the difference in the world. I was still operating on the assumption that my right hon. Friend the Secretary of State had defined things as we understood them on 11 June.
Mr. Horam: My understanding and my clear view, as someone looking at the matter from outside, as it were —obviously there have been conversations and discussions between my hon. Friends and my right hon. Friend for some time —is that what is being said here is exactly in line with the assurances given by my right hon. Friend. It would be wrong—
Mr. Dykes: Will my hon. Friend give way?
Mr. Horam: I have little time left. I have two more points to make before I shall give way to my hon. Friend.
First, the assurances that were given in June are exactly what is being delivered and what was intended by the health authority statement of 25 September. My right hon. Friend sticks by that. Secondly, my hon. Friend the Member for Hendon, North referred to the letter that both my hon. Friends received from my right hon. Friend only yesterday or today, as the case may be. I shall quote two specific sentences. My hon. Friend quoted one paragraph,

1363
I think somewhat unfairly, and I shall quote, as I said, two other sentences.
At the bottom of the first page, the letter reads:
"I anticipate receiving the formal application from the health authority"—
that is, Barnet health authority. That was in the few weeks before the proposals that we have been discussing. The letter continues:
"When it arrives I would of course be happy to discuss the proposals further with you in order to ensure that the demonstrator project reflects as accurately as possible the wishes of local people."
Secondly, my right hon. Friend adds:
"In addition, therefore, to discussing the details of the demonstrator project with you, I would also like to discuss how these arrangements for the enhancement of healthcare in the Edgware area should be implemented …I trust that following your adjournment debate tomorrow we shall be able to make some progress on these issues."
Mr. Dykes: In the spirit of co-operation —I thank my hon. Friend for his remarks —will he guarantee and undertake now that what we decide in any further discussions will be done immediately and will not be restricted to the district health authority's list of the items
1364
that it would cover in a minor accident treatment service, but will be a full emergency facilities casualty unit?
Mr. Horam: I cannot commit my right hon. Friend to that now in the final two minutes of an Adjournment debate. My hon. Friend is an old enough hand to know that that is beyond my power. Clearly, that is something that we shall want to raise with my right hon. Friend. I was pleased at least that my hon. Friend the Member for Hendon, North said that in using the word "hope", and attaching it to the final sentence of the letter, there is an opportunity for further discussion on this extremely important matter.
Both my hon. Friends made the point strongly that there is a unique role for a local Member in these circumstances. I hope that they will understand that, even though I am currently a member of the Government, I, too, well understand the role of a local Member of Parliament in a situation such as this, and understand the position that they have adopted. I hope therefore that they will see that what my right hon. Friend is saying will enable them to discuss the matter further. I hope that they can accept that in the spirit in which it is offered.
Question put and agreed to.
Adjourned accordingly at one minute to Three o'clock.

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