Industrial Winners

Oral Answers to Questions — Trade and Industry – in the House of Commons at 12:00 am on 5th June 1991.

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Photo of Mr David Shaw Mr David Shaw , Dover 12:00 am, 5th June 1991

To ask the Secretary of State for Trade and Industry what representations he has received from British business about the Government's role in picking industrial winners.

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

The Government have received a policy document from the Confederation of British Industry, "Competing in the new Europe". That document would be important to the training and education of Opposition Members. It makes it very clear that the policies of the 1970s pursued by the Labour party, of intervention and massive investment in things that went wrong, are the last thing that this country now needs to carry on the revival of its manufacturing industry.

Photo of Mr David Shaw Mr David Shaw , Dover

Does my hon. Friend not find it incredible that people are still looking back to the 1960s and 1970s when drafting political policy documents? Does he agree that considerable research has now established that it is competition within the economy that creates winning businesses, and that a policy of picking industrial winners is like going into a sweet shop and picking sweets from large jars containing many sweets of different colours, in that one does not always get the colour that one expects? Does my hon. Friend agree that that is a ludicrous policy?

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

My hon. Friend makes his point extremely well. The Labour party lost thousands of millions of pounds when it had the chance of steering the country's industrial policy. It was a disaster, with lost jobs, lost opportunities and large amounts of lost money. British Leyland—Rover alone lost £2,750 million and there were massive losses in the steel industry. That has been reversed by privatisation and by policies based on competition and sensible Government support for business. My right hon. Friend the Secretary of State has set that policy out well in his speeches. Opposition Members should take up their training in industry by reading them.

Photo of Mr James Lamond Mr James Lamond , Oldham Central and Royton

Will the Minister look a little closer to the present day—from 1979 to 1990? He will find that more than 300,000 manufacturing jobs have been lost in the north-west of England alone and that another 74,000 jobs will be lost this year. If he is picking winners, why does he not do something about the multi-fibre arrangement to try to protect jobs in the textile industry?

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

The hon. Gentleman has not been listening to the argument. The Government are not trying to pick winners; that is industry's job. The Government are creating a climate and framework in which industry can flourish. Many thousands of new jobs have been created in the 1980s. Naturally, there has been industrial change because technologies, products and customer requirements change, but it is the Government's policies and not those of the Labour party, that will continue the manufacturing revival of the 1980s into the 1990s.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

Does my hon. Friend agree that ICI has proved to be an industrial winner for this country and that its future is important for its 53,000 workers and the 4,700 who work for its pharmaceutical division in my constituency? Will he assure me that all aspects of the national interest will be taken into account if a hostile bid is made for that strategically important company by Hanson plc?

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

I am sure that my hon. Friend will speak eloquently, should there be any action of the kind that he describes. I assure him that my right hon. Friend the Secretary of State, with his competition responsibilities, will consider all representations, should the need arise, and respond in the right way, given the powers of the European Community and the British Government.

Photo of Dr Mo Mowlam Dr Mo Mowlam , Redcar

The Minister has just stated that the Government are interested in setting the climate for businesses to flourish. I am sure that he would include in that small businesses. On "The Parliament Programme" at 12 o'clock he said, "The DTI has arranged"—

Photo of Dr Mo Mowlam Dr Mo Mowlam , Redcar

Excuse me, Mr. Speaker. The Minister said that the DTI had arranged meetings throughout the country with banks and small businesses to facilitate the discussion of problems that small businesses are facing with the current bank rate. Several small businesses that are concerned about the difficulties have contacted me. I wanted to inform them where the meetings were being held, so I contacted DTI regional offices, but they had no record of the meetings. I contacted the Bank of England regional offices, but of those only one office organises such meetings on a day-to-day basis. The Association of British Chambers of Commerce, the Forum of Private Business and other voluntary organisations have no record of the meetings. Will the Minister tell us where they are to be held, because small businesses want to know?

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

My right hon. Friend the Secretary of State asked the regional offices to arrange such meetings and they will take place. The hon. Lady should tell the interested companies to get in touch with DTI regional offices, which are there to serve the business community. The meetings will do just that—they will provide a forum for an exchange of views between the banks, the DTI and other interested parties.

Photo of Mr Robert McCrindle Mr Robert McCrindle , Brentwood and Ongar

Although it is riot the Government's job to pick industrial winners—clearly that is correct—does the Minister agree that banks that are exerting undue pressure on small businesses during the current recession may be acting to their own disadvantage because among the small businesses that face difficulties today there may be the industrial winners of tomorrow? In the discussions will Ministers draw to the attention of the joint stock banks the desirability of thinking carefully before exerting the squeeze on small businesses that appears to be happening now?

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

Naturally, the banks should think of their long-term business interests, but it is for individual banks to assess the risks of each case. The Government expect to see interest rates falling on average for the corporate sector as base rates fall. If special circumstances exist in some cases, there may be a risk-premium charge. My hon. Friend is also right that it would not be desirable for banks to make life so difficult for many companies that there is not a large volume of corporate business for them in future.