Category: Trade

The speech made by Michael Heseltine, the then Secretary of State for Trade, in the House of Commons on 24 November 1993.

When I returned to the House not many weeks ago—I thank the hon. Member for Livingston (Mr. Cook) for his kind remarks—someone asked me, “How’s life?” I replied, “A great deal better than the alternative.” As I listened to the hon. Member for Livingston today, I wondered whether I had been a little rash in my judgment.

The Gracious Speech made clear the importance that the Government attach to a successful outcome to the present general agreement on tariffs and trade round. It was fascinating that not a word was said about that, although it is perhaps the single biggest opportunity facing the entire world, to improve living standards and trading opportunities—not a word about that from the hon. Member for Livingston. However, Conservative Members will welcome the boost which the passage of the north American free trade agreement has already given to the Uruguay round. There must be no doubt that no country will work harder than we will for a successful conclusion to that round.

The calculations show the excitement of the possibilities. The Organisation for Economic Co-operation and Development claims that a successful outcome could raise annual world income by about $270 billion during a decade. That estimate could well prove to be on the cautious side, once the effects of trade in services and the dynamic benefits of trade liberalisation are taken into account.

We all realise that the timetable is perilously tight and, frankly, all the Governments of the world must face the understandable criticism that it has taken seven years of negotiation, yet we now face trying to conclude the deals on so many issues with just three weeks to go.

It is also important to remember that a successful outcome to the GAIT round would not only be welcomed on trade grounds, important though they are; the less-developed and poorer countries in particular stand to gain far more in extra trade and investment than they could ever expect in extra aid from the more prosperous countries.

Within a more open trading environment, our policy is to enable and assist British-based companies to gain the largest possible share of world trade.

On any detached analysis, there are growing signs today of success. We heard virtually not a word from the Opposition about the direction in which the economy is moving or about the news, which is more encouraging by the day. Inflation is at its lowest level for 30 years. Headline inflation has been below 2 per cent. for 10 months—the best performance since the 1960s. With the base rate now cut to 5.5 per cent., since October 1990 interest rate reductions have added about £12 billion a year of benefit to business. Investment is rising; manufacturing investment in the third quarter of this year was up by 2 per cent. on a year earlier, a point which also seems to have passed the hon. Member for Livingston by—it certainly passed his colleagues by when they drafted the amendment on the Order Paper.

Our GDP has been rising for 18 months. It was 1.9 per cent. higher in the third quarter of this year than a year earlier. Perhaps most excitingly of all, exports are at record levels. The volume of manufactured exports going outside the EC was up by 16 per cent. on a year earlier. Characteristically, the hon. Member for Livingston sought to diminish the world trade that this country has achieved by claiming that our share of it had risen under the Labour Government. The only way he can do that is by talking about cash and ignoring exchange rate calculations. In fact, persistently and under all Governments, since the war we have lost our volume share of world trade. Our share has now stabilised, however. The task is to ensure that we build up our export success, to make sure that it increases in the right direction.

It is particularly encouraging to realise that this is now beginning to happen, given the depth of the recession affecting our principal markets in the European Community. Within the single market, it is this country’s economy that is leading the recovery. There are clear background signs now that we can look forward to persistent growth. Our prime task, which my right hon. Friend the Prime Minister has spelt out with great clarity, is to enhance the competitiveness of our economy.

Opening the debate on the Gracious Speech, my right hon. Friend the Prime Minister covered many of the essential ingredients of this enhanced competitiveness when he set out our central strategies for education, training, research and development, infrastructure and macro-economic management—to which my right hon. and learned Friend the Chancellor will return tomorrow.

In the Gracious Speech, my Department, as the hon. Member for Livingston rightly said, has three Bills: the deregulation Bill, the trade marks Bill and the Bill to privatise the coal industry, and the House would expect me to comment on each of them. I wish to make it clear that the deregulation Bill will not be about destroying the environment, imperilling safety or exposing the unsuspecting to fraud and cheating. We believe it is vital to keep red tape to a minimum. I expected that phrase to provoke a response from the Labour party—I thought that its members might have welcomed it. Why? Because those were the words of the Leader of the Opposition to a small firms conference that he held the other day.

It is all very well for the right hon. and learned Gentleman to come out with these wonderfully ringing words—with which I agree—when he is away from the House and away from the parliamentary Labour party—and when he is not being listened to by his supporters. But when he comes here, he dismisses deregulation, as he did in his remarks on the Queen’s Speech, as almost irrelevant to our national recovery.

The truth is that the only thing that is marginal, in the context of a party that has lost four elections in a row, is the policy of that party on deregulation. We want to make sure when we regulate that we protect the vulnerable, protect the public, protect our heritage and protect the countryside, but in such a way as to deal best with the real risks and to put the fewest obstacles in the way of wealth creation. We must keep paperwork to a minimum and keep the intrusive nature of bureaucracy under the tightest possible control.

There are three thrusts to the policy that we intend to introduce. The first is the new regulations; we will ensure that regulators count the cost of their proposals before they publish them. Secondly, there is no point in taming domestic regulators in Whitehall if European directives keep piling on the burden. Last year, we persuaded our European colleagues to put the cost of business into account and to publish it when new European measures are proposed.

Thirdly, there is the subject matter of the Bill. We are reviewing existing regulations. Under the guidance of Lord Sainsbury, eight task forces from business and the voluntary sector have been examining regulations on the statute book to see whether they can be scrapped, modified or improved.

Even then, primary legislation can stand in the way of reform. That is why we are introducing a deregulation Bill to cut the red tape and open up the opportunities for business. The Bill will include specific deregulation measures, as well as a means to deregulate in the future. [HON. MEMBERS: “Ah.”] The hon. Member for Livingston was deeply immersed in creating fear, at which he is a past master. A parliamentary process will be involved in our proposals.

In the same Bill, we will be removing statutory obstacles to market-testing and contracting-out programmes of both Government and local authorities because we want to see better value for money for the taxpayer in all our policies.

Mr. Bill Etherington (Sunderland, North)

I am pleased to welcome back the President of the Board of Trade after his illness. He seems to fail completely to comprehend that some Labour Members do not correlate cutting red tape and minimising death and injury in the industry. Why does he fail to comprehend that?

Mr. Heseltine

I do so for precisely the same reason that the Leader of the Opposition made it absolutely clear that he wanted to cut red tape to a minimum as well. The hon. Member for Sunderland, North (Mr. Etherington) and other Labour Members cannot understand that in a competitive world we have no choice but to make absolutely sure that every avoidable cost is avoided in our legislative programme.

It must be recognised that deregulation is not simply about the letter of the law. The law gives rise to a plethora of guidance notes, circulars, inspectors and forms—all the familiar trappings of bureaucracy. Our review covers the impedimenta of legislation, as well as the legislation itself.

Mr. Anthony Steen (South Hams)

Conservative Members are finding this speech extremely invigorating, and I hope that we will hear a little more of this wonderful stuff. I wonder whether my right hon. Friend will bear in mind that it is not simply about deregulation—it is about the over-zealous interpretation by officials not only in Whitehall but at local level. It is an attitude problem which we must address from the top.

Mr. Heseltine

My hon. Friend is absolutely right, and that is why I referred to the impedimenta of legislation and all the practices that flow from it. We are well aware that many of the changes that we hope to see will not require legislation; they will require changing practices in a new changed culture. The House will have an opportunity to examine our detailed proposals when we introduce the Bill.

The speech of the hon. Member for Livingston was anticipated, but he is not the only one. Labour Members are already in full cry and, if I may say so, in characteristic vein. This is not the first time that the hon. Gentleman has had an opportunity to indulge in what might be called slightly exaggerated versions of the truth. Indeed, he has a technique. He is a sort of chill factor in the body politic. We are well aware of how he does it because the record is there. He was shadow spokesman for the health service.

Mr. Robin Cook

I was very good.

Mr. Heseltine

Let me remind the hon. Gentleman, if he needs any reminding, of what he said before the election about Conservatives seeking a health service where organisations were put on the second floor of buildings to discourage people who were disabled and therefore expensive to treat from enrolling, or where casualty patients died because no one could pay for them. The hon. Gentleman knew that that was not true; it was a great distortion of anything that we had in mind, but if he could find people to frighten, frighten them he would, regardless of the facts.

The Leader of the Opposition had an even more brazen charge. He said that it is all the Government’s fault—we heard that again from the hon. Member for Livingston — because we are simply reviewing our own regulations. Nothing so reveals the fossilised inherent approach of the socialist in practice as that allegation.

A communications revolution can sweep the world. The globalisation of markets can overwhelm national boundaries. The Asian-Pacific rim can transform the competitive threat. Industry and commerce must change. The one thing that must never change is the good old British regulation. Like the pint and the good old British banger—once a regulation, always a regulation. What a battle cry for the modernised Labour party.

But who can be surprised? The Labour party is the regulator’s natural ally. About the only things left of the trade union movement are the white collar affiliates of the Trades Union Congress who dream up the regulations, inspect the regulated, regulate the regulators and drown the rest of us under the weight of the burden. That is typical of those socialists in their approach, with their ideas frozen in time and practices set solid in concrete. That is the image that one would think they wanted to portray—no change; and when it is done, leave it there.

Hon. Members will want to consider carefully whether that argument is applied as consistently by Labour Members as they would have us believe. They may not be prepared to change one dot or comma of the most outdated regulation. Not a hair on the head of the most lowly inspector must be subjected to the wind of change, but when it comes to their fundamental socialist beliefs, which have cost them four consecutive elections, they want us to believe that the whole lot have been flung out the window. They fought against Europe for 30 years. Now they take every nugget of Euro-speak before the red ink is dry on the paper. Nationalisation was once the essence of their industrial strategy. Now it has become the word that dare not speak its name.

I shall give one example of what can be achieved when the yoke on nationalisation is removed. In 1983, we privatised the ports. In 1989, we abolished the dock labour scheme. The hon. Member for Kingston upon Hull, East (Mr. Prescott) doubtless reacted with a characteristically moderate and balanced judgment. The modesty of his language was exceeded only by the energy with which he rushed around the docks spreading the news of impending disaster.

I took the liberty of doing a little research. In 1980, less than 4,000 tonnes of cargo went through Hull. In 1992, it was nearly 9,000 tonnes. The figure had more than doubled. The only other difference that I have detected over the years of Hull’s growing success is the absence of the hon. Gentleman, who, I am told, has not visited the thriving new dock company since its inception. Like the scarlet pimpernel, they seek him here, they seek him there. But the first sign of real success in his constituency brings forth in the hon. Gentleman a unique contribution to the political debate—absolute silence.

Mr. Dennis Skinner (Bolsover) rose—

Mr. Heseltine

There is someone who has never known what absolute silence is.

I can only say that when the hon. Member for Kingston upon Hull, East describes my deregulation proposals as a return to the killing fields, nothing persuades me more that I have got them more or less right.

Mr. Skinner

Give way.

Mr. Heseltine

Yes, why not?

Mr. Skinner

I have a little tablet here that the President can put under his tongue. Is he aware that when he talks about imports into Hull, he is talking about the massive increase in coal imports which have enabled him 475and his fellow Ministers to encourage pit closures? As a result, the 31 pits that he said he would save now look as if they will be closed. He should be ashamed of himself for putting all those workers on the dole.

Mr. Heseltine

The hon. Gentleman gives the game away. In the real world, employment in the docks is the preoccupation. He cannot understand that there has been a container revolution and that the efficiency of the ports today makes them competitive. What he would really like to see are the days of old when thousands of men carried the loads in sacks on their backs. Then he could have a national union of sack carriers. Doubtless we would have Members of Parliament sponsored by the national union of sack carriers, paying their funds into the Labour party and shackling the competitive instinct of this country, at which the hon. Gentleman is one of the greatest experts.

I should be the last person to wish to do the Labour party any sort of injustice. I have said that it would regulate everything. I am prepared to believe that every rule has an exception. I have missed out one area where no doubt the deregulating zeal of the Labour party would be at the forefront of its political agenda: the trade unions would be deregulated. Here we would find a veritable bonfire of controls: strikes, go-slows, no-gos, Labour in power, socialism in practice—all back to an agenda that we drove from the country 14 years ago. The painful sacrifices accumulated over 20 years that have given the country the best industrial relations for a century would be thrown away in a single Act of Parliament.

On this issue at least let me accuse the hon. Member for Kingston upon Hull, East of no silence. He has made it absolutely clear that Labour would repeal all our trade union legislation. There is nothing to keep. It all has to go. The House will want to contrast that with the charge made by the hon. Member for Livingston that, because we talk to leaders in the construction industry, with a view modestly to changing the regulations to lighten the load on our system, we are indulging in corruption. Yet the Labour party is prepared to sweep from the statute book all our trade union legislation to satisfy its paymasters. What are we supposed to call that? So we shall press on with our deregulation programme as part of our determination to help British industry compete.

Mr. Malcolm Bruce (Gordon)

The President of the Board of Trade is making an entertaining speech. Will he tell the House specifically how the regulations will be introduced? Will the House be presented with a detailed Bill that includes the specific regulations, which can be debated, amended and voted on; or will we be presented with an enabling Bill in which each individual regulation will be determined by statutory instrument? If the latter is the case, that is not the way to deal with deregulation.

Mr. Heseltine

The good old Liberals are at it again. They want it all ways. Whatever we do, it will be wrong. The hon. Gentleman must contain himself. We will have a Second Reading of the Bill, when he can examine it in great detail. Doubtless he will table some amendments, the scrutiny of which we shall be forced to subject ourselves to. Nevertheless, in the proper, democratic exercise of our duty, the Liberals must have their turn, however small it may turn out to be.

Mr. Richard Caborn (Sheffield, Central)

It is good to see the President of the Board of Trade back on form. His speech is entertaining, if in no way factual. I remind him that a great deal of research was done by the Select Committee on Trade and Industry for its report on Europe. Does he recall that the report pointed out clearly to Ministers that the burden of many European Community regulations had been increased by his own civil servants? That was a strong criticism.

My hon. Friend the Member for Livingston (Mr. Cook) has referred to the increase in regulation. That has arisen directly from the inability of Ministers, particularly those in the Department of Trade and Industry, to control their civil servants, who are adding extensively to EC regulations. Ministers rode on the back of EC regulations that would not have passed through the House had the turnkey of the European Community not been used.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. I remind the hon. Gentleman and other hon. Members present that interventions are supposed to be brief. They are not supposed to be mini-speeches.

Mr. Heseltine

The hon. Gentleman makes an important point and I thank him for his generous words to me personally. If he wants to help me to a full recovery, he will avoid inviting me to appear before his Select Committee again.

I now want to say something about the privatisation of the coal industry. The hon. Member for Livingston treated us to a general denunciation of the issues of privatisation, so it may be helpful if first we spend a moment or two looking at the record of privatisation over this decade. We have absolutely no doubt that privatisation drives up standards of efficiency and management, ensures that investment decisions are taken by customers, not Government, leads to increased efficiency and lower costs and encourages innovation, all of which help the privatised companies to get out and become world class players on the international stage.

Just one sobering statistic—a single sentence—will show why we believe that we have brought about a fundamental and important shift. In 1979, taxpayers paid £50 million a week to subsidise the losses of the nationalised industries. The privatized industries are now paying £60 million a week in taxes to the Exchequer on the profits that they are making. There is no clearer vindication than that of the privatisation policies of the past decade.

British Steel is now one of the most efficient in the whole world. PowerGen, National Power and the National Grid are international companies. We have a major extension and modernisation of our water and sewerage infrastructure, with a £30 billion investment programme. British Telecom’s prices are down by more than 27 per cent. in real terms since 1984. Domestic and small business prices for gas have fallen by 20 per cent. in real terms since privatisation. British Gas now operates in more than 45 overseas markets.

The hon. Member for Livingston describes that as the grotesque irrelevance of privatisation. There has been a dramatic transformation of the commanding heights of our economy precisely because they have been privatised. This is the remarkable transformation of great parts of the previously nationalised industries. It is against that background that we believe that the best future for coal is in the private sector. I have no need to repeat the concern shared by everyone in the House for the difficulties experienced by those in the industry.

Mr. Terry Lewis (Worsley)

Bloody hypocrisy.

Mr. Heseltine

The hon. Gentleman talks of hypocrisy. The Opposition have presided over the run-down of the coal industry every time they have been in office. The figures are startling. In 1948, when the industry was brought into public ownership, there were 958 collieries and 700,000 workers; by 1970, it was down to 300 collieries and 375,000 workers. Everybody knows that the market for coal has been declining persistently for the past half century.

Another matter has been proved beyond peradventure. Energy markets are too volatile for any kind of central planning system to make sensible decisions for the future. A salient feature of Government forecasts on energy is that they have always turned out to be wrong. It was forecast that oil and gas would become rare and expensive towards the new millennium. In practice, new discoveries are taking place all the time. Production is at a high level and reserves are mounting. As a result, prices are low and look set to remain that way.

We plan to bring before the House as soon as possible this Session a Bill to privatise British Coal. That would free the industry from the dead hand of state control and allow it to compete within the wider energy market. The Opposition do not see it that way. They have not seen it that way whenever we have privatised an industry and they have always been wrong.

The hon. Member for Livingston is up to his old tricks and trying to suggest that privatisation will threaten the safety of miners. It is despicable how the hon. Gentleman always finds the most vulnerable sectors of society and cynically exploits their legitimate fears for narrow party purposes. When I became President of the Board of Trade, at my first meeting on the subject, I said that I would do nothing to prejudice safety in the mines. I have never been asked to do anything that would do that and, if I were asked, I would not do it. We have fully accepted the advice of the Health and Safety Commission which was contained in its recent report, which has been placed in the Library.

I look forward to the day when British coal companies are free to seek—and invest in—world opportunities and to export their skills and experience in the huge international market. Furthermore, looking back over the decades, I have no doubt that, had we privatised the industry earlier, British Coal would have saved more jobs and we would have had a larger and more viable industry than the market can now sustain.

Mr. Robin Cook

The President must have missed out a page of his speech. Before he leaves the issue of privatisation of the coal industry, will he answer the question put to him? If privatisation is to work such a wonderful transformation of the coal industry, how many pits will survive to be privatised?

Mr. Heseltine

It is an illusion of the Opposition. When they were in power, the pits closed month after month. They never knew, and no Minister will make such forecasts in a market condition where the customer will determine the market.

My third Bill covers trademarks, which play a critical part for business. The forthcoming trademarks Bill will deregulate procedures. It will open the door to the use of international trade mark registration systems under the Madrid protocol, thereby allowing businesses to protect trade marks overseas in all contracting states by a single application. That will achieve substantial savings for other businesses.

The Gracious Speech debate and the Opposition’s amendment go wider than the specific legislation that I propose to introduce. I should like to update the House on the position of Leyland Daf because nothing so illustrates the difference in policy as the differing approaches of the Government and the hon. Member for Livingston on that issue.

The House will remember that the company went into receivership in February this year. The hon. Member for Livingston was on his feet demanding instant intervention. “Bail the company out” was the instant policy. I refused, not least because, having put £3.5 billion into Leyland, we did not seem to have succeeded in doing the trick by bailing the company out with taxpayers’ money. Instead, we backed the entrepreneurial skills of the management, receivers, banks and financial houses to let them find a commercial market solution. The van and truck businesses were able to set themselves up as two independently run companies. Half the jobs were saved, as was the supply and distribution chain. The cost to the British taxpayer was £5 million in regional assistance.

While my Department was encouraging and helping all that intricate, detailed work to save half the jobs at minimum cost to the taxpayer, the hon. Member for Livingston was not idle. He was leaping about, flying to the continent, and climbing on any old soap box urging me to do what the Belgian and Dutch Governments were doing. It all made good headlines at the time, and nudged the hon. Member up the shadow Cabinet pecking order a bit. But, as always, when the facts come out, they do not fit the scare stories in which the hon. Gentleman trades.

The Dutch and Belgian work forces were reduced! by virtually the same proportions as ours, but the poor old European taxpayers were £100 million worse off as a result of their Governments’ hasty involvement. That is what the hon. Gentleman really believes in—spend money first and then try to find solutions. That is what the last Labour Government tried, but it costs money and it does not work.

The news for us is even better. Both Leyland DAF Vans and Leyland Trucks have recovered well. The vans business is maintaining its production volume and has recently announced an £8 million development programme. Leyland Trucks has been able to increase civilian volumes by 30 per cent. and win export markets, and is discussing joint development of a new medium weight truck.

However, to the hon. Member for Livingston, all that was grist to the mill. Some of my hon. Friends, who do not need to concern themselves with the details of those matters, may have missed a little press release that he put out at the time. It was in characteristic language and was headed: Labour reveals the threatened ‘dossier of disaster’ if Leyland Daf closes”. The hon. Gentleman had identified 6,000 firms that would be pushed into closure by the loss of business. He produced a “dossier of disaster”. Are my right hon. and hon. Friends in the Government in whose constituencies a Leyland van had ever been seen were listed for that hideous impending disaster—6,000 fingers stretched out in blame, reaching to tear the throat from the hapless President of the Board of Trade.

My poor old right hon. Friend the Foreign Secretary was up to his eyes in it simply because the Rover car company in his constituency had supplied parts to Leyland Daf. Rover would be hit, we were warned. What happened? Rover is selling cars like there was no tomorrow, recruiting extra employees and setting world quality standards.

It was not just the big fish. Even the junior Ministers were not to be spared the ruthless scourge of the hon. Gentleman’s searing foresight. He said that my hon. Friend the Member for Solihull (Mr. Taylor), the Parliamentary Secretary, Lord Chancellor’s Department, was about to see Land Rover knocked off its perch. What happened? Land Rover has taken on 300 extra staff, and sales of the Discovery have doubled in Japan and Australia.

What has happened to those 6,000 fingers? They are stuck in the dykes of Labour’s crumbling allegations, as every day the recovery reveals the bankruptcy of its statements. If the hon. Member for Livingston is searching around for another press release, why does he not put out one containing good news stories from the constituencies of his colleagues in the shadow Cabinet? I do not want to impose any unnecessary burden or strain on him. Let us have just a press release of good news stories from his constituency—£20 million investment in NEC semiconductors by 1994; 300 new jobs at VRG International in the next four years; 200 new jobs at Mitsubishi in the next two years; 300 new jobs at Marshall Food Group in the next three years; 400 new jobs at David Hall in the next four years; 400 new jobs at IMTEC. I could continue with the list in his constituency alone.

So why are there no press releases about all that? Where are all those menacing fingers? They are itching to get to work in the hon. Gentleman’s constituency, with the new technologies, new factories and new British opportunities. What else? [Interruption.] The hon. Member for Livingston said that it was a gross misrepresentation.

Mr. Robin Cook

The President of the Board of Trade must not run away with a mishearing. What I said was that it was an excellent representation of Livingston.

Mr. Heseltine

That is interesting. It brings me conveniently to the next argument. Why are all those companies in the hon. Gentleman’s constituency? What is it that brings them there? They are all seeking a base in Europe and they are choosing Britain because we are competitive and attractive and they are welcome here. Under this Government, Britain will stay that way, but not under a Labour Government.

I am sorry that the Leader of the Opposition is not here; he is probably looking after some of his new friends in the boardrooms of England. He is famed for his flirtation and carrying-on with the leaders of our great companies—last week, he was at the Confederation of British Industry conference and, week by week, he is among the thick pile and hushed atmosphere of the City dining rooms. I must make it clear to the leaders of our great companies that it is not their smoked salmon that he is after. He has a different agenda. He has a manifesto of Euro-socialism. Of course, he says that it does not mean all that it says, but it has got his name on it, he is a lawyer and it is printed in English.

The manifesto may not mean much to the Leader of the Opposition or his hon. Friends, but if one asks the directors in the boardrooms of the international companies deciding whether to invest in our country or not, they have no doubt about what it all means. What is the agenda that we have from the Euro-socialists? The manifesto supports a substantial cut in working time including the prospect of a 35-hour or four-day week. to breathe life into the European social Chapter. It supports European works councils, consultations of workings in multi-national businesses and European sectoral collective agreements … a guaranteed minimum wage and Community measures … to avoid a tax-cutting competition between member states”. We shall not even be allowed to cut the taxes to bring the investment to create the jobs in the constituency of the hon. Member for Livingston.

There is one other little nugget tucked away in the manifesto for Euro-socialism. It supports a European policy on waste”. Let us start by ripping up the manifesto itself. To what does it actually add up? Every competitive advantage that this country possesses will be thrown away. To pursue the international brotherhood of man is one thing, but to sell the dear old country down the river to get it is another.

The Leader of the Opposition made much play—[Interruption.] There were a great many more people at the Tory party conference than there are Labour Members present today. The Leader of the Opposition made much play of the need for evidence. He asked, “What is it about the Tories? They make all the decisions and announcements—the only thing that is ever missing is evidence.” He accused us of designing policies, against the facts, without regard for evidence, and as a mere reaction to events. I reject that charge absolutely. We are determined to steer the country to a new competitiveness and a sustained recovery.

If the right hon. and learned Member for Monklands, East (Mr. Smith) wants evidence, I shall give it to him. We have the highest proportion of our population at work among the major Community countries. Unemployment has fallen by 137,000 this year. Inflation is persistently lower than at any time since 1960. Exports are at record levels. Interest rates are among the Community’s lowest. Industrial relations are excellent. That is the evidence upon which a sustained recovery can be based and on which I invite my right hon. and hon. Friends to vote for the motion.

The statement made by Michael Heseltine, the then Secretary of State for Trade and Industry, in the House of Commons on 2 February 1993.

The Government have been disappointed to hear about the financial problems facing the Dutch-based company DAF NV, which today filed for a legal moratorium on its debts. We are concerned about the implications for its United Kingdom operations.

I regret that it has not been possible for the company and its bankers to put together a satisfactory restructuring package. We have kept in close contact with the company and with the Bank of England, which has been closely involved in trying to help the relevant United Kingdom banks come to an agreement with their Dutch and Belgian counterparts, which have led the consortium. The United Kingdom banks have done all that they were asked, but unfortunately not all the other banks have felt able to agree an acceptable financing package with the Dutch and Belgian Governments.

The legal position of Leyland DAF should be clarified this afternoon. We have not participated directly in the discussions on the financial restructuring, as that primarily related to the company’s Dutch and Belgian activities.

The Government stand ready to work closely with Leyland DAF, the receivers, banks and other interested parties to mitigate, as far as possible, the impact on United Kingdom jobs. We hope that it will prove possible for all those involved to find a means of creating a business with a long-term commercial future out of at least part of DAF’s United Kingdom operations.

While regretting the particular circumstances affecting Leyland DAF, we must remember that the United Kingdom vehicles sector has made excellent progress during the past few months. In the midlands alone, Rover recently announced a 5 per cent. increase in output for its four-wheel drive vehicles in 1992 and a new £9.5 million fleet deal; Jaguar will be launching a £560 million investment plan on the back of a sharp rise in sales in the United Kingdom and the United States markets; and Lucas is to build a new £3.7 million factory, creating 350 jobs. We must continue to build on those extremely encouraging prospects.

Mr. Cook

Will the President of the Board of Trade précis his answer by confirming that, when I asked what Government assistance may be available, the answer that we got today was that there will be none for Leyland DAF? Is he aware that the news that he has just confirmed is another bitter blow to Britain’s shrinking industrial base? Will he try to understand that it is not enough to express disappointment for the work force, as he did today? The work force, who face the loss of their jobs, want to know what he is going to do to help save them.
Will the right hon. Gentleman remember that he prefers to be known as the President of the Board of Trade? Does he know that Leyland DAF is the leader in the British truck market? If that market share goes on imports, how many more millions will it add to the trade gap? Will he remember that he is the Minister responsible for regional policy? What help will he offer the communities whose local economy will be devastated if those factories and their suppliers close?

Will the right hon. Gentleman remember that he promised to intervene before breakfast, before lunch and before dinner? Why did he not intervene to stop that major British company going into receivership?

Why is it that the Belgian and Dutch Governments were willing to underwrite the loans that would secure the company’s future but not the British Government? Why did the British Government not support that rescue package by underwriting it?

Will the right hon. Gentleman accept that, as advised this afternoon by DAF, the minority who wrecked the deal in the banking consortium were all British banks—NatWest, Barclays and Lloyds? Why has he not had talks with them to press them to take the longer view of the Dutch and Belgian banks who want to rescue, not close, the plants?

Today 5,500 people face the prospect of redundancy. When they hear the Government talk about recovery, it must sound like a Government who do not know what is happening in the real world. Will the President of the Board of Trade do them the justice of now admitting that Britain faces a real industrial crisis and needs an industrial strategy that tackles it?

Mr. Heseltine

The hon. Member practises his usual technique of undermining any British company or institution. He would have done well to read the press release put out by DAF, a copy of which I have. Perhaps I can quote from it in dealing with the serious allegation that the hon. Member made: However, both Governments”— that is, the Dutch and Belgian Governments— have informed the Board of Management of DAF N.V. that they consider a further delay in a final decision on the restructuring and long term financing proposals to be unacceptable … I do not understand how, faced with that public information, the hon. Member can suggest that the British Government have been dilatory in performing their duties. Nor do I understand how he can name and single out three British banks which, he says, did not co-operate without, as far as I am aware, one shred of evidence to substantiate the charge. Does he understand the damage that he does to British banking interests by so careless a use of language?

The Labour party might have learned from its experience in putting hundreds of millions of pounds through the National Enterprise Board into the motor industry when it suggests handing out short-term working capital to a company of this sort that such action is unlikely to solve the problems that it ought properly to address. Will the hon. Member realise that my Department has done all that has been asked of it by the company itself? We have been in touch with the company, and it has made no specific request to us for specific financial aid of the sort that we are discussing today. We have been in touch with the Bank of England, and we know that it has been in touch with British banks.

All the hon. Member seeks to do is to make mischief out of a very difficult situation. He also fails to understand what receivership is about. There is every reason to hope that at least some of these jobs can be saved. What now must happen is an orderly process of analysis so that other people in the market can make offers for parts of this company in order that there can, we hope, be a viable commercial opportunity for those parts of the business that can stand competitive strains.

Mr. Den Dover (Chorley)

Will the Secretary of State confirm that in Chorley and Leyland in Lancashire there is purpose-built accommodation, a test track for vehicles, a major assembly plant for vehicles which is the largest in Europe, and Multipart office and warehousing? Will he also confirm that the labour force in Lancashire is one of the hardest working, best qualified, most skilled and most co-operative and, therefore, looks forward to constructive discussions?

Mr. Heseltine

I know that my hon. Friend the Member for Chorley (Mr. Dover) and my hon. Friend the Member for South Ribble (Mr. Atkins) have been extremely energetic in making sure that the best interests of their constituents were drawn to our attention. I am delighted to confirm the references that my hon. Friend made to the work people of Lancashire. I am equally delighted to know that, while national average unemployment is 10.5 per cent., in the travel-to-work area of Preston it is 7.9 per cent.

Mr. Terry Davis (Birmingham, Hodge Hill)

Is the Secretary of State aware that the Leyland DAF van factory in Birmingham increased its production, its sales and its market share last year in spite of the reduction in the market as a result of the recession, that 2,000 people work at that factory in my constituency, and that the factory has been forced to stop production this afternoon because suppliers have stopped deliveries, putting even more thousands of jobs at risk? Is the right hon. Gentleman aware that the factory has, in turn, been forced to stop its deliveries, including those of components of the Range Rover—the four-wheel drive vehicle mentioned by the Secretary of State—so putting yet more jobs at risk?

The Dutch and Belgian Governments have been engaged in direct talks with the banks in an attempt to save jobs in those countries. Why will not the British Government talk to the banks to attempt to save British jobs and avoid an industrial disaster?

Mr. Heseltine

I fully understand that the hon. Gentleman is deeply concerned about the large number of jobs that will be affected in his constituency. I can only repeat what I said in my first reply: my Department has been absolutely satisfied that the British banks and the Bank of England have been fully engaged in the necessary dialogue. It is now a matter of the administrators, the receivers and management of the company working out proper arrangements to secure, where possible, commercially viable jobs within the DAF organisation. That will not be helped by exchanges across the Dispatch Boxes of the House of Commons based largely on inaccurate allegations from the Labour party. We must let the receivers do their job. Jobs may well be saved as a result.

Mr. Iain Mills (Meriden)

Does my right hon. Friend recognise that many of my constituents live near the factory in Birmingham and, like the constituents of Opposition Members, have contacted me as they are greatly concerned about both the direct effect on their jobs and the indirect effects on the many component suppliers? Will he give me an assurance that he will do everything possible to facilitate a quick solution, whether partial or total, to the problem? The workers have literally been presented today with a closure.

Mr. Heseltine

I give my hon. Friend an unqualified assurance of the sort that he requested. My Department has kept in touch with DAF over this difficult period and will certainly continue to do so. Any proper assistance that we are able to provide we will provide.

Mr. Roy Hattersley (Birmingham, Sparkbrook)

If, as the Government claim, the recession is at last gradually coming to an end, how can it make sense to allow the collapse of a company which, when recovery comes, would make a substantial contribution to our balance of payments? The Secretary of State will recall that he said to my hon. Friend the Member for Livingston (Mr. Cook) that no request had been made to the Government for immediate emergency support to see the company through its difficulty. Were such a request to be made, what would the right hon. Gentleman’s answer be?

Mr. Heseltine

I think that the right hon. Gentleman will realise that the company has been seeking a solution to its difficulties over a significant period. Were there to be a request for the short-term working capital which is, as I understand it, at the heart of the dilemma today, such a request could be put to my Department by a myriad different companies in the motor industry and many others. It would be extremely difficult to find any argument that I could deploy for providing taxpayers’ support for working capital for one company to enable it to compete more effectively with other British companies in the same industry that produce competitive products.

The second issue involves the development of an alternative product to the van, which is the principal product line of the DAF organisation in the midlands. That issue was discussed with my Department before the last election, when figures of the order of £450 million were suggested as the possible investment needed to deal with the long-term programmes. We made it clear that we could not contemplate a project of that sort. Under the regional assistance that my Department is entitled to provide, the maximum amount available would be £18 million. The House should understand that we are either talking about subsidising short-term losses and the implications of that for a wide number of companies in this country or we are talking about dramatically large investment capital projects, and the House having to decide why we should invest in one company when a range of other companies which have invested their own capital are surviving in the marketplace.

§Mr. John Butcher (Coventry, South-West) I congratulate my right hon. Friend on resisting the ghosts of Upper Clyde Shipbuilders. My right hon. Friend is aware of the large implications that this has for the engineering industry generally in the west midlands. Will he reassure me that he will place his office at the disposal of private sector bidders, who may be involved in quite complex negotiations across the North sea, in order to expedite such negotiations, whether purely British companies or British companies in alliance with European companies, so that we may have a speedy solution?

Mr. Heseltine

I welcome my hon. Friend’s constructive approach, which is precisely the approach that is likely to bring the best possible outcome for the large numbers of people employed by DAF and for the viability of the separate component parts of that organisation.

There is no question but that in Leyland in Lancashire there is a modern factory with order books for an important product, and one hopes that there will be alternative owners and capital for that product. It must also be self-evidently the case that the products sold by the company over the years leave considerable demand for spare parts which, again, must offer potential jobs in some companies based on what we have here today. But none of this can be dealt with without a detailed set of negotiations conducted by the receivers in the calm atmosphere that is essential to constructive progress.

Mrs. Audrey Wise (Preston)

Is the Secretary of State aware that compliments to highly skilled, hard-working workers will not be well received unless they are accompanied by some action? The right hon. Gentleman is apparently willing for taxpayers’ money to be used to pay unemployment costs rather than invest in maintaining them at work. He casts scorn on short-term capital investment. Why does he not then find some long-term solutions to prevent the 2,500 workers in the Preston-Leyland-Chorley area from being put on the scrap heap? If the right hon. Gentleman is so scornful of short-term solutions, who does he not look for long-term solutions?

Mr. Heseltine

The hon. Lady should have more faith in the quality of the work people and the quality of the product in Leyland. She would do well to remember that her party has indulged in massive long-term investment in the automobile industry with scant benefit to show for it.

Sir Giles Shaw (Pudsey)

My right hon. Friend will be aware that this company was set up by his predecessors in office at the Department of Trade and Industry, and he will recall the substantial losses that were written off at that time to enable the consortium between Leyland and DAF to survive in order to employ those persons in Lancashire whose considerable skills were at risk. Can my right hon. Friend confirm that the project, which was initially to provide a trans-European prospect for commercial vehicles, where DAF would have the entry into the Community, still remains a realistic partnership on offer to any other company that may well seek to acquire the considerable assets which British taxpayers have supplied to that plant?

Mr. Heseltine

My hon. Friend is right. One of the arguments in favour of the DAF deal with Leyland in 1987 was that DAF would secure for Leyland greater access into the European single market. That it has done, and that is an additional asset now available within the negotiations that must come under way. It is obviously important that those negotiations are given a fair chance.

Mr. David Marshall (Glasgow, Shettleston)

Is the Secretary of State aware that 500 jobs are at risk in the excellent Leyland DAF Albion works in Glasgow which makes axles for the company? As the Dutch and Belgian Governments are doing all that they can to help, will the right hon. Gentleman advise the Secretary of State for Scotland that the Scottish Office, Scottish Enterprise and Glasgow Development Agency will need to do everything possible to protect and maintain those vital, highly skilled jobs in Glasgow?

Mr. Heseltine

The hon. Gentleman cannot have listened to what I said about the Dutch and Belgian Governments. They have made it clear that they are not satisfied with the arrangements that have been offered by the banks involved, so it would be wrong for me to suggest to any colleague of mine in the Government, including the Secretary of State for Scotland, that he should seek to act in a way that neither of those two Governments is prepared to do.

Mr. Phillip Oppenheim (Amber Valley)

While everyone is understandably concerned about the possibility of job losses, will my right hon. Friend bear in mind when considering requests for financial assistance the huge amount of Government money that the predecessor to Leyland DAF received in the 1970s? Does he recall that, under a Labour Government during the period that it received that money, manufacturing output in this country fell, whereas, despite the recession, it has risen under this Government? Will my right hon. Friend bear in mind that any money that he might give companies such as Leyland DAF would have to be taken from other companies that might better be able to utilise it in creating jobs and products that can be successfully sold?

Mr. Heseltine

My hon. Friend is perfectly right. I can only reiterate that the Labour Government’s experience, through the National Enterprise Board, of investing huge sums of taxpayers’ money in what was then seen as the creation of a long-term, viable automobile industry in this country was wildly unsuccessful. During the course of the 1980s, very largely as a result of inward investment in the industry, Britain can now enjoy the prospect of moving back to a trade surplus in the automobile industry. That is because we have viable companies with profitable records behind them. It is absolutely clear that no purpose is to be gained from trying to repeat the mistakes of the past and the Government trying to double-guess the commercial market in that industry.

Mr. Michael J. Martin (Glasgow, Springburn)

As my hon. Friend the Member for Glasgow, Shettleston (Mr. Marshall) said, many people in Glasgow are dependent on the Albion motor works for employment. There are highly skilled engineers throughout the group, and if steps are not taken to protect their jobs Britain will lose an engineering base that has taken generations to build. If the right hon. Gentleman argues that the recession will soon be over, we shall need skilled men and women to cope with the new situation.

Mr. Heseltine

It is precisely because Labour tried to protect industry after industry from the effects of world competition that so much of Britain’s manufacturing base was eroded. The then Government tried to protect it in the way that the hon. Gentleman suggests that we should do.

Mr. John Wilkinson (Ruislip-Northwood)

My right hon. Friend rightly said that he is willing to maintain a dialogue with interested parties. Will he discuss with his colleagues in the Ministry of Defence the military implications of the possible failure of Leyland DAF? As A. W. D. Bedford, another supplier of military vehicles to the British armed forces, failed only recently, will my right hon. Friend and his MOD colleagues see whether some restructuring can be achieved, whereby the important indigenous capability to build military vehicles that Leyland DAF hitherto provided can be maintained?

Mr. Heseltine

My hon. Friend is right to draw attention to the Army truck order that was won by Leyland with the help of DAF. That contract has about another 18 months to go. That supports the point that I was making, that here is a company with a good product and order books—and, hopefully, someone in the commercial marketplace will come to invest in it.

Mr. Malcolm Bruce (Gordon)

Does the President of the Board of Trade recollect that at the time of the Leyland DAF merger I and others expressed concern about the long-term implications for the British truck industry? Admittedly, there has been investment, but the situation now is that a major sector of our industrial base faces destruction. Does not the right hon. Gentleman accept the inconsistency of his statement to the House? On the one hand, there are full order books and a competitive business; on the other, there is no role for Government in ensuring its continuity.

Mr. Heseltine

That is a classic example of the Liberal Democrats wanting it both ways. They claim to want a single European market and to believe in Europe, but the moment a company sets out to achieve a Europe-wide base they criticise us.

Mr. Richard Burden (Birmingham, Northfield)

If the right hon. Gentleman really believes that he and his Department were doing all that was necessary in the run-up to today’s announcement, how does he explain the fact that last week there was speculation in the press, particularly in Holland, that jobs in Britain would be at risk because of the Government’s failure to get involved in a rescue plan? Does the right hon. Gentleman dispute the figures and the effects on jobs in Birmingham, Glasgow and Leyland claimed by my hon. Friends? What does the President’s statement amount to, other than a wringing of hands?

Mr. Heseltine

The hon. Gentleman can start with the employment of 5,500 people in Leyland DAF in this country. I do not accept that that automatically means that all those jobs are at risk. It is hoped that there will be commercial solutions, which will produce long-term, viable opportunities for at least parts of the company and, therefore, for a significant number of the work force.

I fully accept that there has been speculation about the company’s future for some time. We were fully aware of that. The only issue is whether we should have joined the Dutch and Belgian Governments, and whether we would have reached a different decision from theirs. I do not think that it was necessary for us to join them, because they were dealing with problems that were largely located on the continent; but, in view of the advice that we have received from banking sources, I do not see any reason for us to have reached a different decision.

Mr. Alex Salmond (Banff and Buchan)

Was the Secretary of State aware of the existence of the Albion works in Glasgow? He did not mention it until he was prompted. When did his Department first learn the extent of the serious financial problems enveloping the company? Was an intervention package prepared by his Department at any stage, and was such a package then rejected by the Secretary of State on political grounds? Has the right hon. Gentleman tried and failed, or has he just failed?

Mr. Heseltine

Yes, I was fully aware of the existence of the Albion factory in Glasgow. I have before me a list showing the location of Leyland DAF employees, and showing that the axles for the van were produced at the Albion works in Glasgow, which at the time employed some 500 people. The number of employees may have changed since then, but it is of that order.

The hon. Gentleman asked whether an intervention package had been presented. If he was asking whether we were prepared to put money into providing short-term working finance, I can tell him that we were not asked to do that, and that, if we had been asked, we would not have done it.

Mr. Bob Cryer (Bradford, South)

Was not selling off British Leyland to DAF an act of sabotage in the first place, and were not the Government warned at the time that it could lead to the extinction of a significant part of British manufacturing industry?

The Secretary of State keeps talking about refusing to put money into manufacturing industry. Given that he knows that between 10,000 and 20,000 jobs may be at stake—if the component manufacturing jobs are taken into account—why will he not argue the case for putting money into British manufacturing industry to keep our skills and our industry alive? He is prepared to put money into the dole queue to finance the millions who are unemployed, and to add to the queue at a rate of more than £9,000 per head per year. That simply does not make economic sense, or compassionate sense.

Mr. Heseltine

The simple answer is that, having been here as long as the hon. Gentleman, I have observed the track record of parties in government which have put money into what is called “manufacturing industry”. It always results in mounting losses, and in Governments eventually having to face unpalatable conclusions. The Labour party knows that, but is not prepared to recognise it.