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Mr. Michael Fabricant (Lichfield): My right hon. Friend talks of the weakness of the DTI. A few moments ago, he talked of the weakness of the car industry. Does he agree with the Society of Motor Manufacturers and Traders, which says that
It is typical that, at Prime Minister's Question Time today, the right hon. Gentleman said that he would do everything possible to save such companies, yet he will not abolish or withdraw the damaging tax that will come into effect in April.
Mr. Pike: I represent a constituency that is heavily dependent on manufacturing jobs. Was the right hon. Gentleman not being somewhat selective when he referred to the previous Government's record from 1992 onwards? What about the period of Thatcherism, during which the importance of manufacturing industry was totally dismissed? The Thatcher Government were in office for many years, and witnessed the loss of many hundreds of thousands of jobs, and the complete deletion of many manufacturing centres from this country.
Yes, the restructuring in the 1980s caused job losses, but those policies of industrial and trade union reform are now accepted by the Government as an essential precondition to the industrial recovery that followed. I repeat that, after we had achieved the restructuring, jobs in manufacturing industry rose under the Conservative Government. Then, in came the new Labour Government, who abandoned manufacturing industry and ignored its problems, resulting in 350,000 job losses over the past four years. I ask hon. Members to consider the truth of those statistics and what lies behind them.
My essential charge is that the Department of Trade and Industry does not stand up for manufacturing industry. There are many examples of that, including energy prices. Industrial gas prices have doubled over the past year. Indeed, that is the subject of an early-day motion tabled by Labour Members. However, when challenged about this problem--which affects all manufacturing industry--the DTI simply said that it
There is much worse to come. I come to the point raised by my hon. Friend the Member for Lichfield (Mr. Fabricant) in his intervention. From April this year, all firms will be paying a new energy tax--the so-called climate change levy--on all their energy bills, including those reflecting the higher gas prices that are now feeding through. The Engineering Employers Federation has shown in a recent survey that 2,300 of its member firms, employing nearly 1.5 million people, will have to pay nearly £100 million extra in taxation. That money could have gone into investment, but the costs will now have to be fed into higher prices, which will make the firms less competitive in the international markets.
I know of a number of companies that have managed to compete, despite the strong pound, and that have been hanging on, albeit at a reduced level of performance. Unfortunately, however, the new energy prices are likely to be the final straw that will break their backs.
Mr. Heathcoat-Amory: My right hon. Friend speaks from great experience, and also from regional experience: his constituency is next to mine, and we share a number of firms that will have direct experience of the high energy prices. What baffles those firms--and annoys them--is the supine indifference of the Department to this escalating problem, and the fact that it is bringing into effect a tax in a few months' time that will make a bad situation worse.
The Engineering Employers Federation is particularly annoyed that the companies that they surveyed do not even qualify for the limited rebates available under the new tax. Those firms are in textiles, rubber, plastics, motor vehicles and aircraft manufacturing--they go right
To be eligible, firms must be polluting companies and must be regulated under anti-pollution regulations. I promise the House that what I say is true: there are firms that have switched to cleaner industrial processes, thereby making themselves ineligible for the rebates. In other words, they are doing the right thing for the environment--trying to clean up their plants and stopping the pollution--but, by doing that, they are rendering themselves ineligible for the rebates under the new energy tax. That is the politics of a madhouse.
Everything has been explained to the Government. Firms in my constituency, firms in London and firms up north and in the midlands, which I visit, have patiently told DTI officials and Ministers exactly what the problem is, but they get no response whatever.
Mrs. Claire Curtis-Thomas (Crosby): Does the right hon. Gentleman agree that the Environmental Protection Act 1990 had a significant impact on British manufacturing industry inasmuch as many major chemical, gas and plastics sectors were forced to suspend their processes altogether because the cost of implementing the legislation was so great? If he had the opportunity, would he repeal the Act, knowing what he now knows about the impact of the cost of implementing it?
Mr. Heathcoat-Amory: No, I would not. We took great care to minimise the impact on our manufacturing industry and to ensure its competitiveness in world markets. That is completely different from what is happening now, whereby the Government are deliberately introducing a new tax when energy prices are already rising. The tax does not need to be introduced. The Finance Act 2000 only allows the Government to introduce the measure; it could be withdrawn today. The Secretary of State could get to his feet, say that he has listened and learned and tell the House that he will not bring the tax into effect. That would provide immense relief right across manufacturing industry, and I challenge him to do so in the debate.
Mr. Patrick McLoughlin (West Derbyshire): I visited a factory in my constituency a few weeks ago and was told that gas supply cost the company £300,000 last year. Next year, the bill will be £600,000. Gas is the company's third largest cost so it does not need the Government to tell it to try to reduce energy costs.
Mr. Heathcoat-Amory: Exactly. That experience and that information is available to the Government; it has been explained to them. I entirely agree with my hon. Friend. There is real anger and frustration that the Government appear to listen, but fail to act.
Mr. Heathcoat-Amory: My right hon. Friend is entirely right. Those are other industries that have been let down. They were promised that all combined heat and power plants would be exempt from the levy, but that turned out to be completely untrue. The larger plants used by the sugar industry and others will pay the levy, at least in part. Industry is trying to do what is right for the environment and trying to save energy, but it will be clobbered by a new and unnecessary tax.
We heard about Corus at Prime Minister's questions and I have already referred to it. The company will pay some £8 million a year under the tax. That will completely undermine any rescue package that it is trying to put together. The tax will also be bad for the environment. If steel making is exported to countries with lower environmental standards, the global environment will suffer, so the tax does not even make sense from an environmental perspective.