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Competitiveness

4.4 p.m.

Lord Inglewood: My Lords, it may be for the convenience of the House if I repeat a Statement made by my right honourable friend the President of the Board of Trade in another place. The Statement is as follows:

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    investment worth more than £130 billion; investment which has created and safeguarded nearly 700,000 jobs since 1979.

    "Our exports too are a huge success. They reached record levels last year, and the CBI reports that orders are growing at their fastest ever rate. Last year, Ministers led more than 80 trade promotion missions, accompanied by more than 1,000 business people, to more than 50 countries. I am delighted to tell the House that the businessmen who accompanied me to China last week were able to strike deals totalling more than £1 billion.

    "Madam Speaker, I said that competitiveness was ongoing. This White Paper makes clear our determination to seek continued improvement. Improvement in management—we have as many world-class firms as Germany, but we have a higher proportion of poor performers. Among a raft of new measures to help companies, particularly small and medium-sized ones, learn from the experience of the best, the Government will make available nearly £100 million extra through Business Links for locally designed business development programmes. Improvement in exports—despite the success I have just described, only 100,000 of our 2.8 million UK firms export. We can do better. We are therefore setting out today a target of introducing 30,000 new exporting firms to foreign markets by the year 2000. To achieve this, my department will spend nearly £40 million extra on support for exporters over the next four years. In addition, my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs has already announced a significant strengthening of its support for commercial work overseas, involving over 100 new commercial officers, particularly in key emerging markets.

    "Improvement in education and training: this Government's reforms—the national curriculum, publication of schools' performance, devolution of management to local level—have already transformed our education system. One-third of our young people now go on into higher education.

    "But there is no room for complacency. Our aim is for Britain to have the best qualified workforce in Europe. The White Paper sets the steps we are taking to achieve that aim. Today, the Government are endorsing new targets for achievement in education and training drawn up by the National Advisory Council for Education and Training Targets. These set new, challenging standards. To ensure that we meet them, we will conduct a major review of our education and training effort, benchmarking it against our leading competitors and identifying where improvement is necessary.

    "Improvement in innovation: we match the best in inventiveness but not in bringing products to market. Some of the best ideas are born here. We must make sure more are exploited here. To help, the Government will spend an extra £70 million over four years to support innovation and technology. In addition, today's report on the technology foresight programme identifies areas which we need to develop in order to

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    stay in the top league of industrial nations. The Government's initial response is given in this year's Forward Look. Foresight will influence spending priorities in government and the universities. The Government will also encourage industry to respond through a foresight challenge, which will provide £80 million for collaborative projects over the next three years, half from industry, half from government.

    "Madam Speaker, British businesses have already benefited from the huge structural reforms undertaken by this Government since 1979. We shall build on our programme of radical reform. Nuclear Electric and Scottish Nuclear are to be privatised; the gas supply industry is to be liberalised; and I am announcing today over 100 deregulatory proposals on which we shall take early action and new measures to make enforcement procedures more business friendly. In terms of regulations alone, over 1,000 have now been identified for amendment or repeal.

    "Madam Speaker, the White Paper today adds up to a comprehensive agenda for action: action which will help business extend its growing success: action to improve the support which government can give to the wealth creating sector: action to equip our companies with the skills, resources and entrepreneurial drive to challenge the best in the world in the century ahead.

    "Madam Speaker, I commend this White Paper to the House".

My Lords, that concludes the Statement.

4.12 p.m.

Lord Peston: My Lords, I thank the noble Lord, Lord Inglewood, for repeating the Statement made by his right honourable friend in another place. Perhaps I may also say how much I agree with him and the Government about the importance of competitiveness, which is not an issue before us, and how much I look forward to reading the White Paper. I cannot comment on it because I have not seen even its cover let alone the whole document.

I make my usual complaint in responding to Statements. Once again, we shall have a White Paper of, I would guess, considerable importance, as we did last year. Again, as last year, we shall not see it in time to talk about it on this occasion and there will be no time in the succeeding 12 months to debate it. Unless my memory fails me, we have not debated last year's White Paper and there is no reason to believe that we shall debate this one. It is boring, but I have to make the remark that your Lordships' House contains so many people with knowledge, understanding and experience of these matters. It is a gross waste of parliamentary time that we have no opportunity whatever to hear the business men in your Lordships' House speak on competitiveness or others of us who believe that they know something about the subject. The noble Lord is aware that I always make this complaint. When we exchange places in the not too distant future and introduce our White Papers, no doubt he will be making exactly the same complaint. I hope not.

As I say, we believe that competitiveness is important. We should not misunderstand the concept. We are talking about the ability of British firms to compete. We often refer to UK competitiveness, but the UK is not an entity

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in that sense; it consists of firms that do these things. We are concerned as to how well they can compete with their foreign counterparts. There is nothing between us on that. Again, there is nothing between us on the fact that our economic future depends on all the activities in which we engage. It is partly true of manufacturing, but it is also true of the service sector. It is, of course, important that we are efficient in the private sector, but as the Government themselves have recognised, it is important that we are also efficient in the public sector.

I believe that the only reason why we emphasise manufacturing is that, for technical reasons, it is the area in which innovation and technical progress are most likely to occur. It is where we get the economies of large-scale production on which our standard of living depends so much. Overwhelmingly we emphasise manufacturing because as we grow generally we demand manufactured goods. To a considerable extent it would be better for balance of payments purposes if we made them here rather than running an enormous manufacturing deficit on the foreign account. We all know that the essence of our history is that until very recently we ran a manufacturing balance of trade surplus. It is the unique achievement of this Government that in the course of their activities they have generated a manufacturing deficit. We still hope that that will be reversed.

I believe that we also agree that the way in which we wish to be competitive is by improving efficiency. What we do not wish to see happen—but regrettably it has been happening continuously since this Government came to power —is the opiate of sterling devaluation to be the way in which we have to compete with our foreign counterparts. It is true that sterling has been devalued continuously since this Government came to power.

So much for background. I have a number of questions and comments on the White Paper. One thing missing from it, which I hope is an oversight, is that in last year's White Paper the Government emphasised partnership. They referred to the partnership between government and business. In this Statement the word "partnership" does not appear. It is overwhelmingly right that we view our problems in terms of partnership.

I assume that the second omission is also an oversight. In the White Paper—I am sorry, I keep referring to the "White Paper" when I mean the Statement, because I have not seen the White Paper—the words "European Union" do not appear once. Is there some reason why there is no European dimension in the Government's mind to the competitive question, either positively or negatively, depending where one stands on these debates? I should have thought that it would have been central to any view that the Government took about the future of our economic performance to say something about our relationship with Europe, but the words do not appear.

I say with regret that parts of the Statement seem to be rather party political. I cannot imagine why the right honourable gentleman in another place felt that he needed to be party political. As is my practice, I shall not make any party political remarks at all. One has worries about the detail. For example, the Statement refers to an improvement in the balance of payments deficit and says that it "fell sharply". In fact, the largest cause of that had nothing to do with competitiveness, but was due simply to

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the improvement on the invisibles account which resulted largely from the devaluation of sterling following our débâcle in leaving the exchange rate mechanism of the European monetary system. Why has that not been mentioned?

The Statement refers to exports being a huge success. I do not believe that it is helpful to rational argument to say that exports reached record levels last year and somehow not remember to add that imports also reached record levels. If one is a sign of how well we are doing, presumably the other is a sign of how badly we are doing. Why do the Government find it impossible to present a balanced view?

Speaking as an economist, there is one thing that I do not understand and perhaps the noble Lord can explain it to me. The Statement says:


    "The competitiveness of the UK economy is nowhere better illustrated than in our ability to attract inward investment".

I have heard that statement from the Government Benches previously, but no one has ever said why that is such a good measure. In particular, given the enormous scale of UK outward investment, which is inward investment for those to whom we send it, why is not that a measure of our lack of competitiveness? Why is there such asymmetry? There could be political reasons for that, but I could not possibly allow such remarks to cross my lips.

I turn now to one or two other matters on which I agree with the Government although I am slightly at a loss about the leverage in terms of government action. To start with, I did not know that only 100,000 of our 2.8 million firms export, so that is a fact of enormous interest to me. Have the Government conducted any studies to tell them why only 100,000 of our firms export? That figure does not seem a lot to me. I agree that we could do better, but have we done the work to tell us how to do better? I should be interested to know.

For donkeys years we have been making the point about investing in education and training. We have done so independent of party and have always said that there is no room for complacency. I should like us to have the best qualified workforce in Europe, but the fact is that we have one of the worst qualified workforces and, after 16 years of this Government saying that we must do something about it, I am bound to say that setting targets and setting challenging standards is not necessarily the best way to achieve that. I should have thought that we needed something specific by way of action rather than remarks such as, "We shall conduct a major review" et cetera, et cetera. I am getting quite fed up with Statements that refer to "major reviews".

I am in overwhelming agreement with the Government about the fact that we are remarkable as inventors. Our achievements in fundamental science stand second to none. We have said for many years that we are great on the ideas side, but bad on the applications side. I do not see in the Statement—but again, perhaps the White Paper will tell me—anything to tell us precisely what we are going to do about that.

I should like to make just three or four other remarks and then I think that that will be enough from me. The Statement refers to Nuclear Electric and Scottish Nuclear being privatised. I am slightly surprised that the Statement does not say what the nuclear power White Paper says,

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which is that we shall have no more nuclear power stations. That would be a much more interesting proposition than a Statement about privatisation.

The Statement refers to deregulatory proposals, of which there are 100, although 1,000 more regulations are identified for amendment or repeal. Am I right that the Government propose to deal with that by the Deregulation and Contracting Out Act which Parliament passed last year? I should be interested to know how many of the 1,000 regulations that we are to get rid of were introduced by this Government. Does that simply represent a change of mind on such matters?

There is not a word in the Statement about what was called the Private Finance Initiative. Are we to be told something about that in due course? That is an important point.

Finally, are we to have such a White Paper every year? Is this to be the Department of Trade and Industry's equivalent of the Budget Statement? Let me add that if that is the case, I strongly approve. I think that we should have such a Statement. However, it ought to be akin to the Budget Statement and state, "We said this last year. We said that we would do certain specific things last year. These are those that we have done". It should also state, "These are the ones that we have not done". In other words, if we are to have such a Statement every year, rather than have a new lot of blah to replace last year's blah, I should like to have some practicalities so that we know how we are getting on. It may well be that all that information is in the White Paper and that I shall have an opportunity to read it. However, I shall then be frustrated because I shall not have an opportunity to talk about it.


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