Orders of the Day — Industry and Commerce

Part of the debate – in the House of Commons at 12:00 am on 8th November 1977.

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Photo of Mr Robert Ellis Mr Robert Ellis , Wrexham 12:00 am, 8th November 1977

I do not intend to follow the speech of the hon. Member for Moray and Nairn (Mrs. Ewing). I think we shall have plenty of time during the debates on the two devolution Bills to talk to each other and debate with each other across the House. I shall forgo that pleasure until that time.

I thought that the hon. Member for Arundel (Mr. Marshall) made a thoughtful speech. Although I could not agree with all of it, I agreed with large parts of it. I agreed also with the analysis of my hon. Friend the Member for Rotherham (Mr. Crowther), except that, having made the same analysis as the hon. Member for Arundel, I felt that my hon. Friend then failed to grasp the nettle that had appeared following his analysis. I should like to emphasise some of the points that both hon. Members made, in particular concerning the steel industry.

The track record of British industry since the war is not good. It is unsatisfactory and disappointing. If I were asked to name the biggest hindrance to our achieving a really competitive position in relation to other countries, I would say that it has been our inability, since the war, to overcome the problems of change. I find this particularly galling in the light of the slogans that were current in the 1960s. There were slogans about the technological revolution, and about dragging us kicking and screaming into the 21st century. Unfortunately, there has been a failure in this respect. It is very disappointing, and it is reflected in our industrial situation.

As many people have pointed out, one obvious criterion is productivity. Our productivity in a vast range of industries does not compare with that of many of our competitors. But there have also been failures in other areas. There have been failures in regard to the location of industry, and in this respect I quote from the report of a Committee of the House which was published in 1975. It is the Report on Regional Development Incentives, Cmnd. 6058.

The report says: Had Scotland, Wales and Northern England secured 42 per cent."— that is to say, their proper share— of national employment growth during the 1960s, they would have experienced a growth of 270,000; in fact their employment fell by 100,000. Of the deficiency of 370,000, 180,000 was attributed to developments within the services sector; 120,000 was attributable to the primary sector, largely arising from the disproportionate dependence on coal mining; and only 70,000 to the manufacturing sector. This loss of jobs was matched during the same period by an increase of 6 per cent. in employment in the South and Midlands of England.

I make that point, along with productivity, as two examples of our failure in terms of industrial policy since the war. I do so in order to try to underline a general proposition which one or two hon. Members have hinted at during the debate, namely that when one approaches the whole question of industry and its problems one can go along two broad paths. There is the market economy approach, espoused by most Opposition Members—that the market itself will assess the efficiency of companies and that if a firm's productivity does not come up to a certain level, in due course that firm will go bankrupt.

The other approach, favoured by many Labour Members, is that of central planning of the economy with the central decisions being made by Government in order to develop industry, and so forth. Those are the two purist views in practice, although I do not think that anyone would take a rigid purist position.

Indeed, as we know, a great deal of planning goes on in private industry. The whole Galbraithian philosophy spells out the amount of planning that does go on in private industry.

But a very important point that we must get clear in our own minds that if we fudge the whole thing in an attempt to come together from the two extremes we shall have the worst of all possible worlds.

I believe that in many respects what has gone on in this country during the last 30 years has been a fudging of the question whether we are a free enterprise economy or a really determined planned economy, with all the determination and ruthlessness associated with that position.

I should like to give one or two examples in order to make clear exactly what I am saying. I take the example of steel. A number of hon. Members, including my right hon. Friend the Member for Rotherham (Mr. Crowther) said that many people did not really appreciate what a desperately serious position the steel industry was in. The situation is desperately serious. If we were to produce steel at maximum capacity—about 27 million tons—we should be producing at about 140 tons per man per year. But many of our competitors are producing 500 or more tons per man per year. That is a rock-hard fact. It has been known for a long time, although it was to some extent concealed in the 1950s and 1960s, when we were all dragged along by the great American engine. It was only when America went protectionist in 1971 and when the oil crisis came along that one began to appreciate the weakness of our steel industry.

In 1972, when money was made available for the steel industry, the management of the British Steel Corporation was allocated £3.000 million to get on with the job of putting the industry right. I am reminded of the Chief of the Imperial General Staff who, during the course of a battle in Northern Africa during the war, said to Churchill: "Mr. Prime Minister, you must either trust your general or you must sack him. You cannot run his battle for him." What we have done in the steel industry is to try to half-run the battle and at the same time try to let the BSC run the battle.

The nub of the problem was spelt out by the BSC in 1973. It was then said that there were 40,000 jobs to go, over the whole of Britain, over a period of 10 years. That was the problem. I would have thought that the Government could have tackled that problem. We had to tackle the problem in the coal industry, because that was forced upon us.

However, the problem has not been tackled and the position remains today largely as it was in 1972. I am thinking of the big issues, such as competition between various steel plants, and so forth, which are largely unresolved. In the meantime the whole economic situation has become that much worse and the problem has become much more difficult to resolve.

By not tackling the problem we are just building up more and more problems, and one can say, in a dramatic way, that inevitably Nemesis will come knocking at the door.

The basic problem has been our failure intelligently to know precisely what we are doing. Do we have a planned economy, with all the consequences flowing from that, or do we have a free market economy?

I am glad to see that my right hon. Friend the Secretary of State is present. I would say to the Government that the nettle must be grasped, however difficult. What I am saying about steel applies to all sorts of other industries. I give another example, which does not come from Britain. I take an example from Mr. Stuart Holland's recent book in which he says that the richest area of France is the Paris region. It covers 2 per cent. of the land mass, has 19 per cent. of the population and 54 per cent. of the meso-economic capital.

That situation has not come about because the French Government willed it or because of some maladministration; it has come about because of the French Government's impotence, in the same way that Henry Ford has gone to Bridgend not because the British Government wanted him to go there but because, as a multinational concern, Ford was able to choose for himself where to go. With regard to the location of that multinational branch factory the British Government and, indeed, any Government in Europe, were impotent. That is an important point to make.

Ford came up with a number of reasons for the move. There were skills in South Wales, although I agree with several speakers that at the moment some of those skills are in short supply. Ford has moved to South Wales because, by and large, it is a low-wage economy. We must be intellectually honest with ourselves.

The point I am making is that if the British Government, or for that matter the French, German or Italian Governments, wish to have a meaningful say in the destinies of their own peoples, the time has come when they can do it only in concert with other Governments in a particular community. The only practical Community on the horizon is the European Community. It is not, as yet, a real community but it is an embryonic community. I say that to many of my hon. Friends who pride themselves on their Socialism.