' (1) For subsection (4) of section 7 of the Industry Act 1972 there shall be substituted—
(4) Financial assistance shall not be given under this section in the way described in subsection (3)(a) above unless the Secretary of State is satisfied that it cannot, or cannot appropriately, be so given in any other way, and the Secretary of State, in giving financial assistance in the way so described, shall not acquire any shares or stock in a company without the consent of that company.
(3) For subsection (3) of section 8 of that Acts there shall be substituted—
(Financial assistance shall not be given under this section in the way described in subsection (3)(a) of the last preceding section unless the Secretary of State is satisfied that it cannot, or cannot appropriately, be so given in any other way, and the Secretary of State, in giving financial assistance in the way so described, shall not acquire any shares or stock in a company without the consent of that company".'
Mr. Deputy Speaker:
With this it will be convenient to take Lords amendments Nos. 5, 6 and 7. These are amendments that I think all hon. Members will understand. I hope that those hon. Members who speak will stick to them.
This amendment seeks to reintroduce into the 1972 Industry Act certain safeguards that were in the original Act and were repealed in 1975. The amendment will have two effects. First, it will require that assistance, under either section 7 or section 8, in the form of loan or share capital shall be given only in that form if the Secretary of State is satisfied that it cannot, or cannot appropriately, be given in any other way.
Secondly, it will require that assistance under section 8 shall be given only when it cannot, or cannot appropriately, be provided other than by the Secretary of State. We feel that it is right that both these safeguards should be put back on the statute book. As far as the first is concerned, it is important that the Secretary of State should be able to acquire shares or stock in a company only where this is absolutely necessary.
It goes without saying that this amendment will make no difference to the policies pursued by my right hon. Friend, but we believe it right that this safeguard should be on the statute book.
The second part of the amendment more or less speaks for itself. As the House will be well aware, the Government are not, generally speaking, in favour of subsidising industry. Our policies are intended to provide a climate in which industry can generate sufficient profits to meet its own investment needs. We accept that in present circumstances there continues to be a need for Government support in some cases, but it is right that Government should intervene only when the private sector cannot meet the need. I commend the amendment to the House.
The Government seek to remove from the Industry Act 1972 amendments made by the Industry Act 1975. I presume that the Government wish to remove from themselves the temptation in dire circumstances—and there will be some in the immediate future—to intervene in a way which is contrary to the Government's doctrinaire stance towards Government aid and assistance for British industry, and manufacturing industry in particular.
The amendment is proposed so that the Secretary of State will be able to say to industrialists who ask for assistance " I am sorry, but I do not have the power to help you. I do not have the legal authority. To ensure that I do not have that ability I have removed that facility by legislation." Industrialists should not be in any doubt that it will not be an accident that they receive no assistance from the Government. It will be by design.
We cannot accept the amendments. The Government came to office claiming that they intended to create a new industrial climate. Their slogan was that they intended to create a new climate for enterprise. Since then inflation has risen to 22 per cent. Lending rates are at crisis levels with MLR at 17 per cent. Sterling is so over-valued that it breaks the bounds of credibility, particularly as it affects exporting manufacturing industries. There has been a continuing growth in the number of bankruptcies and liquidations. They approach all-time record levels. There are no signs of the growth diminishing. That is a direct result of Government policies.
In the first three months of this year almost 2,500 companies were declared bankrupt or were going into liquidation. The latest quarterly figures from the Department of Trade reveal the highest level of company failure for three years. Investment in British manufacturing industry has fallen. Major companies are cutting their investment programmes in the face of the new climate for enterprise.
Reductions in regional aid have been mentioned by many of my hon. Friends. Many companies are experiencing cash flow problems because of the abrupt change in policy. The Minister knows about the effect that that has had on many companies in development and special development areas. Unemployment has increased in the regions in particular. My constituency is affected.
The textile industry is experiencing closures at the rate of almost one mill a week. The footwear and leather industries are being devastated. The chemical industry, one of the most successful sectors of British manufacturing industry in the last two or three decades, is in difficulties. There are records levels of chemical imports.
Against that background the Government are reducing flexibility and their help to British manufacturing industry. There cannot have been an occasion in modern times when any Government have taken such a step willingly. From some of the amendments that we have discussed we can see that the Government have sometimes taken the step inadvertently. Now they are deliberately reducing their ability to help the British economy and manufacturing industry.
Far from creating a new and better climate for enterprise the Government have created one of the most hostile climates that British industry has ever experienced. If that sound like the Labour Party, what about The Sunday Times as a back-up to that statement? The Sunday Times leader—
I was about to quote from The Sunday Times leader of 15 June, 1980 which said :
Now Mrs. Thatcher's Government is persisting in a deflation which is more sharp than anywhere else and is beginning to assume the characteristics of a reckless gamble with the industrial strength of this country and the tolerance of its people … What is disturbing now is the reduction of economic policy to a single minded, extreme, and irrational version of monetarism.
Nowhere are those views more relevant than in the debate on the amendment before us.
Against that background it is not only incredible but intolerable that the British Government with such wide-ranging responsibility for the future economic well-being of the country should be proposing these amendments.
Since I was not here at the time, I am not altogether clear what the responsibility of the hon. Member for Whitehaven (Dr. Cunningham) was in the previous Government, but if he was in any way connected with the Department of Industry does he recall the instance of the National Enterprise Board's assistance for British Tanners That was a classic example of a company that might have got support from the City but that was provided with alternative support from the NEB. That was to the great detriment of competition in the tanning industry and units of competition that were much more efficient than the company that received assistance.
Since I was not associated with the Department of Industry at any time during the previous Labour Administration I am tempted to say that the question does not arise. But since the hon. Member for Knutsford (Mr. Bruce-Gardyne) lays himself open to a response, I should say that I was associated with the Department of Energy which he will recall if he thinks more clearly.
It is an interesting point. The hon. Gentleman says that money might have been available from the City. We heard about that earlier, in the Ferranti debate. It is quite clear that in that case money was not available. Now the City cannot wait to get its sticky hands on Ferranti, but it would not touch that company with a barge pole when it was in difficulties.
I am afraid that that has all too often been the record of our financial institutions when we experience industrial problems. For good measure, let me tell the hon. Gentleman what was said by his right hon. Friend the present Secretary of State for the Environment when he was Opposition spokesman for industry.
Referring to the Ferranti statement he said on 14 May 1975 in a question to my right hon. Friend the Member for Bristol. South-East (Mr. Benn):
whether the right hon. Gentleman would agree that this"—
he was referring to the Ferranti statement—
is an unnecessary and expensive deal …? Does he agree that, first, it contains no indication about how profitability is to be achieved, nor does it give any indication of a commitment from the unions that they will help in achievin "that profitability?"—[Official Report, 14 May 1975; Vol. 892. c. 459.]
How wrong can one be? All of those things were forthcoming in an NEB enterprise. I agree, as the hon. Gentleman said, that they do not always succeed no one ever claimed that they would. The City does not make that claim, nor does capitalism, otherwise, the problems would not arise in the first place.
I cannot accept what the hon. Gentleman implies—that intervention is unnecessary or that it will fail. Elsewhere within the EEC, the United States of America and Japan, intervention is a reality, and it is a reality on a wide scale. We are the only Western industrial nation with a Government who are reducing their ability to help their own manufacturing industry. There can be no bigger indictment of this Administration than that charge.
The Secretary of State has recently been on a visit to the United States. I am told that he was not only surprised but astonished at the number of people—he would refer to them as entrepreneurs —who had succeeded in business not because of what the hon. Member for Knuts-ford would call market opportunities, but on the back of federal programmes for defence, space development, and so on, based on public expenditure. That is another area of opposition to what the Goverment are doing. The hon. Gentleman and his right hon. and hon. Friends apparently do not recognise that every public expenditure reduction in terms of building hospitals or schools is a business entreprise denied.
My hon. Friend has raised a particularly important point, which will interest all hon. Members. I refer to the effects of cuts in public expenditure on jobs in the regions. It might be for my hon. Friend to seek an undertaking from the Minister to investigate the effects of these cuts in public expenditure certainly on small businesses and other kinds of enterprises. In the development of the Government's policy there seems to be a dire lack of understanding and willingness to go out and discover the impoct of these cuts on people in the regions.
The people of West Cumbria—particularly those who are losing their jobs—will note the complete lack of care or understanding expressed by the hon. Member for Knutsford and no doubt shared or acquiesed in by many of his right hon. and hon. Friends. Apparently if people are out of work, the Tory response is "Hard luck". That is what the hon. Gentleman said.
The Government know that bankruptcies are increasing and will continue to increase. There may be several spectacular failures, as we saw in the period between 1970 and 1972 when the predecessor of the hon. Member for Knutsford, the late Mr. John Davies, coined the phrase "lame duck", espousing a similar industrial philosophy. It was not long before we saw the then Administration nationalise two major companies—Upper Clyde Shipbuilders and Rolls-Royce. They had to bring in Bills to do that, because they did not have the ability to assist those companies. Now they have such ability and, even though it exists—and we believe that it should exist as an insurance policy and long stop measure—they are determined to erase it from the statute book.
As my right hon. Friend the Member for Deptford (Mr. Silkin) said earlier, we are seeing the City institutions—of which the Minister thinks so highly—choosing to support property development and developments other than industrial. We have seen the re-emergence from the woodwork of Slater and Bentley, no doubt sniffing for the opportunities that existed so widely under the Conservative Administration of 1970–1974.
When these powers are removed—and we know that they will be removed, because of the Government's majority—when difficulties arise, when jobs are threatened, when major companies are forced into bankruptcy and liquidation, is it the intention of the Government to stand idly by and see unemployment inevitably and inexorably increased? That is the implication of Lords amendment No. 4. We respectfully request a clear and unequivocal answer to that question.
We shall not oppose the other amendments that we are discussing. In some respects, they are consequential amendments. However, it is our determination to resist Lords amendment No. 4, and we shall vote against it in the Lobbies tonight.
I listened closely to the remarks of the hon. Member for Whitehaven (Dr. Cunningham). He chastised the Government for causing difficulties for business men through the high minimum lending rate. If the hon. Gentleman were to support the Government in reducing further the public sector borrowing requirement he might find that his wish for a lower minimum lending rate would be achieved more rapidly should the output side of our expenditure equation be reduced.
Similarly, the hon. Gentleman criticised us for our reductions in regional aid. I represent a West Midlands constituency and I find that a difficult pill to swallow. I commend to the hon. Gentleman a well-reasoned report, written by Professor Schofield under the charming title "Macro Evaluations of the Impact of Regional Policy in Britain". At this hour, and bearing in mind that my hon. Friend the Member for Meriden (Mr. Mills) will, at some time this evening, wish to become involved in his Adjournment debate, I commend one small piece of the report to Opposition Members. In talking about the balance between what is created in one part of the economy being a loss to another, Professor Schofield referred to
the analysis of the effect of regional policy in shifting the aggregate Phillips Curve leftwards".
I am sure that Opposition Members will be delighted that the aggregate Phillips Curve does shift leftwards. But that phenomenon is referring to the reduction of jobs in parts of the country that are not assisted or development areas and the shifting of those jobs to other parts that are assisted or development areas.
I said earlier that I have some strength of feeling on the matter, because there is an example of that happening in the Coventry area. Hon. Members will know that, as a matter of deliberate policy, the Triumph TR7 was taken away from Coventry, its Canley plant, and its natural home—where people knew how to build cars—and shifted to Liverpool. We found that the Liverpudlians were not so skilful in building cars. Much money was wasted, and many of the problems caused by the labour disputes that emanated, somewhat ironically and fairly typically, from the Liverpool area, caused additional difficulties for the company. The car's production was shifted back to the Midlands. In the meantime, there was a weakened division in British Leyland, which now has had to shift the product further along the fine to Solihull. The net result of that form of regional policy has been the loss of about 4,000 jobs to Coventrians.
I am grateful for the opposition voiced by Labour Members. I greatly enjoyed the show put on by the "Three Musketeers", which involved House of Lords reform, membership of the House of Lords, its capabilities and, at one stage, corruption in high places in nationalised industries.
I regret that I feel obliged to refer to the amendment that we are supposed to be discussing. I wish to place on record my opposition to another comment by the hon. Member for Whitehaven when he quoted from The Sunday Times. He again castigated us for taking an exclusive view of monetarism—a view that was somehow all-important and all-denying to other policies in the Government's economic strategy. If the hon. Gentleman wishes to examine such topics further, I commend the pamphlet entitled "Monetarism is not enough" written by my right hon. Friend the Secretary of State——
I am obliged to you for that guidance, Mr. Deputy Speaker.
The amendment seeks to circumscribe the powers of the Secretary of State, and that would be right. We are amending section 8 of the 1972 Act so as to restore a power that was deleted by the 1975 Act. I fully support the reapplication of this circumscription of the Secretary of State's powers. I should like to quote the example of the measures that are available to foster what we now call the information technology industry. There have been a number of debates on this industry, but in the context of this clause I should like to demonstrate that the amendment will help us in fostering an industry that is a growth industry.
The hon. Member for Newton (Mr. Evans) said that the only growth industry was likely to be that which dealt with liquidations and bankruptcies. He may be interested to know that in the state of California alone about 3 million jobs have been created in real terms in the industry. We are therefore discussing one of the few ball games in town, as the Americans would say.
Let us consider, in the context of the power of the Secretary of State, what happens to his equivalent in France. There is a gifted gentleman—in this country we would call him a bureaucrat—called Simon Nora, who has written a report for the French Government at the personal instigation of Valery Giscard d'Estaing, which has assumed that only two industries are worth bothering about in the 1980s. One is food production. The other is telematique—information technology.
Many people are seized of the opportunities here, including Ken Gill, who is not exactly a friend of my party, and Mr. Clive Jenkins, who seems to be no one's friend but his own. I wish that there were another opportunity, on another day, to debate this matter fully. It is most important that we take note of what the French Secretary of State for Industry could do under his powers, but that we do not necessarily take the French line, which needs an almost centralised and Napoleonic form of administration in order to direct the measures required under that system.
By contrast, the Secretary of State for Industry in Japan would not have his powers circumscribed in this way. He would presumably work through an organisation called MITI, which is, significantly, the Ministry for International Trade and Industry. It is an intervene- tionist machine. Its task is to pick out individual industries, put specilic sums into individual companies to protect them while they are growing—I see Labour Members nodding—and, when they have grown, to release them on to the international market. Again, I am delighted that our Government do not take the Japanese route.
In this country, whenever we have taken investment-push decisions, we have invariably made some colossal errors. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) said on another occasion that when Conservative Governments dole out money, they like expensive toys—technocratic gimmicky toys—whereas Socialist Governments tend to like old-fashioned toys and old-fashioned industries, such as shipbuilding or the coal industry.
I turn immediately to the United States. The hon. Member for Whitehaven referred accurately to what happens in that country, but he did not make clear that in the electronics industry in the United States, which has a turnover of about £30 billion, £8 billion of that consists of Space Agency contracts, contracts for defence, and so on. Instead of using an investment-push route, it uses a demand-pull route—if I may use some convenient jargon. I can recommend that method to the House, and for that reason I think that the powers of the Secretary of State should be circumscribed.
I am ashamed to report to the House that the most significant success that the United Kingdom has had recently in information technology—the Prestel tele-data system—has, according to today's news, been adopted whole-heartedly in Germany. On a British system, using demand-pull methods, it will install about 3,000 British-designed sets in Dusseldorf and another 3,000 sets in West Berlin. Surely that is a signal to Britain that we, too, can take enlightened buying decisions. I hope that the money that is now being saved on the restriction of investments will be used for the placing of contracts in crucial areas of our economy. especially in information technology.
The British approach has always been an ad hoc approach. Whenever we have taken investment decisions they have become politicised. Some hon. Members who are present today participated in a debate on Inmos about six weeks ago. The debate was untidy. Those present were mainly Scottish Members, clamouring for a factory to be built in their area. If we quarrel over the building of factories like dogs quarrelling over a bone, we shall produce only a dog's breakfast.
As I understand, the NEB was set up by the previous Administration to act as an entrepreneur, but as soon as it does so, and makes money, we quarrel over the decisions that it has taken. We say that for social or socio-economic reasons we should like the factory to be built elsewhere. In that approach, I sense the seeds of another TR7 scandal. There is a role for my right hon. Friend the Secretary of State in this key industry—the co-ordination of all the procurement of public agencies, nationalised industries and, most important, Government Departments.
I refer my right hon. Friend the Secretary of State to his hon. Friend the Under-Secretary of State for Education and Science, who has produced what I believe is a beneficial schools programme, which I hope will use the maximum amount of British hardware. Surely that is an area where some liaison with the Department of Industry will be helpful if we are to seek a policy of backing our winners.
I commend to my right hon. and hon. Friends three areas where the powers of the Secretary of State could be used. The first is the System X telephone exchange. I am aware that a policy has been started, but the procurement programme could be brought forward and enhanced. The second area is that of fibre-optic cabling, which will help us to achieve breakthroughs in terms of the increase in traffic and telecommunications that is desirable. Thirdly, although it is too late for us to say that we have taken the lead, can we not follow the German lead and ensure that viewdata systems are installed in many Government Departments and in nationalised industries?
I thank you for your indulgence, Mr. Deputy Speaker. We can now return to the debate on the Lords amendments.
The amendments are intended to proscribe the Secretary of State's powers. As my hon. Friend the Member for Whitehaven (Dr. Cunningham) said, they are a reflection of the Government's philosophy—namely, to circumscribe intervention in industry. That philosophy is being implemented at a time when British manufacturing industry is facing a decline in production greater than any other throughout the post-war period. We are facing job losses in British industry unequalled since the 1930s. It is predicted that the level of unemployment over the next few months will hit 2 million. Various commentators are suggesting that unless the Government's policies are changed we shall have 2½ million unemployed in 12 months.
I suspect that changes are coming in any event. The cheers that the Prime Minister and the Chancellor of the Exchequer get when they talk of creating an atmosphere that encourages entrepreneurs as their economic policy are not quite so full as they were 12 months ago shortly after the May 1979 election. Conservative Members must be starting to besiege the Department of Industry with pleas to save jobs in their constituencies.
The CBI is changing its tune. It is not only British Leyland that is starting to feel the pinch. Other large car companies are also feeling it. A great deal of pressure is being generated and placed on Ministers who see the economic salvation to all our problems as the creation of massive dole queues to manipulate the population and the trade unions and to curb the public sector borrowing requirement.
The Secretary of State's ability to provide assistance is already pretty well circumscribed without limits being placed on sections 7 and 8. For example, the Secretary of State has the Industrial Development Advisory Board to assist him in assessing applications. The board has the right, if the Secretary of State disagrees with its decision and makes a grant, to place a statement before the House. The permanent secretary at the Department of Industry, Sir Peter Carey, has the authority of an accounting officer under the Exchange and Audit Department Act 1866. If he disagrees with any expenditure on which the Secretary of State, the PUSSs—that is the shorthand term for Parliamentary Under-Secretary of State—or the Minister of State has embarked, he can submit a minute in protest, which can be taken up by the Public Accounts Committee.
The curtailment of public expenditure by the Secretary of State is already pretty well defined. Why should the Government restore the sections of the 1972 Act? By the time that the Secretary of State is satisfied that financial interests cannot be met appropriately in any other way, the firm in question may well have gone into liquidation. He has to carry out an examination. He has to question other institutions under the terms of section 8.
In many areas the position changes from week to week. For example, there were sudden events at Rolls-Royce. Several large concerns have restrictions on their cash flows. A contract may change overnight; there may be a rapid change of Government—as happened in Iran—or an even more rapid rise than usual in the level of the pound. Such events could seriously affect a company. Any rescue would have to be carried out rapidly.
Needlessly to circumscribe the Secre tary of State's powers is absurd. It is conceivable that such circumscription will lead to unemployment. The Secretary of State may not be able to act quickly enough. Some lunatics in the Government are driving people on to the dole queues. Industrialists have told me that they are deeply disappointed with the Government. High interest rates——
That business man is certainly not alone. The hon. Member for Knutsford (Mr. Bruce-Gardyne) appears not to accept our remarks, but perhaps he will accept a statement that appeared yesterday in the Financial Times. In a major article on the Government's policies, John Elliott wrote :
' There is a real danger of running industry down so much that it won't recover', one company chairman, a life-long Conservative, told me. ' If we go to 2½ million unemployed, we'll not solve the problems in the way the Government hopes, but will create others'.
The hon. Gentleman should not hazard the suggestion that industrialists are not saying such things. They say them every day.
Some industrialists have spoken to me. I have just quoted one. More and more industrialists are talking to Labour Members because they recognise that they made a grievous mistake when they supported the notions that the Conservative Party put forward in May. It may be a joke to some Hon. Members, but there is a different world outside. People are deeply concerned about the wrecking tactics that the Department of Industry and the Government are adopting towards British industry. The two amendments are examples of that.
Does not the attitude of Conservative Members in such debates disturb my hon. Friend? Some hon. Members come to the Chamber time after time and watch the amusement of certain Conservative Members. The conduct of the hon. Member for Knutsford (Mr. Bruce-Gardyne) has been deplorable. It is about time he understood that many hon. Members come from areas of increasing unemployment. We do not want to be baited with amusing comments such as those made by him.
I am grateful to my hon. Friend for his apposite comments. Section 8 schemes are already the subject of wide consultation. However, the Secretary of State apparently has to be satisfied that assistance cannot be given in any other way before authorising the scheme.
We know from experience. Without assistance the ferrous foundry industry would not have modernised in the way that it has and the non-ferrous foundry industry would not have undertaken a modernisation programme. The machine tool industry was stimulated to invest by the machine tool programme. The Department of Industry conducted a detailed survey into the wool textile scheme. It found an increase in product quality that made the industry more competitive.
I am gravely disturbed when the Prime Minister trills at the Dispatch Box that the wool textile industry is doing well with exports. In 1979 there was a deficit in textile goods of over £700 million. In the first four months of this year the deficit was £200 million. It is an industry that has been highly modernised, with a great deal of investment, under the wool textile scheme. The scheme was started under a Conservative Government and was carried on by a Labour Government. The Secretary of State has to stay within the statutes, and he will now have another qualification on granting finance.
It is absurd to pursue this policy. We have to compete with other Common Market countries. As The Guardian points out, there is a greater level of intervention in Western Germany and France. The Government are blinded by an absurd dogma, and are busily undermining and destroying British manufacturing industry. As lengthy dole queues testify, there are closures, liquidations and bankruptcies throughout the country.
Not only the big section 8 rescue cases are affected when the Government choose not to intervene. While the Secretary of State is busy assessing whether the City can provide assistance and the company is going out of existence, the small companies that provide services and components are also going bust. We are led to believe that the Conservative Government are concerned about small companies. They criticise the Labour Government for rescuing British Leyland and Chrysler. Over 10,000 small companies supplied components to British Leyland and Chrysler. The Conservatives voted against those rescues and thereby against the rescue of 10,000 small companies.
The hon. Member for Coventry, South-West (Mr. Butcher) talks about the amendment prescribing further regional assistance, but the West Midlands would be an industrial desert had it not been for the intervention of the Labour Government. Hundreds of millions of pounds have gone to British Leyland, Chrysler and Alfred Herbert. Jobs have been preserved in Coventry by such intervention. It is the only way to retain our manufacturing base.
The, hon. Gentleman mentioned the TR7 scandal. The whole of the Triumph Stag was made at Speke. It is not a scandal that the manufacture was moved there; it is a scandal that it was moved back.
Does my hon. Friend recall the difference between the argu- ments under the Labour Government and what has been said tonight? I do not know of one of my hon. Friends from the West Midlands who would want his area to benefit from jobs lost in other parts of the country. The West Midlands has suffered badly under both Governments. However, no one on the Opposition Benches would have the temerity to suggest that there should be greater unemployment in other areas to protect the West Midlands. We are not in the business of choosing where unemployment should be higher. We want to defend our own areas and have lower unemployment throughout the country. We have never made a naked attack on jobs in specific areas, as does the hon. Member for Coventry, South-West (Mr. Butcher).
The hon. Gentleman also made shoddy comments on workers in Liverpool and their strike record. I spoke to a large meeting of shop stewards in Birmingham. They adopted a principled attitude, just as my hon. Friend the Member for Birmingham, Selly Oak—Perry Barr (Mr. Rooker) describes. We should preserve jobs and fight for them in every part of the country—the West Midlands, Liverpool, Tyneside, and so on. The tragedy of going on to the dole is the same wherever it is. I see that my hon. Friends from the Wearside area are here tonight because of their concern for jobs in that region.
Perhaps it was a Freudian slip when the hon. Gentleman referred to his hon. Friend the Member for Birmingham, Perry Bar (Mr. Rooker) as the hon. Member for Birmingham, Selly Oak, because my hon. Friend the Member for Selly Oak (Mr. Beaumont-Dark') is an expert on the asset stripping that has taken place at Government behest in the West Midlands. In his maiden speech, my hon. Friend referred to about 112,000 jobs that have been created elsewhere as a result of having been moved out of the West Midlands conurbation.
The moral of the story about the TR7 is that once we mix up social and political decision-making with economic criteria, we eventually have to face up to the truth that that product becomes non-viable in two locations, with a loss of jobs eventually. It takes a very courageous politician, if I may say so, to explain to people that that which is unpleasant in the short term may eventually produce a long-term benefit.
What the hon. Member is saying is that his economic system has no understanding of or care for social consequences. I reject his economic system, which puts people on the dole in Tyne-side, West Midlands, Liverpool, or anywhere else in this country. The Government have a prime duty, which they are miserably failing to fulfil, to provide decent opportunities for workers in this country. I see that the Minister of State finds the whole thing incredibly funny. He is not exactly a person who has faced the dole queue himself, having been born with a rather large silver spoon in his mouth. I am filled with contempt by the way in which Tory Members find the whole question of unemployment so passively amusing. It is the chaps outside who face the dole queue, while the people on the Conservative Benches enjoy their membership here and generally half a dozen company directorships as well. Their lack of understanding and concern is disgraceful, and it is shown in the policies involved in the amendments.
The Government have no mandate to destroy British manufacturing industry. The only way in which we shall be able to develop British manufacturing industry is.. achieving a balance, helping firms, nation-wide, that need assistance. There are some firms that do not and will not need it; that is all to the good. But there are a number of industries that simply do not have the information, or the skill and understanding, to collate the necessary information about where the level of investment in their industry is most needed. That is why the Government have in the past undertaken discussions nation-wide with machine tool organisations and with organisations representing foundries, and produced a scheme, with the co-operation of the industry concerned.
This sort of amendment is an inhibiting factor on that ability to produce schemes—schemes that the industries themselves have said are of advantage, enabling them to increase productivity and to have a better chance against international competitors. We have to balance national schemes with help for the regions, the areas that have the greatest amount of deprivation, the greatest amount of un- employment, which, sadly, is growing apace week by week. This sort of amendment inhibits the Secretary of State's ability to bring assistance to bear where it is needed. The sad fact for Conservative Members is that capitalism is failing. It cannot exist by itself. The rising dole queues, the decline in production and the erosion of British manufacturing industry are a testimony to the fact that capitalism cannot stand on its own.
I support my hon. Friend the Member for Whitehaven (Dr. Cunningham) in the excellent manner in which he opposed the amendment. I also support most of the remarks of my hon. Friend the Member for Keighley (Mr. Cryer).
To a very large extent, we are now in the same situation as we were in 1970 and 1971, especially in the first year of the previous Conservative Government, when all the hesitations and consultations that were taking place about the presentation of their regional policy created a complete crisis of confidence in industry. We face the same position now—high interest rates, and the deliberate destructive efforts by the Government to dismantle the regional policy which they inherited and which, despite anything that Conservative Members may say, achieved a very large measure of success in the development areas.
I view with a great deal of horror and revulsion the attitude of the hon. Member for Knutsford (Mr. Bruce-Gardyne) when we talk about unemployment almost at unparalleled levels. It is certainly at the highest level since the end of the last war in Scotland, in the Northern region, on Merseyside and in the South-West.
On a point of order, Mr. Deputy Speaker. I think I am right in saying that there is absolutely no pressure on the right hon. Gentleman concerning time. He has made an allegation against me which is totally without foundation. It may be that it is based on a misunderstanding. He owes it to me and to the House to give me a chance to put him straight.
I have no intention, Mr. Deputy Speaker, of withdrawing what I said. All of my hon. Friends present will confirm that when my hon. Friend the Member for Workington (Mr. Campbell-Savours) made the point about the loss of jobs in Cumbria, the hon. Member for Knutsford said, quite audibly, loud enough for all of us to hear—and I am the farthest from him—" Hard luck."
Yes, indeed—but not on that point. I am grateful to the right hon. Gentleman for allowing me to put him straight. I said "Hard luck" in reference to the fact that the hon. Member for Whitehaven (Dr. Cunningham) had the hon. Member for Workington (Mr. Campbell-Savours) as a neighbouring MP. That is what I was referring to—[Interruption] Indeed—and not to the subject of unemployment at all.
The hon. Gentleman gets further into the mire the longer he talks. I maintain what I said. I listened to his remark with horror and revulsion, because he has certainly no understanding of what it means to be unemployed. Those of us who have had that experience know only too well how we are stripped of our dignity, when we have acquired skills by our diligence and effort and are rendered unemployed not once but several times in a working lifetime. And that is the response that we get from the hon. Gentleman.
This awful fate has befallen more and more people during the 13 months of the present Conservative Government. We have the same crisis of confidence. I am afraid that Lords amendment No. 4 will further worsen conditions for the attraction of new industry into development areas such as the Northern region. Almost every day, the Northern press, whether a morning or evening newspaper, in Sunderland, Tyneside, Cumbria, or any other part of the region, carries new accounts of a factory closure involving a loss of 20 to 1,000 jobs next week or the week after that. The possibility of attracting new industry and generating new job opportunities recedes further into the future. Every credit is due to the local authorities in the Northern region—in Sunderland, the county of Durham, and Tyne-and-Wear—that are taking on the role of the Government by investing in small factory units to relieve the desolation of unemployment so many people have to undergo
The deliberate attack on regional incentives, the whole regional policy of the Government, contributes to the developing unemployment. Reference has been made to the possibility that, in all too short a time, the figure will reach 2 million. For as long as I have lived, the Northern region has borne more than its fair share of unemployment, with little benefit in return for the sacrifices that have been made.
The Northern region runs a grave risk of becoming an industrial wasteland. There will be no possibility of recovery even to the level of unemployment that the Conservative Government inherited on taking office. There has been reference to the ravaging of jobs on the West Midlands. I should like to know how many jobs from the West Midlands or anywhere else in the United Kingdom have come to the Northern region in the last 13 months. The answer, I believe, is none, or very few.
I long for the day when regional policies are so streamlined, effective, efficient and productive that we in the Northern region can say that we have arrived at the same economic plateau as the West Midlands, the South and the South-East. That would satisfy us to a greater extent than is ever likely to be the case under the present Government.
I have learnt, not for the first time, that one should beware of the interpretation liable not to be placed on asides. I do not regard and have never regarded unemployment as a matter of bad luck. My comments, I assure hon. Members, were related to the predicament of the hon. Member for Whitehaven (Dr. Cunningham) in his political neighbourhood. It was purely an aside.
I do not regard unemployment as a matter of bad luck. Nor do I take kindly to remarks by Opposition Members such as the hon. Member for Keighley (Mr. Cryer) who was a member of the Government when unemployment doubled. I do not accept for one moment that unemployment is made more attractive to its victims when they are told that the Ministers responsible are shedding crocodile tears every night. That does not improve the situation. It is a load of hypocrisy for people such as the Member for Keighley, who held office in the previous Labour Government, at a period when unemployment was doubling, to tell the House that hon. Members on the Conservative side do not care about unemployment. That is a load of hypocrisy. It does not add to the reputation of the House to treat the issue in that way. That has been welling up for a while. I shall return to the Lords amendment.
I am sure that the hon. Member can find a song somewhere downstairs. I should not like to inflict my vocal chords on the House at this hour.
The amendment is designed to diminish the area of temptation for Ministers. I confess that I have always believed that Ministers of all parties, like Oscar Wilde, can resist almost anything except temptation. I am all for putting temptation a little further out of their reach.
Two instances seem to be relevant to the debate. One relates to the subject which we discussed earlier—Ferranti. I refer to 1975 when Ferranti ran into trouble.
I intend to do that. Under the terms of the amendments Ministers are required, as they should be, to satisfy themselves that a business seeking assistance under section 7 or section 8 is unable to obtain assistance from an alternative source. The problem with Ferranti in 1975 was that it could have obtained assistance from an alternative source but for one thing—it had a nonviable transformer division which had to be rationalised. Because the then Government had taken the powers to provide assistance—
Mr. Deputy Speaker:
Order. The hon. Gentleman is making a speech which might have been made earlier if he had been fortunate enough to catch the eye of the Chair. He must not deal with Ferranti except by way of illustration. He is referring to what happened when the previous Government were in power.
We are debating a Lords amendment to remove the additional powers which the Labour Government gave themselves under the Finance Act 1975 to provide assistance, whether or not alternative sources of assistance were available. Ferranti's predicament today to some extent relates to the fact that under that Act, which we seek to amend, the Government were enabled to provide assistance to Ferranti under terms which, had the amendment been on the statute book, they would not have been able to make. The rationalisation of Ferranti through the capital markets would have occurred in a way which today would guarantee the integrity and independence of Ferranti. That is my point.
When the hon. Gentleman talks about rationalisation of Lancashire industries and the capital markets, does he not bear in mind the destruction of the Lancashire cotton industry by the capital market after the First World War and the havoc wrought by unleashed private enterprise in that industry throughout Lancashire?
I feel that I should get into great trouble with you, Mr. Deputy Speaker, if I followed the hon. Member for Colne Valley (Mr. Wainwright) down that path. The point I was seeking to make is that in this case the rationalisation occurred. The fact that it was done by the NEB and not by the capital markets did not prevent it from happening.
The transformer division of Ferranti effectively disappeared. That happened through the NEB where otherwise it would have happened through the capital market. This is where my point is relevant to the amendments we are discussing. I submit that if the Government at that time had not amended the Industry Act 1972—for which I hold no brief, since I opposed it at every stage—by the 1975 Act they would not have been able to put Sir Don Ryder into Ferranti to destroy its independence and create the problem with which we dealt earlier today. Hence, this is a specific example of the sort of temptation which we should remove from the Government by passing this amendment.
The second example I wish to cite relates to the intervention that I made during the speech of the hon. Member for Whitehaven. That concerned the case of Barrow Hepburn and the support of the National Enterprise Board for British Tanners in 1978. There, once again, was an instance where, if the Government had not taken power under the 1975 Act to provide assistance—notwithstanding the possibility of finding alternative commercial means of assistance—Barrow Hepburn would not have been able to load British Tanners on to the NEB.
It would not have been able to face the rest of the tanning industry, which was a great deal more efficient than British Tanners, with the subsidised competition which eventually ended in disaster and which the NEB had to concede was a grotesque affair. None of those things would have happened, I suggest, if we had retained the restraints on ministerial propensity to succumb to temptation which were applied in the 1972 Act.
I do not think, however, that the restraints on that ministerial propensity to succumb to temptation in the 1972 Act were adequate. I have always been in favour of the notion that Ministers, if they wish to inject the taxpayers' money into private industry, should have to put some of their own capital behind the project which they think will be successful. But if I went down that way I am sure that you would rule me out of order, Mr. Deputy Speaker. Therefore, I will not go down that way.
I have quoted those two instances because they seem to me to be particular examples of why we need the safeguard which is included in this amendment so long as we intend to operate under the provisions of the Industry Act 1972. Therefore, I strongly support my hon. Friend in inviting the House to endorse these amendments from another place.
I shall be brief. I welcome the amendment. For the benefit of the hon. Member for Keighley (Mr. Cryer), I should point out that the experience of unemployment does not belong only to Opposition Members. That experience is shared by many in the House. It is on record, and I am not ashamed of it, that I am one of eight children whose father was unemployed before the war, and I remember it vividly. I assure the hon. Gentleman that unemployment means something to me.
Part of Dundee lies in my constituency; and its unemployment problem is very real. However, I do not believe that Dundee was assisted by what we are attempting to remove through the amendment. I know Dundee well and I know that it was not assisted. If the hon. Gentleman believes that the previous Labour Government's record in places such as Dundee was good, I recommend him to go there and talk to the people because they do not see it that way.
In my judgment, the amendment will help to sort out some of the problems that have been created by well-intentioned, well-meaning but sadly ineffective measures in the past.
The hon. Member for Whitehaven (Dr. Cunningham) sought to illustrate the damage which would be done to the Secretary of State's powers to assist industry by referring to Ferranti. I remind him, since he has forgotten it, that the subsection about which he is so concerned was on the statute book at the time that the Ferranti rescue operation was mounted. Therefore, there can be no bigger piece of nonsense than for the hon. Gentleman to pray in aid that this clause would have prevented the Government from carrying out a rescue operation on Ferranti. The hon. Gentleman—I was careful to write down what he said—raised the matter of Ferranti. I did not.
The hon. Gentleman also quoted from the Financial Times the article on the North. But he gave a quotation out of context of one industrialist who was in trouble. Perhaps it would have been better if he had come to some of the broader and more general conclusions—some of the surprising ones—in that article :
These impressions have been built up during conversations with a wide range of industrialists, and especially during a four-day tour of the north-east which has always been one of the country's most depressed areas but which now presents the visitor with some glimpses of potential prosperity".
That is from the article that the hon. Gentleman chose to quote. He may laugh, because he does not like to have the article that he chose to quote from quoted back at him. If he believes that article forms a judgment, perhaps he will in fairness allow me to quote from it.
The Under-Secretary can go on and quote David Brown of D. J. Brown Engineering, one of the most successful entrepreneurs in the North-East, who is about to expand his business. Unfortunately, because of Government policy—and he is quoted in the article—he says that he will expand in the United States.
Is the hon. Gentleman saying that this comment about "glimpses of potential prosperity" in the Northern region is real when it has the highest unemployment rate of any region of the United Kingdom, except Northern Ireland?
The hon. Gentleman is right to draw attention to the high level of unemployment in the North-East, and I shall come back to that later. Before doing so, I should say that my hon. Friend the Member for Coventry, South-West (Mr. Butcher) made an important and valuable contribution to the debate with a considerable number of ideas and suggestions that I should like to look at carefully in the Official Report tomorrow.
The right hon. Member for Houghton-le-Spring (Mr. Urwin) spoke about the danger of unemployment rising, particularly in the North-East. I understood him to say that he wished that more Ministers would pay visits to that area.
Then I misunderstood the right hon. Gentleman. However, I am going to the North-East on Friday and Saturday of this week. I share with him a concern about the problems in that area.
For the Minister's information, I must point out that I did not say that we should have more visits from Ministers. One reason is that, no matter how many Ministers have visited us in the past 13 months, there is no distinguishable improvement, or likelihood of improvement, in the employment position while the Government remain in office. However, that being said, I look forward to meeting the Minister in Sunderland on Friday afternoon. I hope that he will be able to say to the leader of the council and others that he will not shelter behind the limitations imposed upon the Government as a result of the amendment. I hope that he will be able to give them the benefit of some sound, good advice about bringing new industries into that heavily depressed area.
I am grateful to the right hon. Gentleman for his clarification. I look forward to seeing him on Friday. My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) spoke with genuine feeling about the problems of unemployment. I am deeply concerned about job losses.
The hon. Member for Keighley (Mr. Cryer) called on the Government to save jobs. That is not within the gift of the Government. Jobs are created because men and management are jointly producing what the customer wants, at a price that he is prepared to pay. No amount of shaking the head from the hon. Member for Keighley will alter that reality. The Government cannot do that—only men and management can do that, in cooperation with each other.
Will the Minister accept that the National Research Development Corporation helped to fund the hovercraft, and also to fund the development of the computer in Britain? The development and creation of new ideas and jobs should not be left to the market place and to individual entrepreneurs, who seem a bit thin on the ground these days.
. The NRDC is continuing its work of helping in the area of technological advance investments. We are anxious to encourage it in that role. I would have thought it somewhat embarrassing for the hon. Member for Keighley to intervene in the debate on the theme that he sung about the way in which the Government could prevent unemployment from rising. He occupied my position as a junior Minister in the Department of Industry, and he presided over a period in our history when unemployment doubled. On that basis, he seems an ill person to whom to look for advice when dealing with the problems of unemployment.
Will the Minister confirm that his party was elected to office on 3 May last year on the slogan that it intended to solve the problem of unemployment, and especially to do away with the problems that it claimed the previous Labour Government had created? Far from anything having been solved, unemployment has increased. Is the Minister prepared to stand at the Dispatch Box and say that in 18 months' time there will not be 3 million unemployed in Britain?
I shall come to the major economic problems that have been raised. Before I reach that stage, I wish to refer to the speech of my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne). He warned against Ministers yielding to temptation. Perhaps I shall have to not yield to the temptation to follow him in the routes down which he sought to lead the debate.
I return to the central points that have occupied the speeches of a number of hon. Members, especially the hon. Member for Whitehaven who opened the debate for the Opposition. I refer to the problems of bankruptcies, inflation, minimum lending rate and the level of the pound. Those are the central economic issues that were raised during the past two and a half hours.
I, of course, share the concern which Labour Members have expressed about the rising level of bankruptcies. However, it ill-behoves them to harp on that subject when during the period of their Administration bankruptcies reached the highest level since records were first kept in 1914. On that basis the hon. Member for Whitehaven should be careful in seeking to level criticism.
The hon. Member for Whitehaven also referred to inflation. Inflation is the greatest destroyer of jobs and business growth. It destroys jobs because it makes every business cash hungry. Businesses then run up to the limits in the bank and are unable to extend their borrowing. They have to stop expanding, but their overheads continue to rise—rates and rent and so on. The business then sees its profit margin being eroded and the skids are under it. Repeatedly, businesses are driven into trouble because of the consequences of inflation. It is therefore the Government's top priority to deal with the causes of inflation.
Fascinating and vital words were used by the hon. Member for Whitehaven when he said that inflation was rising "inexorably". He put his finger, in a Freudian slip, on the important factor. There is an 18-month to two-year delay before money management of the country's economy works through in inflation. The inexorable aspect is that 18 months ago there was lack of control of a runaway money supply. That has now come through in inflation. It was caused by the activities of the Labour Government. If we are to attack the causes of inflation we must steadily reduce the increase in the money supply. One of the consequences of that is high interest rates. My hon. Friend the Member for Coventry, South-West was right when he called on Labour Members to join the Government in seeking to encourage cuts in Government expenditure so that the public sector borrowing requirements can be reduced and interest rates can fall the quicker. That is a central aspect of our policy.
Labour Members also sought to berate the Government over the high level of the pound. The pound is high because of the law of supply and demand in an international market. That market is not controlled by the British Government. We are a stable society sitting on an oil well. There is nothing we can do to avoid making this country an immensely attractive place into which foreign Chancellors will put their money.
In addition to the oil strength of the pound there is the strength that comes from the high interest rate. I say "Courage, mon ami"; keep your nerve.
As interest rates fall, so we shall have the desirable combination of lower interest rates and some easing in the level of the pound—a combination that the business community is calling for and which it will get as the Government succeed in fulfilling their policies as set out by my right hon. and learned Friend the Chancellor in his Budget Statement this year.
|Division No. 367]||AYES||[11.20 pm|
|Alexander, Richard||Griffiths, Peter (Portsmouth N)||Page, Rt Hon Sir R. Graham|
|Ancram, Michael||Grist, Ian||Page, Richard (SW Hertfordshire)|
|Arnold, Tom||Gummer, John Selwyn||Parris, Matthew|
|Aspinwall, Jack||Hamilton, Hon Archie (Eps'm&Ew'll)||Patten, Christopher (Bath)|
|Atkinson, David (B'mouth, East)||Haselhurst, Alan||Patten, John (Oxford)|
|Baker, Nicholas (North Dorset)||Hawkins, Paul||Pollock, Alexander|
|Beaumont-Dark, Anthony||Hawksley, Warren||Rathbone, Tim|
|Benyon, Thomas (Abingdon)||Henderson, Barry||Rhodes James, Robert|
|Berry, Hon Anthony||Hicks, Robert||Rhys Williams, Sir Brandon|
|Best, Keith||Hogg, Hon Douglas (Grantham)||Roberts, Michael (Cardiff NW)|
|Bevan, David Gllroy||Hooson, Tom||Rost, Peter|
|Blackburn, John||Hordern, Peter||Scott, Nicholas|
|Boscawen, Hon Robert||Hunt, David (Wirral)||Shaw, Giles (Pudsey)|
|Bright, Graham||Hunt, John (Ravensbourne)||Shelton, William (Streatham)|
|Brinton, Tim||Jopling, Rt Hon Michael||Shepherd, Colin (Hereford)|
|Brocklebank-Fowler, Christopher||Kershaw, Anthony||Sims, Roger|
|Brooke, Hon Peter||Lee, John||Speed, Keith|
|Brotherton, Michael||Le Marchant, Spencer||Speller, Tony|
|Brown, Michael (Brlgg & Sc'thorpe)||Lester, Jim (Beeston)||Stevens, Martin|
|Bruce-Gardyne, John||Lloyd, Peter (Fareham)||Stokes, John|
|Butler, Hon Adam||Loveridge, John||Stradling Thomas, J.|
|Cadbury, Jocelyn||Lyell, Nicholas||Temple-Morris, Peter|
|Carlisle, John (Luton West)||MacGregor, John||Thomas, Rt Hon Peter (Hendon S)|
|Carlisle, Kenneth (Lincoln)||MacKay, John (Argyll)||Thompson, Donald|
|Churchill, W. S.||McNair-Wilson, Michael (Newbury)||Thome, Neil (Ilford South)|
|Clark, Hon Alan (Plymouth, Sutton)||Marshall, Michael (Arundel)||Viggers, Peter|
|Clarke, Kenneth (Rushcliffe)||Mates, Michael||Wakeham, John|
|Clegg, Sir Walter||Mather, Carol||Walker, Bill (Perth & E Perthshire)|
|Colvin, Michael||Maxwell-Hyslop, Robin||Waller, Gary|
|Crouch, David||Meyer, Sir Anthony||Ward, John|
|Dorrell, Stephen||Miller, Hal (Bromsgrove & Redditch)||Watson, John|
|Douglas-Hamilton, Lord James||Mills, lain (Meriden)||Wells, Bowen (Hert'rd & Stev'nage)|
|Dover, Denshore||Miscampbell, Norman||Wheeler, John|
|Dykes, Hugh||Mitchell, David (Basingstoke)||Wickenden, Keith|
|Fairgrieve, Russell||Moate, Roger||Wilkinson, John|
|Faith, Mrs Sheila||Morgan, Geraint||Winterton, Nicholas|
|Fenner, Mrs Peggy||Murphy, Christopher||Wolfson, Mark|
|Fox, Marcus||Neale, Gerrard||Young, Sir George (Acton)|
|Gardiner, George (Reigate)||Needham, Richard|
|Garel-Jones, Tristan||Neubert, Michael||TELLERS FOR THE AYES :|
|Gow, Ian||Newton, Tony||Mr. David Waddington and|
|Grant, Anthony (Harrow C)||Onslow, Cranley||Mr. John Cope.|
|Bennett, Andrew (Stockport N)||Cryer, Bob||Dubs, Alfred|
|Booth, Rt Hon Albert||Cunliffe, Lawrence||Dunwoody, Mrs Gwyneth|
|Callaghan, Jim (Middleton & P)||Cunningham, Dr John (Whitehaven)||Eastham, Ken|
|Campbell-Savours, Dale||Dalyell, Tarn||Evans, John (Newton)|
|Clark, Dr David (South Shields)||Dixon, Donald||Field, Frank|
|Cocks, Rt Hon Michael (Bristol S)||Dormand, Jack||Foster, Derek|
|Cowans, Harry||Douglas, Dick||Foulkes, George|
|George, Bruce||Lyons, Edward (Bradford West)||Skinner, Dennis|
|Gilbert, Rt Hon Dr John||McCartney, Hugh||Smith, Rt Hon J. (North Lanarkshire)|
|Grant, George (Morpeth)||Millan, Rt Hon Bruce||Soley, Clive|
|Hamilton, W. W. (Central Fife)||Newens, Stanley||Tinn, James|
|Harrison, Rt Hon Walter||Parry, Robert||Urwin, Rt Hon Tom|
|Haynes, Frank||Powell, Raymond (Ogmore)||Wainwright, Richard (Colne Valley)|
|Home Robertson, John||Prescott, John||Welsh, Michael|
|Homewood, William||Roberts, Ernest (Hackney North)||Woolmer, Kenneth|
|Howell, Rt Hon Denis (B'ham, Sm H)||Robertson, George|
|Hughes, Robert (Aberdeen North)||Robinson, Geoffrey (Coventry NW)||TELLERS FOR THE NOES|
|Lamond, James||Rooker, J. W.||Mr. Terry Davis and|
|Litherland, Robert||Silkin, Rt Hon John (Deptford)||Mr. George Morton.|