I think that the interesting nature of the hon. Gentleman's remarks was not so much his authority, which I do not doubt, but the passion with which he defended the vested interest with which he is concerned.
I concede that, not surprisingly during the past seven years, the City has done very well by its own standards. City salaries have risen astronomically. I know that the Chief Secretary is an expert in these matters. Will he give us his judgment about City salaries and about the society in which we remove the wages council protection from the young but allow City institutions to pay men of 30, 35 or 40 not only £50,000 or £60,000 a year, but a £250,000 signing-on fee—a new phrase in the English language that goes with hello, and which the Chief Secretary knows perfectly well is common in the City? Will he comment not only on the morality and propriety of that, but on how he thinks that it affects the Government's drive for lower wages for those at the lower end of the income scale?
The City has done well, its salaries have risen vastly and City employment has risen while employment in the rest of the economy has slumped. We have to understand — and hon. Members who defend the City have to accept—that the City has not and cannot make up for the matching and related collapse in manufacturing industry. The City cannot fill the gap that will be left in our balance of payments when the oil begins to run out. The British Invisible Exports Council was explicit on this point. It says that it does not see the growth of services
as being to a major extent a substitute for decline in general industrial activity.
In the words of the right hon. Member for Old Bexley and Sidcup (Mr. Heath),
the service industries have to have something to service.
In the economy in general under this City-oriented Government, it has been seven years of decline, in part because the City has hopelessly failed to provide investment in export promotions, in job creation and in the areas where manufacturing industry might grow and where new jobs might be found.
There are three sectors of particular concern. One is small firms, particularly those that need, and should be provided with, loans and investment at the soft rates common among our more successful creditors. Secondly, there is an important need for but failure in long-term investment—the failure of the City to take a long-term view of these things. Thirdly, there is a desperate need for the City, when it is examining industry, to make a more sensible evaluation of the long-term risks.
One of the reasons why long-term risk evaluation is so often inadequate is that the City does not know about manufacturing industries, is not interested in them and is not concerned in them. In our more successful competitors in the OECD and EEC there are banks that choose to work as part of industry alongside industry and understanding its problems. Here in Britain, the City is different, superior, exclusive and industrially ignorant. However, when charged with failure to provide an adequate investment, the City always gives the same circular, self-righteous, self-serving defence. It is that there is plenty available for suitable investment. I see the hon. Member for Beaconsfield (Mr. Smith) utter the words as I say them. That is his view, but not that of British industry.
I quote from Sir Terence Beckett, not usually on the side of Labour party economic policy, who spoke to the House of Lords Select Committee about:
the widespread comments I get from industry, particularly small and medium sized companies who have difficulty in getting finance from banks".
The British Chamber of Commerce was equally conclusive. It said:
Every bank will tell you that there is money available in all directions—but they have to or feel obliged to put certain criteria on the lending which are somewhat different from our overseas competitors".
The hon. Member for Beaconsfield may laugh at the idea of the British Chamber of Commerce complaining about the absence of investment, but he is laughing about the failure of the Government and the institutions that they support to help small firms to develop and grow.
In any case, what does money available for suitable projects mean in practice? I give the House a definition offered to me by a west midlands clothing company whose highly successful expansion, principally into the export
market, was made possible only because of the help that it received from the West Midlands enterprise board. The chairman of that company, who had touted about the City looking for new investment, said;
If I had wanted to build a casino in Mayfair they would have pressed £5 notes into my hand. But because I wanted to make things and export things, they did not want to know.
They want to know about some things—the merger boom, for example, which occurs under our wholly inadequate competition policy. The City wants to finance takeovers, which have nothing to do with efficiency, output or employment, because this is a sector of easy pickings. It is work with which the real economy has no connection, work that is unproductive in terms of investment, output and jobs.
What is more — and the tragedy and mistake is accentuated by the takeover boom—the stock exchange system as a whole concentrates far too much of its financial attention on short-term profits. Prices are determined by the most recent returns, and so are takeover profits. Now, with more and more successful predators stalking the market, company after company increasingly occupies its time in erecting protection from suddenly being swallowed up. I offer in evidence the comments made in an article in the Bank of England Quarterly by David Walker, the bank's executive director. He talked about takeover mania
re-inforcing in many boards the disposition to be cautious about innovation expenditure which reduces profit in the short term.
The country needs the will to innovate and a willingness to make judgments on the long-term not the short-term profits. Yet the takeover mania, the inadequacies of present competition policy, buttressed by the behaviour of the City, has concentrated industry's mind more and more on the next share price, on the next quarterly profit and on the prospects of being swallowed up while the needs of the real economy are investment growth and jobs. Those needs are forgotten.
Perhaps most important of all, for the City to say that its investment programmes, investment potential and the investment it makes available to manufacturing industry are meeting the economy's needs is for the City complacently to accept an economy in which manufacture collapses, in which there is an incipient balance of payments crisis which will break over us when the oil runs out and in which there are permanently 3 million or 4 million men and women unemployed. That may be good enough for the City, with its vast salaries, its great power and its special relationship with the Government. It is not good enough for the Opposition, and I do not believe that it is good enough for the people of this country.