Business (Government Policies)

Opposition Day – in the House of Commons at 4:53 pm on 13 June 1991.

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Photo of Gordon Brown Gordon Brown Shadow Spokesperson (Trade and Industry) 4:53, 13 June 1991

I beg to move. That this House condemns Her Majesty's Government for creating and then compounding a recession which has led to large falls in manufacturing output and investment, rapidly rising closures and bankruptcies and the fastest growing unemployment in Western Europe, now hitting all professions, occupations and trades; deplores the problems all businesses, especially small businesses, are facing over high interest rates; regrets, especially in the run-up to 1992, the current contraction of industrial strength in all regions and nations of the country; and calls for an interest rate cut and policies for technology skills and the regions that will build a stronger industrial base throughout the country.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

I have selected the amendment in the name of the Prime Minister. In view of the late start to the debate, it will be necessary to impose a 10-minute limit on speeches between 7 and 9 o'clock.

Photo of Gordon Brown Gordon Brown Shadow Spokesperson (Trade and Industry)

This motion draws attention to the urgent need for measures to deal with unemployment, with the crisis in investment, and with the problems of training and skills in our economy.

Today unemployment is nearly 2·25 million men and women, 70,000 higher than last month. That is the biggest May rise since 1945—a higher rise than the previous highest in the United Kingdom, during the last Tory recession in the 1980s. Unemployment is now 600,000 men and women higher than it was at this time last year, having risen relentlessly for 14 months in a row. It is rising faster than in any other country in western Europe; it is rising not merely in the south and the north but in every region of the United Kingdom. It is rising not merely in areas of traditional blue-collar employment but among every profession, trade and occupation, with 80,000 managers now out of work.

Unemployment, the biggest destroyer of opportunity, is now half a million higher than when the current Prime Minister came to power, pledged to a classless society and the hollow promise of opportunity for all. It is half a million higher than when the Prime Minister, when Chief Secretary to the Treasury, told us that families and people in work could plan ahead on the basis of there being an economic miracle.

There has been as fast a rise in the numbers unemployed in a shorter time as under any Prime Minister since the 1930s. The recession is reaching parts of the economy that previous recessions did not reach.

Photo of Gordon Brown Gordon Brown Shadow Spokesperson (Trade and Industry)

I shall give way in a minute.

For a year, the Government have boasted that unemployment is below the European average; now, according to the Organisation for Economic Co-operation and Development, unemployment is higher than the European average and is rising faster than anywhere else. By the end of the year, according to the most recent estimates, unemployment will be higher in Britain than in any other European country with the exceptions of Ireland and Greece. What of the human consequences?

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

It is perfectly legitimate for the hon. Gentleman to mention unemployment in the context of this debate, but I wonder whether he recalls that when challenged by Conservative Members during a previous debate on the Labour party's minimum wage policy, he said that if that policy were implemented unemployment would increase a little additionally. Would he care to say by how much unemployment might rise if his minimum wages policy were introduced?

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

The hon. Gentleman should do his research before he comes to the debate. I have never had any statement of the sort attributed to me. It is absolutely clear from looking around Europe, where they all have minimum wages, that that has not affected employment and there is no reason to believe that it would affect it here.

The Secretary of State for Employment has made the issue of the next election very clear. In contrast to Labour's minimum wage proposals, he has said that he wants to abolish wages councils in their entirety. I ask the hon. Member for Brigg and Cleethorpes (Mr. Brown) and his colleagues to defend the existence of more poverty pay in our economy.

Photo of Mr Spencer Batiste Mr Spencer Batiste , Elmet

If the hon. Gentleman is not willing to face head on the reality that statutory minimum wage policies will cause increased unemployment, does he share with Gavin Laird the concern that that policy will erode skill differentials and discourage training?

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

No, I do not and I believe that a minimum wage is not only socially just, but makes for economic efficiency. I quote the words of Sir Winston Churchill, when he introduced the first minimum wage proposals into this House in 1908 and said that he wanted to end a situation where the good employer was undercut by the bad and the bad employer undercut by the worst. That is precisely what our minimum wage proposal will do—[Interruption.] That shows that Conservative Members want to return to the position before 1908.

What of the human consequences of unemployment, about which Ministers say so little when talking emptily about opportunity for all? Perhaps the Secretary of State will be more influenced by listening to a manager from a Tory constituency, a Tory voter who was quoted in The Times on 4 June as saying of the Tories: they have devalued my house. They have lost me my job. They have pushed up inflation. They have made unemployment start rising and they do not seem to be taking any notice. They do not realise the resentment there is pent up. It is not the people who make noises, it is the silent voter who is frustrated by what he sees is happening, the mismanagement of the country". It is not merely managers; skilled, conscientious and reliable men in their 50s, who have worked every day for nearly 40 years, are now being made redundant, and are gradually beginning to realise that they will never work again. Their suffering is no doubt part of the price that the Chancellor thinks is well worth paying. Widows, the only breadwinners for their families, are condemned to an indefinite future of unrelieved poverty on the basic dole of£40 a week, or just a little more. No doubt the Chancellor regards their unemployment as a price well worth paying.

Young people are denied the opportunity of doing a first-class job. They have never experienced the self-esteem that can follow a good day's work. No doubt that colossal waste of human potential is also part of the price that the Chancellor considers well worth paying. Then there is the family man with a mortgage who goes home to tell his children that, now that he has lost his job, they will shortly have to lose their home. No doubt that family's suffering is all part of the price that the Chancellor considers well worth paying.

The lives of all those people—if I may use the agonised phrase of the former Prime Minister—have been shattered like patterned glass smashed on the ground. No doubt, however, it is all part of the price that the Chancellor thinks well worth paying. The truth is that the only price in unemployment that the country thinks worth paying is the unemployment of the Chancellor himself.

Photo of Mr Winston Churchill Mr Winston Churchill , Davyhulme

How does the hon. Gentleman imagine that Labour's policies of giving more power back to the union bosses and increasing taxation levels will contribute to the solving of such problems?

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

It is amazing that, on a day when we have heard that unemployment has risen by 70,000, the hon. Gentleman cannot think about the problems of people in his constituency who are losing their jobs, and that he should suggest that the Government's policies are working. The fact is that they are not.

Today, Ministers should tear down the offensive advertisements, mounted at the taxpayer's expense, which read: "I will work, I must work, I can work." Those advertisements attempt to show that it is not the Government but the unemployed who have failed. The Government should erect, at their own expense, a billboard addressing the truth—that Conservative government is not working. It is the Government who have let down the unemployed.

A memorandum from the Department of Employment itself makes it very clear what is happening, and what will happen in the next few months. According to the document, which was produced on 2 May, the forecast for the period October 1990 to October 1991 was for a 50 per cent. rise in the levels of unemployment"— that is, an increase of 850,000 in the number of unemployed men and women in a year. Since October 1990 half a million have become unemployed, and the Government and the Training Agency predict that 350,000 more will do so in the next few months. The memorandum goes on: Any arguments that the Treasury therefore have for a reduction in funding for training are now completely eroded. There is a demonstrable justification for further funds. Ministers should act today, even if they do so not because they fear the unemployment of others as a result of the recession, but because they fear their own unemployment following a general election. Every day on which they delay the training and employment programmes that we propose for the unemployed represents a further betrayal of those whom they have pushed out of work.

Photo of Mr Philip Oppenheim Mr Philip Oppenheim , Amber Valley

The tenor of the hon. Gentleman's speech makes it plain that he is concerned about the performance of British business. Will he cast his mind back to an era when British Airways was rated below Aeroflot, British Leyland was the butt of international jokes and British Steel was the world's largest loss-maker? A Labour Government were in power then. How can the hon. Gentleman, who has never manufactured anything except dodgy policies, expect to do any better?

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

As the hon. Gentleman delivers his continual lectures from the Back Benches, he should remember that the growth rate under the last Labour Government was higher than it has been under the present Government. Despite what he says, our share of world trade has fallen under this Government, and fallen severely.

The hon. Gentleman should cast his own mind back —to the manifesto that he wrote in 1987. Unemployment in his constituency is now 61 per cent. higher than it was last year. In 1987, he wrote: The battle for jobs is finally being won. It is not only the old, obsolete, traditional companies that are going under; it is also the new, high-technology companies which were told by the Government that they represented the country's future, but which in recent months have needlessly become part of our industrial past. The Government cannot dismiss the 500,000 unemployed, the 40,000 bankruptcies in a year, the 5 per cent. fall in output and the 20 per cent. fall in manufacturing investment as the froth on the economy or a simple loss of fat from industry. They must admit that those losses go far beyond the natural resilience of the economic cycle, and represent not just a tragedy for individuals and families, but the attrition of our industrial base. They have eroded a critical mass of skills and expertise, and a culture of technology that, once lost, cannot easily—if ever—be restored.

Where is the recovery promised by the Chancellor and others? Last November, in the autumn statement, we were told to trust the Government, because the economy was about to turn the corner. A few months later, we were again urged to trust them, because the economy was about to turn the corner. In November 1990, the Prime Minister told us that the recovery would come "early next year", but the unemployed are still waiting. In his Budget speech, the Chancellor told us that the recession was "largely behind us", and that the recovery would begin around the middle of this year".—[Official Report, 19 March 1991; Vol. 188, c. 165.] Under pressure, the Chancellor told us a week later that the recovery would begin towards the middle of the year. If recovery were indeed beginning towards the middle of the year, would we not be experiencing it now? The unemployed are still waiting.

In April, in a speech to the Institute of Directors, the Chancellor said: we are close to a turning point"— but the unemployed are still waiting. The right hon. Gentleman continued, in even more fevered language, "victory is in sight." A few days ago, when he realised that developments could not be timed as precisely as he had thought, the Chancellor said: "It's not like arriving at Waterloo station. You cannot tell when it will happen"—a remark which betrays a sad lack of familiarity with the realities of life for London commuters.

The Government told us three years ago that a miracle had happened, when it had not. A year ago, they told us that there was no recession, when there was. Can we now believe anything that they say about a recovery? In his last survey, Mr. Banham, from the CBI, said that things were bad and getting worse. The Engineering Employers Federation's last survey told us that prospects would not improve in the short term. According to the motor manufacturers, the recession would continue until the end of the year. Ian Valiance of British Telecom, one of the Government's supporters, has said: there is no sign of an upturn"— except for him, that is— and we do not know when it will come". Mr. Graham Mackenzie, of United Engineering Steels Ltd., said: we were pessimistic six months ago but we never expected anything as bad as this". On Monday, Goldman Sachs said that it was hard to find any company in any part of the economy that was reporting clear signs of improvement in activity. Kleinwort Benson has referred to the almost complete evaporation of confidence over the last few weeks". What are we to make of all the Government's claims about the promised recovery? All that the Chancellor has been able to say, in an extended interview on these matters, is what he said to David Frost a few days ago—that he could detect "vague stirrings" in the economy.

A transcript has now become available. The Chancellor said: There are vague stirrings at the moment, but the signs are there. Business men say 'We cannot see it'"— but the Government, of course, can see around the corner.

David Frost said: But the vague stirrings you are saying you have seen—you say you have seen vague stirrings. The Chancellor replied, Faint stirrings, yes. There are those who claim to see visions; there are those who claim to hear voices; yet others claim to have second sight. Now the Chancellor seeks to persuade us that he can hear, see, feel or otherwise detect "faint stirrings". I am advised by those who know about these matters that, if the symptoms were merely those of seeing things that the rest of us could see and misrepresenting them, the Chancellor would be deemed to be suffering from delusions. Alas, his predicament is more serious: he is seeing things that he knows others cannot see, and living his whole life as if they were there. This is a textbook case of an otherwise sane man hallucinating a whole economic recovery—just as three years ago he hallucinated an economic miracle.

What is to blame for what has gone wrong? Is it consumer spending? Is it the stock exchange crash? Is it inefficient management? Is it the wage rises? Is it the banks? Is it the right hon. Member for Blaby (Mr. Lawson), who is often blamed for creating this mess single-handedly? It is interesting that the answer came to us in an interview not in Vanity Fair or in "Bark", the Japanese journal which enjoys the confidence of at least one faction of the Conservative party.

In a revealing interview nearer home, hidden away in the privately circulated House Magazine, which the Secretary of State for Trade and Industry, presumably hoped few would take the trouble to read, the right hon. Gentleman was asked, "Why the recession? Why inflation?" He said: It rose because of mistakes which were made during the period I was at the Treasury". Mistakes at the Treasury—a significant confession. The right hon. Gentleman continued: so I can't, and wouldn't wish to, escape my share of the blame. There it is—a confession, a complete admission of guilt.

The Minister who is to stand before us today has given us a full and frank account of his part in the affair. He has made a clean breast of it and has avoided the necessity of a prolonged cross-examination during his speech. It is a recession which, we now know, cannot be blamed on the Gulf war, America, the EC, the unions or managers but which, by the right hon. Gentleman's admission, is due to mistakes which were made at the Treasury.

Far more significant than the admirable personal confession of guilt by the Secretary of State—in effect, the right hon. Gentleman turning Queen's evidence; I remind the House that he was only a junior Minister during those events, probably keeping bad company at the time—is his statement of the part played by others. As he puts it, the blame attached to those at the Treasury.

Who are these men whose careers have gone unchecked, who have never been forced by The House Magazine into a confession of guilt and who have inveigled themselves into more senior positions? I refer, of course, to the former Chief Secretary, now Prime Minister, and to the Financial Secretary, now Chancellor, who were jointly and severally responsible. They were to blame, not the managers of our companies, not trade unions, not businesses and not primarily bankers, either. On the admission of the Secretary of State for Trade and Industry, mistakes were made by people at the Treasury—the senior ones now at Downing street.

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

Does the hon. Gentleman recall that the mistake of cutting interest rates excessively after the crash of October 1987 was endorsed by the shadow Chancellor? Unlike me, the right hon. and learned Gentleman still believes that it would have been right to have interest rates even lower then, while I have recognised that that was not right and that we erred in the direction of resisting a slump. The consequence was greater inflation.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

That was an interesting statement. The right hon. Gentleman now seeks to tell us that it was a "mistake" and not "mistakes" that were made during the period he was at the Treasury. [HON. MEMBERS: "Answer."] Of course we supported the reduction in interest rates—[HON. MEMBERS: "Oh."] We did not make a mistake. Of course we supported the reduction in interest rates. We did not support the £6 billion in tax cuts, mainly to the very rich, which was the primary reason why things moved ahead after March and caused the problems.

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

In other words, the hon. Gentleman is saying that I was not mistaken.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

The right hon. Gentleman was certainly mistaken. Talking about mistakes, the biggest mistake made in that three months was the 1988 Budget, which caused many of the problems with which we must now deal. I asked the Secretary of State for Trade and Industry at the time how he could defend that Budget, on the grounds not only of social justice but of economic efficiency, when the Government pumped £6 billion into the economy and then cut interest rates again. That is why we have all the problems now, and everyone knows it. They are the men who are guilty of creating the recession they once claimed never existed, guilty of compounding it by further actions and, even now, guilty of failing to correct the recession without rapidly rising unemployment and cutting at the heart of our industrial capacity.

What does the Prime Minister now say after all that? The classless society now looks like a hollow promise; opportunities for all look, with rising unemployment, like a sick joke; a nation "at ease with itself"—the comment he took from President Bush and said was applicable to Britain—now looks like a contradiction in terms. What are we now told? At the start of the week, we were told that we would have a keynote speech defining Majorism. The Prime Minister appears to have changed his mind—that in itself is a definition of Majorism. We have had Thatcherism, but of course we never had Churchillism, Macmillanism or Gladstoneism. Apparently, after six months of these achievements, and after all that new thinking, we are to have Majorism. I believe that the nation would excuse the lack of Majorism as a philosophy if we at least had policies to deal with one problem—rising unemployment.

Ten years ago, we were told that the Prime Minister was not for turning but that the economy would turn. Now it seems that things have changed. We have a Prime Minister who does nothing but turn and an economy that will not. What is to happen in this recovery which we were promised? The Government's case is that, after this unfortunate recession, will come sustainable recovery and all our worries will cease—exactly what they told us after the first Tory recession. It is even less credible when we have entered a second Tory recession with unemployment higher than it was in 1979 and industrial capacity smaller.

The real question is, what kind of recovery can we expect? Will it be investment-led growth? Will it he industry-led? Will it be likely to ensure sustainable growth? The Chancellor has already begun to answer the question. When pressed by David Frost, the only stirrings the right hon. Gentleman could detect were not stirrings in industry or manufacturing, not even signs of new investment in industry as a whole, but stirrings in the property or the housing market. Those are precisely the sectors whose expansion without investment-led growth led to the recession in the first place. Indeed, the very sectors in manufacturing industry upon which the country's future most depend for sustainable growth will, by the Chancellor's own admission, be the last to recover.

Is it not the case that the Government recognise that fact and will not tell the nation the full truth? Despite all pleas to the contrary, Britain will do badly in 1991; it will also do badly in 1992, according to the Government's own figures. As we leave the recession, if interest rates arid inflation fall, the real questions will be: how much capacity will have been lost? How much unemployment will there be? How much investment will there be? The question that dominates our future as well as our present deliberations is: how can we have steady, sustainable, long-term growth for Britain without the capacity, particularly the skills, and the strength to sustain it?

Anyone looking at the forecasts that are made in Europe, with the Government's help, will know that investment prospects in Britain are believed to be about the lowest in Europe, not just in 1991 but in 1992. Investment is expected to rise by 4 per cent. in Germany, 6 per cent. in Spain and 4 per cent. in Italy but only just over 2 per cent. in Britain. Having had a worse record for output this year than any other country except Greece, next year Britain will fall to the bottom of the European investment league as well. According to the forecasts, employment is expected to fall in 1991 and 1992. Not only will Britain's export performance be the worst of any EC country this year but, according to the EC's forecasts, the same will happen next year as well.

What will happen to our balance of payments next year? We will have all the elements in 1992 or 1993 of the problems that caused the present recession, including the pressures from imports and the balance of payments which brought rising interest rates and rising inflation. The answer is to be found in the Government's own publication, the Red Book of the Budget. According to the Government's figures, next year imports will rise by 4·5 per cent. The balance of payments, which is in a parlous state this year during a recession, will worsen yet again by £2 billion, according to the Government's estimates, and will have to be financed from abroad through higher interest rates.

Built into the Government's forecasts and into what they are saying in their official publications and buried away in the Red Book are all the elements of future grief in rising imports and a worsening balance of payments deficit. Let us be absolutely clear: there is no long-term strategy from the Government to bring Britain sustainable growth—only a short-term tactic to get them through an election. Even the Government, with their own figures, cannot claim to offer sustainable recovery.

If they do not believe me, will they listen to what industry is saying? The president of the Engineering Employers Federation said: My contention is that the United Kingdom manufacturing sector will simply not be big enough to support the kind of expanding economy that we need in the 1990s Martin Jacomb of Barclays de Zoete Wedd said: It is amazing how long it has taken people to realise the competitive weakness of our economic performance. Even today, our political leaders do not acknowledge it. You still hear them talking as if we were economically successful.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

No, I shall not give way. I have already done so many times.

If anyone is in any doubt about the gap that must be bridged in the run-up to 1992 and beyond, let him consider the problems that we face not only in training, technology, output and investment as a whole, but in manufacturing investment for the future.

A survey that the Confederation of British Industry gave its members only a few days ago said that manufacturing investment per worker in the United Kingdom is only £2,800; in Germany, it is £4,000; in France, £4,300—60 per cent. higher; in Japan it is more than twice as much—£6,000. Those are the 1989 figures. Investment in other countries has risen and is still rising in most cases, but in Britain it is down to what we estimate to be £2,400 per manufacturing worker. It is falling this year and slipping behind all our competitors as we move forward.

The tragedy is that the loss of investment power for manufacturing workers is not a one-off occurrence that can be dismissed as a freak or a blip—it is a recurring and lasting feature of the past 12 years. Over the past 12 years, the British worker has had only £18,000 invested in him in real terms. The figure for the German worker was nearly 30 per cent. higher, for the French it was 60 per cent. higher and even for the Irish worker it was 50 per cent. higher. In the Netherlands, the figure was 250 per cent. more, and in Canada and America it was 100 per cent. more. No other country invested less in manufacturing per worker except Greece. If the Government will not listen to us, will they listen to the voices from industry?

Photo of Sir Ray Whitney Sir Ray Whitney , Wycombe

Will the hon. Gentleman give way?

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes


Under this Government, the whole country now sees 1992 not as the opportunity that it should have been, but as the threat that it has now become.

What of the role of the Department of Trade and Industry? For 12 years, the DTI has done next to nothing. Only a few weeks ago—this is important, because the Secretary of State thought it so in the speeches that he made—after 12 years of doing nothing, the Secretary of State acted and made a few speeches on DTI policy. What was the purpose of those speeches? It was to explain the philosophy behind doing absolutely nothing. I suppose that, having acted and made so many mistakes at the Treasury, by his own acknowledgment, he is playing safe by doing nothing at the DTI.

Under the new Prime Minister, the Department of the Environment is at least getting rid of the poll tax, if not until 1993 or 1994. At least the Department of Health is setting itself new targets even if, it says, they will not make any difference until 1995 or beyond. At least the Department of Transport is talking about investing to get trains to run on time at some as yet unspecified time in the future.

What has happened at the DTI? What does it do when its sphere of responsibility includes dealing with the rundown of research, the failure of investment, the weakening of many of our exports and needs for innovation and the problems of the regions? What is the most important and interesting single initiative of the DTI over the past few weeks? It is not a new policy initiative or programme, but a video. The Sunday Times states: Plummeting morale at the DTI has persuaded the bosses to commission a video to remind staff how vital their work is. The low-key image of Peter Lilley has led some officials to look back with rose tinted spectacles on the reign of Lord Young whose campaigns made DTI staff feel important. The grumblers doubt that the new video will make much difference. Mr. Lilley will star in it himself. Presumably the video will begin, "You may not of heard of me, but I am in charge here."

When industry needs research and development support; when it needs a Department to speak up for them in government and imaginative thinking of public and private partnership to develop the infrastructure; at a time when we need to modernise—as the Labour party proposes—rather than abolish regional policy if we are not to slip back in the run-up to 1992, the best that we have is a video featuring the Secretary of State. The problems of this country are too important to be left to a Government who have failed.

When the House of Lords recommended improved capital allowances to boost investment in manufacturing—as the Labour party has also recommended—and when it recommended in its report tax credits for additional research and development such as those in America—a similar proposal to that advanced by the Labour party —the Government chose to do absolutely nothing. The House of Lords proposed regional development agencies, but we see absolutely no action except cuts in regional incentives, cuts in regional innovation and cuts in the regional technology transfer budget.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham

Perhaps the hon. Gentleman will tell the House what the commitments to tax-free credits for research and development amount to in total. The House would like to know precisely what figures the Labour party has in mind to bolster industry. While he is at it, will he kindly explain why Japanese and American companies prefer to invest more in this country than in the whole of the European Community?

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

That investment will not continue unless we have a decent research and development policy and a decent regional policy. The hon. Member for Horsham (Sir P. Hordern) is a well-known attender of Budget debates. He knows that we set out our proposals clearly during the previous Budget debate. They were set out in the document "Modern Manufacturing Strength" and during every debate that we have had since.

Several Hon. Members:


Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

I could take one, two, three or four people, but I do not know which faction of the Conservative party to favour.

When the House of Lords proposed regional development agencies, no action was taken by the do-nothing Department other than to cut regional grants. It is also important that when the Government holds guarantees over British Steel and a golden share, and even after one of the most critical reports by the Select Committee on Trade and Industry, the DTI's response is again to do absolutely nothing. It even refused to debate the issue or to meet me and the shadow Scottish Secretary to discuss it. When the Department was criticised over Rover and British Aerospace and misleading the House and the country by a Select Committee with a Conservative majority, the response was wholly complacent and did not even begin to answer the central charge of deception. Once again, there was nothing from the DTI.

When criticised over secret deals on shipbuilding which prevented investment in profitable capacity in the north-east, the DTI said nothing and refused even to answer the charge. The House of Lords argued that the high incidence of takeovers is damaging to manufacturing industry—as Labour has argued in its policy for stricter takeover laws—but Government policy has been merely to enunciate what is called the Lilley doctrine to prevent state takeovers from abroad and then to water it down almost out of existence in a speech that he made yesterday.

When the most serious takeover threat to British manufacturing in modern history is deemed to be possible, the Government do absolutely nothing and refuse to make clear their views. Would the Government of any other country in western Europe do nothing, if its largest manufacturer and its second largest exporter were at risk? Would it ever come to that in another country, if such a takeover were even contemplated? Why will the Conservative party not make clear its views about the importance of ICI to research and development and to the regions of this country?

If the Government were serious about the needs of industry, about competition policy or about the regions, they would tell us now that they will introduce legislation In the next Session of Parliament—if they go beyond October—to deal with cartels, to set up the regional development agencies that the country needs and that, instead of the privatisation of the Export Credits Guarantee Department and the British Technology Group, we shall have policies for training, technology and innovation.

What about small businesses? Is the Secretary of State for Trade and Industry aware that business debts, small and large, ran at £30 billion last year and that interest repayments were four times higher than in 1979? Is he also aware that £30 billion went in interest payments because of high interest rates, but that only £14 billion was spent on manufacturing investment? Is he aware that interest payments are now a far greater share of companies' out lay than their total investment? Is he aware that because of that and because of the margins charged by the banks, there were 10,000 small business failures in 1980, which was bad enough, but that there were 25,000 last year—500 a week. In 1991, they are now estimated to be anything between 40,000 and 50,000, yet on this, as on every other issue, the Secretary of State does absolutely nothing.

The Government cannot act on Europe because they are divided. They cannot act on training, unemployment, the public services or industry because they are caught between the Thatcherite ideology that they all support and the reality that the public will not go along with it. They are frozen into inaction and scared of further divisions within the party.

The result is that, while the French Prime Minister, who took office only a few days ago, could say that, starting on her first day in office, her biggest priority was to build and to prepare French industry properly for 1992, when our Prime Minister took office on the steps of Downing street in November, he did not say that his aim was to rebuild British industry or the British economy, but merely to reunite a divided Conservative party.

There is urgency in the measures that we are proposing today for investment, training and employment because the summer and autumn will be make or break months for decisions which, if avoided or badly made, will blight our economy for a decade. Having dithered over our preparations for 1992; having drifted into recession and failed to prevent the calamitous collapse of industrial investment; having failed to act decisively over the skills programme, over training for the unemployed, over the industrial investment incentive and over the technology trusts, all of which we have proposed; having failed to act decisively over the regional development agencies that we believe are necessary, not just in the regional interest but in the national interest; and having been caught unawares as our industrial capacity has shrunk, while our competitors have moved ahead, there is little time left for Britain in the run-up to 1992.

Faced with the deadline of 1992, any other Government—

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

Will the hon. Gentleman confirm that, whatever the impression he is trying to give, he cannot offer or commit himself to a single extra penny of expenditure because industry does not feature as one of the Labour party's two top priorities, and that any extra expenditure, at which he might be hinting in the remarks that he has finally got round to making, can therefore be made only when growth provides the money?

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

I know that the right hon. Gentleman has to intervene on this point, but he should have listened to the Budget debates and to the Labour party's own debate during Budget week, when I set out the Labour party's proposals on training, investment, skills and action on unemployment. We made our spending commitments absolutely clear in that Budget statement, just as we made them clear with the publication of "Modern Manufacturing Strength".

Any other Government, faced with the deadline of 1992 and pressed for decisions, would do more than adopt the "nothing" approach of the Department of Trade and Industry. Having created a recession, compounded it by further mistakes and having failed to correct it without a cut in industrial capacity, Ministers have failed, failed and failed again. They have nothing to offer the country except their resignations.

Photo of Peter Lilley Peter Lilley Secretary of State for Trade 5:32, 13 June 1991

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 'congratulates Her Majesty's Government on its determination to defeat inflation and on the increasing success of that policy; recognises that industry's first priority is the defeat of inflation so that growth can be resumed; welcomes the transformation of the British economy over the last 12 years; rejects the pro-inflationary policies of the Opposition who would increase public spending and borrowing, provoke a pay explosion and take risks with the exchange rate; and condemns their anti-industry policies of nationalisation, intervention and punitive taxation which would threaten the Government's remarkable achievement.'. Listening to that customary gloom-laden speech from the hon. Member for Dunfermline, East (Mr. Brown), I could not help recalling that splendid old radio programme "Take It From Here", which featured a family called "The Glums". If the BBC ever revive that programme—I hope that it will—the hon. Gentleman is a shoe-in for the part of Ron Glum. He is not merely glum; he is mired in gloom; he positively radiates gloom. He can brighten a room just by leaving it. His speech was long on gloom, but short on policies. He spoke for 30 minutes before even mentioning any Labour party policies. There is a simple reason for that—it is because the Labour party has no strategy on inflation, no strategy for the recession and no strategy on unemployment.

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

The Labour party keeps its policies out of sight because it is ashamed of them and because it knows that those policies would make every one of those problems worse.

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

Labour's policies would raise inflation, deepen recession, and increase unemployment—[HON. MEMBERS: "Give way."] The hon. Member for Dunfermline, East will be able to intervene in a moment. he spoke for 35 minutes without telling us about any of his policies.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

I am grateful to the right hon. Gentleman for finally giving way.

Is not the right hon. Gentleman gloomy about unemployment at the moment? Can he tell us whether his Government now irrevocably rule out Labour's proposed training and employment programme that is designed to reduce unemployment? If he is doing that, he is abandoning and betraying the unemployed.

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

What a pathetic intervention. The hon. Gentleman knows that that point, which he did not raise in his speech, was dealt with adequately last night by my right hon. and learned Friend the Secretary of State for Employment.

Photo of Gordon Brown Gordon Brown Shadow Spokesperson (Trade and Industry)

The House deserves a direct answer to a question which, incidentally, I asked in my speech, although the right hon. Gentleman did not seem to hear it. Are the Government now ruling out a training and employment programme to reduce the rate of unemployment? Are they ruling out an emergency programme, which we believe to be in the national interest and an essential matter of policy?

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

The hon. Gentleman knows that that point was dealt with perfectly well last night by my right hon. and learned Friend the Secretary of State for Employment. The hon. Gentleman wants to conceal the fact that, as I have said, the Labour party does not have any policies on the recession, inflation or unemployment.

The Labour party does not have a strategy for inflation, because it does not recognise its importance; it does not have the faintest understanding of its cause and does not have a clue about how to cure it. Conservative Members know that success in dealing with inflation is a precondition for everything else. That is why getting inflation down is our top priority. Even businesses that are experiencing the pain of recession agree with us about that. The good news is that inflation is coming down—we are winning that battle. Inflation is already down 4·5 per cent. from its peak and is below the lowest level that was ever achieved by the last Labour Government. Inflation is on track for 4 per cent. by the end of the year, which is half the lowest level that was ever achieved by the Labour Government.

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

The underlying rate of inflation, about which the hon. Lady is asking, is also heading downwards, as yesterday's producer prices index of 6 per cent. confirms. What is more, both the Confederation of British Industry and the journal of the Bank of England think that that index is too pessimistic about our success in reducing the underlying rate of inflation, because many firms seem to report their list prices—[Interruption.]—without taking into full account the discounts that they are giving, as they are requested to do. [Interruption.]

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

Order. I apologise for interrupting the Secretary of State, but our debate is not helped by excessive sedentary shouting from both sides of the House. I hope that we can have some self-restraint.

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

Conservative Members understand that Labour Members do not want to hear their lack of policies being exposed.

As well as believing that the rate of underlying inflation is declining more rapidly than the official index suggests, the CBI also states that 19 per cent. of the firms in its survey have reduced their net prices over the past four months. I am sure that the hon. Member for Dunfermline, East would prefer those figures to be more pessimistic but, alas for him, there is more good news. Pay costs are also slowing down. That process is best encouraged where top management sets an example. Throughout industry as a whole, pay settlements are 2·25 percentage points below their peak. The CBI's figures show that one in five companies is deferring any pay increase for the time being. If the hon. Member for Dunfermline, East could pay some attention to the debate, perhaps he will tell the House whether he is prepared to welcome that moderation in pay settlements—I shall give way to him if he wishes me to do so—or is he so afraid of his trade union masters that he will not welcome pay moderation?

The fact is that the Labour party does not have any policies to bring inflation down, but it has plenty that would put it up. A Labour Government would increase public borrowing, as they always do, which would raise inflation—

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

I shall give way to the hon. Gentleman in a moment.

A Labour Government would increase public spending, as they always do, which would raise inflation. They would spark off a public-sector pay explosion, as they always do, which would increase inflation. They would push up wages everywhere through their statutory minimum wage. That would certainly increase inflation. They would cut interest rates prematurely. That would increase inflation. Let us face it, they would devalue the pound. All Labour Governments have devalued the pound. The Labour party is the party of devaluation, and the hon. Member for Great Grimsby (Mr. Mitchell) advocates that course.

Photo of Austin Mitchell Austin Mitchell , Great Grimsby

The Secretary of State is telling us all about inflation. Any fool can bring down inflation and this Government almost certainly will, because it is always slow in graveyards. However, when the Government have brought inflation down to the lowest possible figure and they have a graveyard, where will the locomotive for growth come from? What will produce the return to growth?

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

The hon. Gentleman simply does not realise that bringing inflation down is the precondition for a return to growth. As we bring inflation down and interest rates fall, lower inflation itself gives a stimulus to the economy and both together cause a resumption of growth.

One City firm recently said that because everyone recognises that the Labour party is prone to devalue, a Labour Government would have to keep interest rates at anything up to 30 per cent. to hold the pound within its exchange rate mechanism limits. All these Labour policies would take us back to the funny money of the 1970s in fairly short order.

Photo of Mr Richard Tracey Mr Richard Tracey , Surbiton

The point that my right hon. Friend has omitted so far and of which all the country is aware is that a Labour Government would increase taxation. Will my right hon. Friend speculate? The hon. Member for Derby, South (Mrs. Beckett) has said that one in 20 people would pay more in tax. The Leader of the Opposition has said that one in 18 people would pay more in tax. The right hon. and learned Member for Monklands, East (Mr. Smith) has said that one in eight people would pay more in tax. Which one does my right hon. Friend think is telling the truth? Or are they incapable of doing so?

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

Frankly, I do not believe any of them. If one looks at their voting record, one finds that those hon. Members voted against every cut in the basic rate of taxation which brought the rate down from 33p to 25p in the pound. I judge them by their voting record, not by their attempts to excuse and argue their way out of the consequences of their high-spending policies.

It is extraordinary that, having chosen to debate the recession, the hon. Member for Dumfermline, East has as yet offered us no insight into how the Labour party would deal with it. He described it, revelled in it and gloated over it, yet we heard not one whit about what he would do about it. It is his politics of gloom once again, without a single ray of policy to illuminate us.

The hon. Gentleman's calls for further interest rate cuts, when he makes them, are totally discredited by the admission of his right hon. and learned Friend the Member for Monklands, East (Mr. Smith), the Shadow Chancellor of the Exchequer, that, throughout his entire time as Shadow Chancellor, he has advocated a 1 per cent. cut in interest rates. He maintained that call even when interest rates were at their lowest point in 1988. As the hon. Member for Dumfermline, East pointed out, I and the Government as a whole have acknowledged, with the benefit of hindsight, that it was not necessary to cut interest rates following the October 1987 crash. But the shadow Chancellor still says that we cut them too little. He demonstrates his unworthiness to be Shadow Chancellor because he does not understand the connection between interest rates and the economy. If we had followed his advice, then or ever since, inflation would have gone higher and the recession would have been more severe.

There is no doubt on the Government side of the House that Labour's policies would aggravate even further the problems that we face. A recent range of stockbrokers' analyses of the likely impact of Labour's policies agreed that a Labour Government would mean a loss of confidence, higher interest rates, more inflation and an increase in the cost of equity capital for investment.

Photo of Mr Giles Radice Mr Giles Radice Chair, Treasury & Civil Service Sub-Committee

I wonder whether the right hon. Gentleman thinks that the best way out of the recession is by way of expanding the property market, as the Chancellor seems to suggest.

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

That is a facile and silly point. My right hon. Friend the Chancellor said no such thing. The economy will resume growth in the second half of this year as a result of our success in getting inflation down.

Labour's whole growth strategy—if the phrase is not a self-contradiction—has a fatal flaw right at its heart. All its policies to boost growth require a great deal of extra public spending. They require more spending on training, more on science, more on innovation and more on the regions. But their own rule—Beckett's law—tells us that, apart from pensions and child benefits, everything must wait "until resources allow". Note the logic—the Labour party will boost growth by spending more, but the spending must wait until growth has been boosted. The argument deserves to be more famous than it is, but in a sense it is pretty famous already. In every textbook of logic, it is called circulus in probando.

Photo of Mr Terry Dicks Mr Terry Dicks , Hayes and Harlington

Will my right hon. Friend not forget to make the point that, if the Labour party was allowed to spend the £30 billion of additional money that it wants to spend, there would be an increase in income tax of 15p in the pound?

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

My hon. Friend is right. That is why the Labour party tries desperately to cover over the consequences of its spending plans for its tax obligations and why Labour Members gave the confused, misleading and self-contradictory answers to which my right hon. Friend the Member for Surbiton (Mr. Tracey) referred.

Perhaps I have been a little harsh on the Labour party so far. I believe half of its argument. I believe the part about spending. I believe that it would spend more on the multitude of priorities which its Shadow Chief Secretary to the Treasury denies. I believe that it would spend more even on industry because it would spend more on subsidies. It would spend more on quangos. None of that is hard to believe, because it has done it all before. The part that I do not believe about the Labour party's strategy is the growth.

Far from generating growth, the Labour party's spending would cripple the economy. That spending could come only from higher taxation, to which it is already committed, and higher borrowing, at which it hints. In both cases the increase to which it admits is but a fraction, a small fraction, of what its announced promises add up to.

The hon. Member for Great Grimsby wrote in April's New Statesman and Society—it does not have a large Tory readership: To fulfil Labour's proposals we would now need substantially higher borrowing and bigger tax increases. Absolutely right. In the "On the Record" programme last month, the hon. Member for Blackburn (Mr. Straw) said: In an ideal world we would like to say, yes … we'd increase taxation. When interpreted that means, "We know that tax increases are unpopular, so we will not admit to them until after the election".

Photo of Mr Bruce Grocott Mr Bruce Grocott , The Wrekin

As the Secretary of State is in the process of quoting lots of radio programmes, would he like to confirm his complete agreement with the Leader of the House who, in a recent radio programme, pointed out that taxation had clearly risen for the average family under this Government?

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

It is strange then, that the hon. Gentleman voted against every reduction in tax rates that we made.

The part of Labour's policies in which I believe is that there would be some sort of growth as a result of its policies. It would be a growth in taxes and in borrowing. That would consume the resources that industry needs in order to expand and prosper. One thing that I would have thought that the Labour party might have learnt from the 1980s is that, when income and corporation tax rates are reduced, one is more likely to see growth than when they are increased.

We reduced tax rates in the 1980s and saw growth in Britain, for the first peacetime decade this century, exceed that in Germany or France. That was the same decade which saw not only lower tax rates but privatisation, huge reductions in subsidies, less intervention and a pruning of quangos. My colleagues will understand my lack of optimism about Labour's formula: higher taxes, nationalism, increases in subsidies, more intervention and a record number of quangos.

The hon. Member for Dunfermline, East asked me again today to comment upon the Hanson-ICI issue, but he should know better than that. There has been no bid and no Secretary of State could conceivably comment on a hypothetical merger. If I did, and a bid subsequently emerged that called for action by the United Kingdom authorities, the courts might rule that I had "fettered my discretion". In any case, like it or not, any bid where the combined turnover exceeds 5 billion ecu is outside British jurisdiction. It would fall to be considered by the European Commission.

It is hypocritical of a party that is now committed to giving away our power to govern ourselves in monetary, economic and social matters to get hot under the collar about our loss of sovereignty on merger policy. The hon. Member for Dunfermline, East has made a lot of noise recently about the threatened possible takeover of ICI, but he has said nothing about the biggest takeover threat facing British industry—the takeover threatened by Labour's renationalisation plans.

Nationalisation is the N-word which the Labour party dare not mention. It is the policy that dare not speak its name. If the hon. Member for Dunfermline, East and his colleagues are reluctant to speak about it, I shall speak about it for them. The hon. Gentleman's specific documented pledges would involve the Labour party taking over companies worth three times as much as ICI, which invest four times as much a year and which employ five times as many people. Now that is some takeover threat.

Today the hon. Member for Dunfermline, East sneered at our policy of referring to the Mergers and Monopolies Commission where foreign state companies try to take over British firms. It seems that the Labour party is still so obsessed by nationalisation that it would prefer British companies to be owned by foreign Governments than to be owned by British private enterprise.

Photo of Frank Cook Frank Cook , Stockton North

On foreign state companies, would the right hon. Gentleman care to comment on the arrangement between ICI and Kemira, a state-owned Finnish company? That arrangement would not only have transferred ownership of the fertiliser section of ICI to Kemira, but would have preserved many hundreds of jobs in my constituency and those of Cleveland, Bristol and Edinburgh, Leith. The preoccupation with nationalisation and national ownership is an obsession in the mind of the Secretary of State rather than in that of anyone else. Was not that the reason for blocking that arrangement which had already been agreed upon?

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

The MMC recommended that the deal be forbidden and I accepted its advice as has been the practice of every Secretary of State since time immemorial. No guarantee was given that jobs would be preserved had the MMC recommendation not been accepted.

Photo of Mr Richard Holt Mr Richard Holt , Langbaurgh

My right hon. Friend will be aware of my concern that Britain's only potash mine has been put at risk as a consequence of his decision on the Kemira deal with ICI. At some stage or other, Ministers should stop hiding behind the fact that civil servants, quangos or anyone else make the recommendation. They are in the job to make such a decision, and there are occasions—even if it means that foreign firms have an interest in a British Company—when British national interest should be uppermost in the Secretary of State's mind.

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

All those points were taken into consideration by the MMC report that I considered. I accepted its judgment that the arrangement was against overall British national interest. Such acceptance has been the practice of Secretaries of State for at least a decade.

From time to time, the hon. Member for Dunfermline, East criticises the Government for what he calls their "hands-off" attitude to industry. By contrast, he would operate a hands-on policy, but so did the Boston strangler —by and large Labour Government policies have had rather similar effects, as they have throttled industry. That desire to intervene is not just a passion of the hon. Gentleman as the shadow Chancellor—normally a hands-offish type—recently declared his belief that Intervention by Government can make a significant contribution to improved efficiency and productivity Yet look at the shadow team who want to get their hands on British industry. They are not all here today, but there are seven of them to match four of us—quantity against quality. Not one of them has ever sullied his hands with a day's work in British industry during their adult lives. If I am wrong, I shall happily give way to any of the Opposition Front-Bench team who want to tell the House of their experience, which will enable them to improve, as the shadow Chancellor said, the efficiency and productivity of industry through intervention. Can any of them tell us what experience they have gained in industry which will enable them to do that? [HON. MEMBERS: "Come on."] Normally the hon. Member for Dunfermline, East is jumping up and down like a jack-in-the-box. Normally he is hyperactive. There must be some truth in what a journalist told me—he works only when he is plugged into a fax machine.

Photo of David Clelland David Clelland , Tyne Bridge

I have had some experience in industry. Is the Secretary of State aware that the machine tool industry is the barometer of the manufacturing industry, if not the economy? A few hours ago, a number of my hon. Friends and I met senior directors of the Machine Tool Industry Association. They are extremely concerned about the present recession and the state of the manufacturing industry. They say that, if present policies continue—we must assume that they would if the country were unfortunate enough to be inflicted once again with a Conservative Government—the deficit in manufacturing investment would be £15 billion a year by the year 2000. They believe that, if the current recession continued for more than six months we should have no machine tool industry in the country.

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

I understand the concerns that the hon. Gentleman articulates. His experience gives him much more right to be on the Opposition Front Bench than that of its present incumbents. It is not just I who think that, because, last week, The Sunday Times hit the nail on the head in its leader: If Mr. Brown was at the industry department we would be back to the days when politicians thought they knew more about the running of business than managers or shareholders, even though most politicians have never run anything (in Mr. Brown's case the most he seems to have run is Edinburgh students' council). The Opposition Front-Bench spokesmen's ignorance of business means that they just do not understand what makes industry tick. If they had any understanding of business they certainly would not be proposing to create a multitude of new quangos and regulations. The one lesson they have learnt is not to talk too often in public about their policies. If they will not, I will.

Just from reading "Modern Manufacturing Strength". Labour's latest policy document on industry, I have found seven new varieties of quango. We have the national investment bank—in other words, a state-run bank—regional development agencies in England, British Technology Enterprise, a defence diversification agency, a new national training agency, technology trusts and, the final irony, a new network of small business advice services to help firms with the bewildering multiplicity of overlapping openings The majority of those quangos will have to borrow on the credit of the British Government and spend what is, in effect, our money.

Quangos are not the only extra burdens that the Labour party is planning to impose on business which were not mentioned by the hon. Member for Dunfermline, East. It will introduce a new jobs tax of 0·5 per cent. on the payroll of companies whose training effort does not meet the Labour party's approval. That will kill off another 50,000 jobs. The Labour party plans to implement in its entirety the European Commission's social action programme, which has been condemned by every major employers organisation in Britain. That would add £3·5 billion to industry's costs and destroy another 100,000 jobs. In addition, there will be thousands, more forms for businesses to fill in because Labour is proposing "social audits" for firms to ensure that social as well as economic costs of decisions … are properly identified".

The Labour party also intends to introduce a new sex equality Act that will require businesses to produce an annual company equalities report. New obligations will be put on companies to make them give employees time off to engage in trade union activity. As well as that, the Labour party will introduce a new entitlement to 10 days paternity leave. One thing is certain. Under Labour, hundreds of thousands more people will be taking time off, and permanently. The truth is that Labour's industrial policies are a job destruction programme on a mammoth scale.

The hon. Gentleman wept salt tears over today's unemployment figures, but he gave no policies for reducing unemployment, and small wonder. His party's main policy plank—the statutory minimum wage—is about the most effective way imaginable to destroy jobs. That is not just my view. The only evidence that the hon. Gentleman could find in its favour came from 1908, from a person who was not even an economist, distinguished though he was as a Liberal of those days. Not only is it not just my view: it was the view of the last but one Labour Government, who published a report entitled "A National Minimum Wage," which concluded: the greater the cost of the national minimum, the greater the consequent adjustment in the level of employment is likely to be. If the House wants something more up to date—though still from the same party—the hon. Member for Birkenhead (Mr. Field) said: The employment consequences of a minimum wage would be little short of disastrous.

Photo of Austin Mitchell Austin Mitchell , Great Grimsby

The right hon. Gentleman is indulging in the most abominable kind of nit-picking, at a time when unemployment has risen by 3,200 people per working day since the present Prime Minister took office. We are losing 4,000 jobs a week in manufacturing industry and it is forecast that 40,000 firms will go bust this year, yet all the Minister can do is nitpick. When do the Government intend to bring unemployment down?

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

If the hon. Gentleman is concerned about unemployment, why does he give his allegiance to a policy which, in the view of even his hon. Friends, will increase unemployment by hundreds of thousands? For example, the Fabian Society, part of his party, recently provided the helpful estimate that up to 880,000 jobs could be destroyed by Labour's minimum wage plan.

Even the National Institute of Economic and Social Research—not normally well disposed to the present Government—estimated recently that a statutory minimum wage could raise the price level by 3·5 per cent. at the end of three years, while reducing the level of GDP by 0·5 per cent., with all the employment consequences that would follow.

Photo of Mr Robert Jones Mr Robert Jones , Hertfordshire West

Will my right hon. Friend confirm that in addition to a minimum wage causing such additional unemployment, it would hit hardest those with most difficulty in the job market, namely, the disabled, ethnic minorities and women?

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

My hon. Friend is absolutely right. It would, at the same time, destroy the incentives of people to improve their skills. Opposition Members seem to be getting rattled by criticism coming from within their own ranks on this subject. Recently, the Leader of the Opposition attempted to refute them by claiming that the OECD had concluded that the effect of the minimum wage in France had been in plain language, no job losses. The hon. Member for Sedgefield (Mr. Blair) wrote to the Financial Times yesterday in similar vein, claiming: The most recent study by the OECD into France found no unemployment impact through introducing a minimum wage. The OECD actually said: indications are that the increase in the relative value of the SMIC"— the French minimum wage— in the 1980s is likely to have reduced employment levels, especially for youths and the unskilled. The language of the Leader of the Opposition may be plain, but in this case he is plain wrong.

This week, the Leader of the Opposition, who has been very active, relaunched Labour's science and innovation policy for the umpteenth time. It appeared in a document entitled "Pushing Back the Frontiers"—an apt title. It pushes them all the way back to Harold Wilson and the white heat of technology.

Photo of Mr Barry Field Mr Barry Field , Isle of Wight

Does my right hon. Friend recall that Harold Wilson promised the nation the white heat of technology and we ended up with the selective employment tax, which put thousands out of work?

Photo of Peter Lilley Peter Lilley Secretary of State for Trade

Absolutely. He applied all the policies to which the Labour party is now reverting, although the document that Labour published this week is almost devoid of concrete policies. Instead, Labour sets a target, and the document says: Labour believes a reasonable target is to increase civil research and development from the present 1·8 per cent. of GDP to 2·5 per cent. Table 2 of the document says that that would involve increasing spending on research and development by £5·8 billion. That is some target. As the hon. Member for Livingston (Mr. Cook) said recently, unhelpfully from Labour's point of view: Anyone can invent targets, but targets won't hit themselves. The challenge is what action the Government will take to meet those targets. Unfortunately, the document does not spell out what action a Labour Government would take to meet the target. If Labour proposes to do so by increased Government spending on research and development, that will represent a massive breach of Beckett's law. If not, it must be relying entirely on the only specific proposal in the document, and that is Labour's discredited idea of tax credits for incremental research and development.

I am amazed that Labour Members are still plugging that idea. All the international studies of such tax incentives show how ineffective and wasteful they are. An Inland Revenue study carried out with the help of the OECD reached three conclusions. The first was that countries which operated the biggest tax incentives for research and development had the lowest level of industry-financed research and development. The second was: the best evidence available suggests that special fiscal incentives only increase industrial research and development by an amount that is roughly half of the revenue forgone by the government: the remainder goes to swell companies' cashflow and post-tax profits. The third was that much of the consequence of such incentives was simply to enable accountants to reclassify expenditure that was going on anyway as research and development. The study concluded: in some instances, evidence of abuse (amounting to criminal fraud) has led to the discontinuation … of fiscal incentive measures. So if Labour is relying on tax credits to reach its extra £5·8 billion target, it must be willing to forgo, say, double that in tax revenues, while giving accountants and fraudsters a field day.

Of course, what really makes companies invest in research and development is the spur of competition and the lure of profit. In the last six years, when profits increased substantially, industry raised its spending on research and development by about 50 per cent. in real terms.

On Monday of this week we published—or The Independent newspaper published on our behalf—a research and development scoreboard. That was widely welcomed, and I hope that it will give industry more of a stimulus and the financial world more of an understanding of the importance of research and development.

I have today drawn up another scoreboard. This one compares the performance of the Conservatives with that of the Socialists over our entire periods in office. We are proud of our record, even if Labour Members are ashamed of theirs, and if they insist on going back to the policies that they practised during the last Labour Government, it is legitimate for us to compare the performance of that Labour Government with our performance.

I concede that Labour wins in some categories. I start with inflation, and I must admit that on that one they are high scorers. Prices rose more than twice as fast under Labour as they have risen under Conservative rule. Labour also comes out top in days lost through strikes. They averaged 14·6 million a year between 1974 and 1979, twice the average over our period in office, and in the last 12 months, the number of days lost has fallen to just 0·8 million. That makes Labour's grand total so far two. Travaillistes: deux points.

I come to our achievements, and I begin with growth. Excluding North sea oil, the economy has grown by 1·9 per cent. a year under Conservative rule. It grew by 1·2 per cent. under Labour. In manufacturing productivity, throughout our term in office it has grown by 3·6 per cent. a year, three times as fast as under Labour. The number of new businesses trading, after all mergers and closures, has increased by 41,000 a year under us, twice the rate that they grew under Labour. The disparity in the case of self-employment is even greater. The ranks of the self-employed have risen by 126,000 every year since 1979. Under Labour they fell by 23,000 a year.

Under the Government, the average increase in real take-home pay for a man on average earnings with two children has been 2·4 per cent. a year. Under the last Labour Government, it was just 0·1 per cent a year. That means that, since 1979, the standard of living of the average man has gone up 37 per cent. but under Labour it rose by less than 1 per cent. That is the price that ordinary people pay when all the growth of the economy is channelled into increased public spending. That is the policy that Labour pursued between 1974 and 1979, and that is what it threatens us with again.

Let me recap on my scoreboard: Labour—two; Conservative—5. Labour easily beat us on inflation and strikes, but we beat Labour on growth, manufacturing productivity, business start ups, self-employment, and standard of living.

The Government have delivered not just for one year but over a period of 12 years. We have delivered a stronger economy, a massive increase in the number of firms, and a substantially higher standard of living. That is a record to be proud of. It is based on sound policies that will ensure growth in the 1990s. Our record will deliver a fourth election victory to our party, and socialism will never begin to challenge it.

Photo of Mr Stan Orme Mr Stan Orme , Salford East 6:12, 13 June 1991

No one would believe from the Secretary of State's speech that the Government have been in office for 12 years—and are presiding over massive unemployment and a huge reduction in manufacturing. The Secretary of State has no policy to deal with those problems. He analyses what he assumes to be Labour's policy. We shall tell him what our policy is when we start to implement it under the next Labour Government.

The Secretary of State's speech was outrageous. Faced with the largest increase in unemployment, the decline in manufacturing industry, and the closures that are taking place, he has a duty to the country to say in straightforward language what the Government intend to do and to explain their policy. However, he did nothing of the sort. Rather, his speech contained only bluff and schoolboy politics.

Photo of Mr Robert Jones Mr Robert Jones , Hertfordshire West

Will the right hon. Gentleman give way?

Photo of Mr Stan Orme Mr Stan Orme , Salford East

No, I shall not. I have just started. I will give way later.

Many years ago, Salford was a large engineering city, but it has experienced an unbelievable decline in manufacturing. Only 10 days ago, a firm told me that it employed more than 100 people in my constituency. Its work force was highly skilled and the company had overseas orders that it wanted to develop. Its employees had agreed not to take a wage increase, unlike some directors of large companies. Well over 100 jobs are at stake in that firm. If it closes because of a cash flow problem, with the banks calling in their money—some £100,000—about 140 workers will be thrown on the dole and will never work in industry again, despite the first-class product manufactured by that company. What will that cost the nation?

The events taking place within that firm are a mirror image of what is now taking place throughout our society. I wrote to the Chancellor about the issue. I saw the interview of the Chancellor on the David Frost programme, when he said that he would talk to the chairmen of the banks. The Barclays bank advertisement says that it is in favour of helping small businesses. I want to see some evidence of that. I want the banks to take action in favour of the firm to which I referred and many other firms in constituencies of hon. Members on both sides of the House. Conservative Members know the reality of the situation.

In north-west England there has been a 34·5 per cent. decline in manufacturing industry since 1979—the largest percentage fall experienced by any region in the United Kingdom. The number of male employees alone fell by 274,000. Where are we to get the manufacturing sector that will create the wealth to give our 60 million people the standard of living that they demand?

Photo of Alex Salmond Alex Salmond Leader, Scottish National Party

On the question of replacing manufacturing jobs, has the right hon. Gentleman heard about the remark of the former Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), today? She said that jobs in manufacturing can be replaced by jobs in gardening. What price does the right hon. Gentleman think the Chancellor of the Exchequer, the Secretary of State for Trade and Industry and the current Prime Minister would pay to keep the former Prime Minister quiet?

Photo of Mr Stan Orme Mr Stan Orme , Salford East

I am not surprised to hear what the previous Prime Minister said.

Photo of Mr Raymond Powell Mr Raymond Powell , Ogmore

On a point of order, Mr. Deputy Speaker. I notice that the hon. Member for Brigg and Cleethorpes (Mr. Brown) is seeking assistance from the Minister's aide from the Box. I do not think that that is in order. If it is, I assume that we can all go to the Box for information on any matter that arises in the House.

Photo of Mr Harold Walker Mr Harold Walker , Doncaster Central

I know nothing about the Box to which the hon. Gentleman refers. It does not exist as far as the Chair is concerned.

Photo of Mr Stan Orme Mr Stan Orme , Salford East

When the Chancellor was asked, on the David Frost programme, where the recovery might come from, he referred to the building industry and other areas, but not to manufacturing.

Many of my hon. Friends will be aware of what is happening in the north-west. As the recession worsens, companies are cutting jobs or even closing down. Job losses announced in the past few months include those at British Aerospace, which is to close its military aircraft plants at Preston and at Kingston, Surrey, with a loss of 5,000 jobs. At the manufacturing facility at Lostock, Lancashire, 620 jobs are to go, and 370 jobs are being axed at Woodford, near Manchester. Cammell Laird cut 115 jobs on Merseyside. Reports predict that up to 1,000 production jobs will go at Ford's Halewood site on Merseyside over the next few months.

Following the closure of the Bass brewery at Preston Brook, near Runcorn, Cheshire, 430 people are to be made redundant. Rolls-Royce motors is to cut its Crewe work force by 340. The Tootal textile group is closing its factory in Farnworth, Lancashire, with a loss of 148 jobs. At Manchester airport, 300 to 400 jobs are threatened at Dan Air. ICI is threatened with takeover by Hanson. I should have thought that the Secretary of State would be concerned that one of the major manufacturing units of the United Kingdom, or even of the world, could be emasculated and put out of action by the asset stripping of Hanson. The problem is that yet worse figures will follow the job losses that have been announced today.

It is no good the Barclays bank chairman saying, in the famous advertisment that is in the press today, that the major banks are in favour of assisting small businesses. Evidence shows that this is not so. This would not happen in Japan, Germany or the United States, but it happens in the United Kingdom because there is no concern for the manufacturing industry. I have spent a lifetime working in manufacturing industry and I know that it has always been seen as a poor relation, although it created the wealth that made Britain a leading country.

Photo of Nicholas Soames Nicholas Soames , Crawley

The right hon. Gentleman makes a powerful point. Is he aware that that is compounded by the fact that the Japanese, American and German Governments support their major corporations far more vigorously than we do? Here, we spend so much time thinking about small businesses that we tend to forget the important interests of our major companies.

Photo of Mr Stan Orme Mr Stan Orme , Salford East

I take that point, but we should be concerned about all industry. We need small and medium-sized industries as well as large industries, and large industries have been diminished as well.

People in the machine tool industry have told me that orders for the industry are down by 46 per cent. and that overall investment is down by 22 per cent. in the first quarter. That tells it all. The machine tool industry led the world. I have worked in it, and I know what it is like. It no longer leads the world because it has been overtaken by the Japanese, the French, the Americans, the Germans and many others. If ever there was a time when the industry needed support, it is now. The industry is made of medium and small firms, many of which are high-tech.

To illustrate the point made by the hon. Member for Crawley (Mr. Soames), I shall use the example of British Aerospace. It is the largest industrial manufacturing employer in the United Kingdom, employing about 130,000 people directly, and tens of hundreds of thousands indirectly. The Government have no policy on British Aerospace. On Tuesday 11 June, a survey on British Aerospace in the Financial Times said: the industry is having to adjust to a slump in both its commercial and defence sectors. I know that things are changing, not least in the defence world, and that there is recession in the commercial world. I have spoken to both workers and management, and they are crying out for a more positive Government policy to assist them, but the Secretary of State has turned away. He has said that this is a matter for market forces. If market forces were allowed to run riot, we would have no aircraft manufacturing industry left. We have seen television, car manufacturing and other industries go. The British aircraft building industry is next unless the Government are prepared to support it.

Photo of Mr James Cran Mr James Cran , Beverley

The right hon. Gentleman is trying to convey the impression that British Aerospace, Britain's largest manufacturing company, is clapped out. If that is the case, why did British Aerospace have record profits last year, and why is it that this year it has its most valuable ever order book, at £11.8 billion?

Photo of Mr Stan Orme Mr Stan Orme , Salford East

I wish that the hon. Gentleman would listen to what I am saying. I did not say that the industry was clapped out. I said that it was one of our major high-tech industries.

British Aerospace recently announced large planned reductions in its work force, both in the military and civil divisions, some of which will result in redundancies in the north-west and in the south of England. These include reductions of 675 workers at Chadderton works, 375 at Woodford, 1,470 at Hatfield, 60 in Bristol, 2,200 at British Aerospace (Dynamics), the missile production division, 620 at the Lostock factory in Lancashire, 500 at Stevenage in Hertfordshire and 1,300 at Bristol. About 5,000 will be lost in the next three years, following cuts in both Preston and Kingston-upon-Thames.

This is a major industry. I know that we need to take the peace dividend into account, but both the workers and the management want to co-operate with this or any Government to ensure that the industry has a basis from which it can survive and expand. Instead, it gets no support from the Government. If we sit back and watch the industry disintegrate, it will be a disaster for the country. If that happens, we shall not have the manufacturing capacity to challenge our main competitors. We shall then become a second-rate country.

Photo of Mr Kenneth Eastham Mr Kenneth Eastham , Manchester, Blackley

Does my right hon. Friend recall that, in a recent meeting, Mr. Roland Smith expressed concern about the future of British Aerospace? He told us that the nation must make up its mind whether it wants to continue to have an aircraft industry, or whether the business should go to Germany instead.

Photo of Mr Stan Orme Mr Stan Orme , Salford East

The airbus is about to come on stream. Important decisions must be made both in the commercial and the defence sectors. I recognise that they will be difficult decisions, and I am not trying to gloss over that fact. However, we should be looking at the problem as a nation. The Government should be involved both in measures to overcome it and in the necessary planning.

My hon. Friend the Member for Dunfermline, East (Mr. Brown) made constructive proposals. Whether I believed in them or not, I wish that the Secretary of State had at least made some proposals. We have nothing from him. We need a fresh approach. High interest rates, training and investment, the exchange rate and the lack of a national policy are all important factors. We are debating the future of the United Kingdom in the 1990s and beyond. We must resolve the problem and ensure that the nation prospers, with all the necessary growth and expenditure. If we do not do something about it, whatever party is in power, we shall not have the capacity to produce the standard of living that people demand. The Government's policy is unbelievable. I hope that the British people will listen to this important debate so that they know what the answers are.

Photo of Mr William Clark Mr William Clark , Croydon South 6:29, 13 June 1991

I followed the speech by the right hon. Member for Salford, East (Mr. Orme) with great interest. He was reminded by my hon. Friend the Member for Beverley (Mr. Cran) that British Aerospace has a record order book. We do industry no good by trying to talk down a successful company.

All that one can say about the speech by the hon. Member for Dunfermline, East (Mr. Brown) is that it was a good knockabout speech. He spent most of the time in knockabout and it was only as a postscript that he mentioned one or two points such as more training, and more research and development. Not once would he answer the question of where the money would come from. We can all have targets and ideas, but, in the last resort, the question is where the cash will come from. As hon. Members know, the Labour party's top priority seems to be to increase pensions and child benefit. It is all very well for them to talk about targets, but we and the country are entitled to know where the cash will come from.

As we entered the 1990s, the supply side of the economy was good and in far better shape than it was in 1980. Today we compare with the best. I accept that there is a drop in investment. We start from a high level of investment. Investment will come from industry when it feels that there is a product that it can make—with new machinery or whatever—which is competitive.

We have been debating business and the help that we can give to the general economy. We should remember that inflation has come down from well over 10 per cent. to 6·4 per cent. and I am confident that when the figures come out tomorrow, we shall see that inflation has come down to under 6 per cent. Inflation will continue to come down, which will assist not only business, but everyone in the community. As my right hon. Friend the Secretary of State said, with inflation coming down, interest rates will follow. We have already seen the base rate come down from 15 to 11·5 per cent. and we all hope that it will continue to come down with inflation.

I agree with the right hon. Member for Salford, East that as the Chancellor of the Exchequer has reduced the base rate by 3·5 per cent., the reduction should be passed on to the local business man, whether big or small. The Chancellor has not reduced interest rates to increase the banks' profits. He has reduced interest rates following the reduction in inflation to help business and to help us become increasingly competitive. We must find a solution to the problem for the sake of the small business man and the large business man. I have raised the matter with the Governor of the Bank of England and I am waiting for his reply.

The small business man also suffers from some of the charges that banks impose when a loan is being renegotiated or when an overdraft is increased. Business men are suffering from a cash flow problem. We must soon consider the problem of payment of debt, especially from large companies to small companies. We should consider whether it should be mandatory for interest to be paid by the person who owes the money after a stated period, whether 28 days, 40 days or whatever. Some large companies are late in paying.

We must take the question of bank interest out of the political arena. My right hon. Friend would be well advised to get the British Bankers Association, which covers all the clearing banks and all the merchant banks, to exercise influence on the banks.

The hon. Member for Dunfermline, East said nothing about the good things in our economy and about our achievements. In the short term, there are temporary difficulties—nobody could deny that—but we must look at the economic long term. In the 1950s and even in the 1960s, we were the poor relation in Europe and we were bottom of every economic league. Now we are not—

Photo of Austin Mitchell Austin Mitchell , Great Grimsby

At least we paid our way in the world.

Photo of Mr William Clark Mr William Clark , Croydon South

I must remind the hon. Member for Great Grimsby (Mr. Mitchell) that it was because of socialist policies that we were bottom of the league in Europe. One needs only to look around the world. The world is rejecting left-wing policies. Socialism ruined Africa, Russia, the Baltic and all the other iron curtain countries. Those countries are now in a desperate state, yet the Labour party advocates similar policies for us.

Photo of Mr Den Dover Mr Den Dover , Chorley

My right hon. Friend said that the hon. Member for Dunfermline, East (Mr. Brown) did not mention any good news. He mentioned one point which his right hon. Friend the Member for Salford, East (Mr. Orme) also mentioned. They pooh-poohed the fact that there has been an uplift in the amount of housing development started recently. Labour Members complain about a lack of manufacturing and a lack of investment. Does my right hon. Friend accept that investment in housing is investment? Does he also accept that housing requires a lot of manufacturing—the manufacture of machinery, of timber frames, of bricks, of pipes and of all the parts that go into a dwelling including carpeting and finishing?

Photo of Mr William Clark Mr William Clark , Croydon South

My hon. Friend makes a valid point. There is no doubt that if the building industry improves, so will all the other industries associated with building.

We must look at the Government's record. There are well over 400,000 more firms today than there were in 1979. As my right hon. Friend the Secretary of State said, the number of self-employed is over 3·25 million, up by 70 per cent. compared with 1979. That must be good.

The small firms have created well over 1 million jobs and that is an achievement.

Hon. Members have talked about helping business. We need only look at the actions of successive Chancellors of the Exchequer. In 1979, corporation tax was 52 per cent.; today for large companies it is only 42 per cent. In 1979, corporation tax for small companies was 42 per cent.; today it is 25 per cent. That is a great help for small businesses. Small businesses invariably grow into big businesses and one must start small if one is going into high technology and innovation, especially in communications.

Income tax has come down. The standard rate has fallen from 33 to 25 per cent. and the top rate from 83 to 40 per cent. The tax on investment income has come down from 98 to 40 per cent. The welcome increase in the threshold for VAT has also helped business men. However, I sound a note of caution. Some of the fines imposed for genuine mistakes, whether in VAT or in pay-as-you-earn, are draconian and that point should be examined. However, we all welcome the quarterly payment by small businesses of PAYE and national insurance contributions. The Government have also helped to cut form filling. Many thousands of different forms are no longer needed.

The Labour party will not tell us where the money is to come from. There are only three ways in which we can get the money: first, by increasing taxation; secondly, by borrowing it; and thirdly, by printing it. During the past three years, the Government have repaid the national debt to the tune of £26 billion. That is quite a good achievement and saves a servicing charge of about £2 billion to £3 billion a year, which is now available for extra spending in the public sector.

We know that, under a Labour Government, income tax would go up to at least 59 per cent. One of the other proposals that the Labour party has slipped in is that investments worth more than £3,000 would cost the investor an extra 9 per cent. on top of the normal tax. The Labour party also intends to reform the trade unions, so that we would be back in the bad old days when the trade union bosses ran the economy.

The Labour party would cut interest rates. I was delighted that my right hon. Friend the Secretary of State reminded the hon. Member for Dunfermline, East that, during the 1987–88 crash, when we now know, with hindsight, that interest rates were reduced too rapidly, the Labour party was asking for extra cuts. Such cuts would have compounded the problems for which it now criticises us. If we took the advice of the shadow Chancellor and the Labour party and cut interest rates by a substantial amount tomorrow, there might be a run on sterling, which would be catastrophic. If the Labour party ever became the Government and cut interest rates, the resulting collapse of sterling would be serious for this country.

It has been said that the Labour party intends to bring in a job tax. How would that help the economy or reduce unemployment? The Labour party says that it will generate £20 billion more in revenue, but the Leader of the Opposition seems confused about how that will happen. He has overlooked the fact that, in the next three years, the forecast for this Government's spending is about £38 billion. Is the £20 billion to be on top of the £38 billion? I was delighted that, on the "Today" programme on 13 May, the shadow Chancellor said that the £20 billion would not be an addition—presumably, it would be a substitute. I should not have thought that all those irresponsible, bogus promises from the Opposition could hoodwink the general public. The Labour party talks about a minimum wage, which in itself would create more and more unemployment.

There are signs that the recession is coming to an end. I do not know whether hon. Members have read the words of Christopher Johnson, the chief economic adviser to Lloyd's. He reckons that the recovery has already started. David Kern, the chief economic adviser to the National Westminster bank, wrote in April that the recession was at its lowest point. If that were so, from then on, the recession must have been coming to an end. I agree with the hon. Member for Dunfermline, East that the recession was not caused by the Gulf war—everyone accepts that. But it has to be admitted that the Gulf war contributed towards it, particularly as it affected our tourist industry and consequently our balance of payments and our overseas deficit.

The economy is soundly based—

Photo of Mr William Clark Mr William Clark , Croydon South

The hon. Gentleman is good at intervening from a sedentary position and more or less, to use the jargon, barracking, but, as the right hon. Member for Salford, East said, this is an important debate and should not be treated lightly, as the hon. Member for Great Grimsby appears to be doing.

There has been a complete transformation of the economy since 1979. We have only to look at the number of shareholders and home owners, and the level of real wages. My right hon. Friend the Secretary of State mentioned the real wages of the average family—a married man, the sole earner, in a family with two children. In real terms, his earnings have risen by 37 per cent.

As so many party poltical points are being made, we are in danger of talking too much doom and gloom. I am absolutely convinced that the constant talk of doom and gloom, and repetition that this country is flat broke do us no good. My view is shared in many parts of the City and industry. Our economy is extremely sound and we should be shouting about our achievements, not running ourselves down

Photo of Dawn Primarolo Dawn Primarolo , Bristol South

Will the right hon. Gentleman give way?

Photo of Mr William Clark Mr William Clark , Croydon South

No, I am just finishing.

I think that my right hon. Friend the Chancellor is right to resist the siren calls for a rapid cut in interest rates. Inflation is coming down and I think that tomorrow's figures will be extremely encouraging. We should not take panic measures, but should stay on our present course. We have control of public expenditure and are getting inflation under control—a recipe for future prosperity.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery 6:45, 13 June 1991

I listened with great care to the right hon. Member for Croydon, South (Sir W. Clark) and I agree that it would be wrong to peddle doom and gloom, and create pessimism about the prospects of British industry. However, if the Right hon. Gentleman believes that his optimism, which is shared in some parts of the City, is filtering its way through to people working in factories around the country, and to those in commerce and industry outside the City of London, he is making a fundamental mistake. That mistake is also being made by many others in the Conservative party who believe that their policies are credible to the public at large.

I shall open my argument with some evidence from a source that has already been mentioned: the machine tool industry. The evidence has been provided by the Machine Tools Technologies Association and puts the Government's policies into their proper context. The machine tool industry is at the centre of manufacturing industry, no part of which operates without its innovations. The machine tool industry is made up largely of small to medium-sized enterprises, the sort of businesses which are the blueprint of the philosophy of Conservative economic strategy—at least, as we used to hear it from the previous Prime Minister.

The machine tool industry has been innovative and has provided vital overseas earnings. The economic growth in the 1980s, for which the Government claim sole credit, is very much based on the achievements of the machine tool industry. It is precisely companies such as those in that industry that are bearing the brunt of the Government's current policy. The recently issued three-month and 12-month sales and order figures for the industry show a desperate decline in orders for advanced technology made by that industry. The overall trend is disastrous. We have already heard that, according to the Central Statistical Office, orders for the first quarter of this year were down 46 per cent. on the first quarter of last year. There has been a decline in sales from £30·5 million a year ago to £23 million in March 1991—a fall in sales of more than 23 per cent. in less than a year.

There was also a decline in investment in plant and machinery of 22 per cent. in the first quarter of 1991. What better measure of confidence or lack of confidence within the industry is there than the measure of its investment? When we hear that the investment in plant and machinery made by a vital industry such as the machine tool manufacturing industry has declined by nearly a quarter in the first quarter of this year, we have something to worry about.

Photo of Austin Mitchell Austin Mitchell , Great Grimsby

I just wanted to add to the hon. and learned Gentleman's statement, with which I absolutely agree. When a number of Labour Members met the association this lunchtime, its president said that if things continued at their present rate, in six to nine months there would not be a machine tool industry.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

The hon. Gentleman reinforces my point.

That industry's figures tell the story of what has happened recently under the present Government. One sees the symptoms reflected dramatically throughout the United Kingdom. Only 20 years ago, my own country of Wales was a major producer of coal, steel, and food. Two of those industries—coal and steel—are virtually redundant, and agriculture daily faces the threat of a similar decline. Every day, some of my farming constituents go out of business.

Where, 20 years ago, men produced steel plate and fuel for heavy industry, in a nation famed for its design and innovative skills, today their children assemble typewriters and televisions designed on the other side of the world. The former Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), apparently believes that the future lies in gardening. While there is no doubt that the United Kingdom leads the world in gardening, it is not enough to build an economy on.

Wales welcomes the new industries that have come there—often from abroad—but they are evidence of the failure of successive Government policies for indigenous manufacturing industry. We now have to buy the design, components, manufacturing techniques, and even the industrial practices from the other side of the world, to provide jobs for people in this country's industrial areas.

The whole culture and ethical framework within which business operates has changed since 1979. To be fair, the Government have encouraged new business, but their efforts have not borne much fruit in terms of long-term employment or security. For every Body Shop, there are hundreds of bankruptcies. I was shocked to see for the first time last week, while travelling by Underground, an advertisement in a carriage for a firm of liquidators, inviting people in real trouble with their businesses to use that firm's skills. It is extraordinary that we should now find advertisements on the tube for liquidation experts. One of the best careers that right hon. and hon. Members can recommend to young people looking for lucrative employment—

Photo of Austin Mitchell Austin Mitchell , Great Grimsby

Is the legal profession, as a barrister.

Photo of Mr Alex Carlile Mr Alex Carlile , Montgomery

—is liquidation, sadly. It is much more profitable than being a barrister.

Liquidations and bankruptcies are at shocking, record levels, and every one of them means bad debts for innocent and hard-working people. They often drag suppliers themselves into liquidation or bankruptcy. There are also huge losses to the Inland Revenue. When the Minister replies, perhaps he will tell the House how much money has been lost to the Inland Revenue and to Customs and Excise as a result of liquidations and bankruptcies, with tax remaining unpaid, since the present Government have been in office.

Many believe that an atmosphere of greed has led to increasing fraud, which has besmirched the reputation of business, from the highest to the lowest levels. The City of London used to be a byword for integrity, which was taken for granted. Sadly, that is no longer so. The phoenix syndrome of here today, gone tomorrow, businesses has spread. For many people who deal with companies, the term "Limited" should not be a sign of commercial credibility but a clear warning that they may not get paid.

More bills remain unpaid by companies today than ever before. Despite the blandishments of the right hon. Member for Croydon, South, who puts the case very clearly, the Government refuse to introduce statutory interest for late payment of bills. Many other countries in western Europe have such legislation, and it works. Perhaps it would embarrass the Government. It is the experience of those in the professions who undertake work for the Government—including my own, the legal profession—that the Government are a very slow payer of bills. They often pay late, and they almost always pay reluctantly. I invite the Government clearly to state that they will set an example in future, by paying their creditors quickly, and will create an atmosphere in which bills paid late carry interest, to encourage settlement on time.

We heard something of an argument between members of the Government and Labour Front Benchers as to who takes a hands-on and who takes a hands-off approach. Under the present Secretary of State and the other Ministers in the very dry Department that he runs, it has been customary to say that it is right to keep one's hands off business and to leave things to the market. However, the Department of Trade and Industry's attitude is even more distant than that. In truth, it has been a case of, "Look, no hands—and the devil take the hindmost."

The Government seem to be avoiding dealing with the problems of industry while beating their breast and looking for a conscience in respect of what to do about Europe. One is tempted to take the view of this Government that, if one gives them enough Europe, they will hang themselves. While having that inner conflict, the Government have allowed business confidence to fall dismally and daily. Nowhere is that more evident than among small businesses.

If small businesses—the seeds from which big manufacturing plants grow—do not have the confidence to go to their bankers and to borrow, to be innovative and imaginative, there is no hope for our manufacturing industry. In my constituency and throughout rural Wales, many small businesses have been assisted by organisations such as the Development Board for Rural Wales. Personal taxes have declined, and the Government lay great store by that. However, the claim that the Government's fiscal policies have eased the burden of small businesses is laughable. Value added tax is up. Business rates are up through the roof. Interest rates are up. The tax on company cars, which is essential for any business in a rural area, is also up. That is all part of a package of increased costs to industry that small businesses are finding it extremely difficult to bear.

Instead of merely worrying about paying their taxes, as they used to do, many small businesses live in terror of the bank manager because of high interest rates. Today's press release and advertisement from the chairman of Barclays Bank is welcome, but we wait to see their content put into practice. The Government must also help. It is not enough for the Chancellor of the Exchequer to call in bank chairmen and give them a dressing down.

The Government have elevated non-intervention to a shibboleth, while ignoring evidence from France and elsewhere that central Government can give considerable assistance to industry without interfering in its management. The Government should serve as an agent, consultant and potentiator, in informing industry of new markets and opportunities, which they should cajole and entice industry to seize—but they do not. The Government appear to be determined not to assist industry even in respect of some exports, as we can see from their action in respect of the Export Credits Guarantee Department.

The future of British industry, small and large, is surely in Europe. We serve ourselves ill by cribbing about a single currency. Business and the City clearly want one. The public do not feel strongly, although some members of the Conservative party clearly do. What does it matter if a new unit of currency is devised? Why cannot it be called the pound, franc, or lira, according to the country in which it is spent? Why do the Government want to continue filling the coffers of currency dealers with commission that has no logical justification in what is supposed to be an economic community?

Why is it that, if one sets off round the Community with £100 and simply changes it without spending it, one comes back to Britain at the end of the tour with about £70, £30 simply having gone to the money changers? That makes no sense at all. The Government strongly underestimated the confidence that the creation of an independent central bank would engender alongside the acceptance of a common currency for Europe.

The Government must act. The explosion of pessimism in manufacturing industry was fuelled today by the prediction of a 70 per cent. increase in long-term unemployment within the next year or so. For the Government to proclaim success for their economic and employment policies, as they have done today, is surprising.

It is time to recognise that good industrial policy starts in the schools, in the education and training of young people in the skills that are needed in manufacturing industry. It starts by creating an atmosphere in which careers teachers would not tell the brightest and best to go into accountancy, law, politics or merchant banking but one in which careers teachers would, as happens in France, tell such people to go into manufacturing industry where they will have a chance as an engineer, scientist or a manager to rise to the top in industry and in the nation.

We need to commit ourselves to 1992 in a way which will ensure that our manufacturing industry is in the lead in Europe, not simply apologising, as the Government appear to do, for being in Europe.

We cannot glean much confidence from the Labour party's attitude to Europe. I shall not read the Leader of the Opposition's 228-word sentence of yesterday, which was described as a "huge octopus squirting ink" by one language expert. An Oxford professor said: It needs translating into English". I hope that the hon. Member for Gateshead, East (Ms. Quin) will tell us in a few short words, with an occasional subject, verb and object, what all that means. I invite her to tell us what the Labour party's policy is on Europe. In the light of what the Leader of the Opposition said Britain, and particularly manufacturing industry, can have no real confidence that the Labour party has any policy on the EC upon which it is united. There are policies within the Labour party, but as far as I can see there are many more than two.

British manufacturing industry has a great deal to worry about, because the Conservative and Labour parties are afraid of Europe. It is time that we stopped being afraid of Europe. It is time that we started to play a positive role in shaping what promises to be the greatest ever market known for manufacturing industry.

Several Hon. Members:


Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. I remind the House that, between now and 10 minutes to 9 o'clock, speeches should last no longer than 10 minutes.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes 7:03, 13 June 1991

The hon. and learned Member for Montgomery (Mr. Carlile) has considered the Government's and the Opposition's policies towards Europe and commended the policies adhered to by his party.

The Government will be negotiating on behalf of Britain against a single currency at the intergovernmental conferences taking place during the next few months, not because they see a problem with the changing of money into different currencies—last year, when he was Chancellor of the Exchequer my right hon. Friend the Prime Minister set out the possibility of a common currency, the possibility of the hard ecu, which would enable the hon. and learned Gentleman to have his way on such transactions—but because they will not allow sovereignty and the management of the economy and our currency to pass to Europe. That is what the debate is about, and that is what the hon. and learned Gentleman does not appear to understand.

However, to be fair to his party, it has made it clear that it wants to see and does not fear the transfer of power from an elected body, the national Parliament, to officials in Europe. However, Conservative Members are clear. We want to make sure that, while taking advantage of that vast free common market, with all the advantages of 1992, there must nevertheless be democracy and accountability to the House of Commons.

But the hon. and learned Gentleman was right to challenge the Labour party in the way that he did and the Leader of the Opposition's use of such an extraordinary number of words. The hon. Member for Dunfermline, East (Mr. Brown) had little to say about Europe, but he ought to get to grips with it for the simple reason that the Labour party's policies include a national investment bank, financial support for nationalised industries and a greater emphasis on public subsidy through regional policy. The hon. Gentleman should turn up article 92(1) of the treaty of Rome because he will find that, as a general rule, all Government aid to business is forbidden. I challenge the hon. Gentleman to say whether, in his view, Labour's industrial programme would be permitted by the EC. Labour's industrial policies have been criticised on many counts.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

I shall give way in a moment, because I have a question for the hon. Lady which she can answer, and after the next sentence or two, it will be most appropriate for me to give way. Most of the weapons used in the past by Labour and advocated in the first part of the policy review are ruled out by the EC. Direct aid to, or support for, industry or investment; a regional policy, which finances jobs; public support on research and development; financial support for nationalised industries; public purchasing policies designed to encourage industry and modernisation; a National Investment Bank providing long-term, low-cost finance for industries which compete with Europe's; all these are ruled out. If the hon. Lady is not prepared to take that from me, she had better take it from her hon. Friend the Member for Great Grimsby (Mr. Mitchell), because he used those words on 6 October 1989 in Tribune. I give way to the hon. Lady to ask her to answer the hon. Gentleman's point.

Photo of Ms Joyce Quin Ms Joyce Quin , Gateshead East

I am glad that the hon. Gentleman has given way, presumably in response to my earlier request for him to do so. I refer him to the European Commission's publication on the amount of state aid given by different countries in the EC which is deemed to be compatible in article 92 of the treaty. I am afraid that the hon. Gentleman has not read the treaty very carefully, nor has he looked at the statistics in the European Commission's publication. It is clear that a variety of state and regional aids are authorised by the European Commission as long as they meet the European criteria.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

It sounds to me as though the hon. Lady had better take that matter up with the hon. Member for Great Grimsby, whose views on the EC I respect. He has been consistent ever since he came to the House of Commons. She may accuse me of not understanding the treaty of Rome, but the hon. Member for Great Grimsby has understood it ever since he came to the House in 1975. I suggest that the hon. Lady looks at what he said in Tribune and has a little debate with him.

The hon. Member for Dunfermline, East referred to the hypothetical question of ICI and Hanson. The Labour party seems to be making a great meal of this, which I cannot understand. There is no bid to take over ICI and, in any event, such a takeover would be a matter for the EC, not my right hon. Friend Secretary of State. I am not the Secretary State, and I do not have to concern myself with fettering any decisions on the matter—

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

No. The 10-minute rule is in operation, and I do not have much time.

Some Opposition Members seem to think that ICI is good and Hanson is bad.

Photo of Mr Michael Brown Mr Michael Brown , Brigg and Cleethorpes

I caution the hon. Gentleman, with whom I have a lot in common. I suggest that he looks at my constituency, which adjoins his. Many of the work force in Brigg and Cleethorpes work in his constituency and vice versa. I remind him that, when I first became the Member of Parliament for the constituency of Brigg and Scunthorpe, it contained a chemical concern called Albright and Wilson, which was taken over by ICI and became Britag, which was wholly owned by ICI and employed many people. It was the largest employer in the town of Barton-upon-Humber in my constituency.

A few miles down the road in my new constituency, which came into being after the 1983 boundary changes, was the old Laporte company, which was taken over by SCM Chemicals, which was in turn taken over by Hanson. I am able to say that I have had experience of two chemical factories—the largest employer of labour in the Cleethorpes area of my constituency, SCM, which is owned by Hanson, and the other factory which is owned by ICI.

I have to report that the ICI factory no longer exists; it has been razed to the ground, there have been redundancies, and there was no investment. The whole thing was a flop and a failure, whereas SCM, which manufactures titanium dioxide, competes alongside the ICI-run dioxide factory in the constituency of the hon. Member for Great Grimsby. There has been massive investment in SCM in the past few years, and it is a very successful company.

I shall shed no tears if the business disciplines of the Hanson group of companies should be extended into this country's chemical industry, and I make no apology for saying so.

I want to nail this business about the minimum wage, which the Opposition constantly fudge. The hon. Member for Dunfermline, East pulled me up and told me that he had not said that the imposition of a minimum wage would cause any more unemployment. Today he is saying that the imposition of a minimum wage will result in no unemployment. Surely he cannot ignore the Fabian Society document. I was pulled up on a point of order for consulting my hon. Friend the Parliamentary Private Secretary, who went to the Box on my behalf to find out whether they had a copy of the Fabian Society document. I had forgotten that I am no longer a Parliamentary Private Secretary at the Department of Trade and Industry, so I apologise to the House and to the hon. Member who raised the point of order. Unfortunately, they do not have a copy of the document. However, it is quite clear that in the society's view there is the possibility of up to 880,000 jobs being lost by the imposition of the minimum wage.

If the Labour shadow Front-Bench spokesman will not take that from the Fabian Society or from me, I suggest that he consults the hon. Member for Birkenhead (Mr. Field). In 1984 he clearly said, along with Gavin Laird, that the minimum wage would cost jobs.

Only the Conservative Government have a coherent industrial policy.

Photo of Mr Edward Leadbitter Mr Edward Leadbitter , Hartlepool 7:13, 13 June 1991

The right hon. Member for Croydon, South (Sir W. Clark) used some interesting words— The economy is soundly based. In that case, what on earth are the Government doing by delaying the election? Why are they so hesitant? If the economy is soundly based what other factor is deterring them from facing the electorate? The answer is quite simple —the right hon. Gentleman is wrong.

For some months, the Government have been in a state of panic. Any Government who get rid of a Prime Minister who has served them for so many years and gets 204 votes and is replaced by a Prime Minister with 185 votes are obviously a Government in panic. They would not have done it had they thought that they could have won a general election with her. Fear of the general election is perpetually in the minds of right hon. and hon. Members. That is a hard fact.

The public's impact upon the Government, not merely in terms of opinion polls, but in the recent by-election in Monmouth and the views expressed in the responsible press are all factors which have put the Government in a state of fear—a state which they have not experienced for years.

The election has only one significance, no matter how the figures are juggled or how many party political points are made; the general public only want to read and hear one thing and that is the facts of the matter at the moment. The public are not interested in history tutorials; they are not interested in the conjectures of the Conservative party about what a Labour Government might do because the Conservatives have no original arguments of their own. The electorate are concerned with how they are affected at the moment.

Let us consider some of the present warning signals. In another place, the Select Committee on Science and Technology, which has a majority of Conservative members, said in its report a few weeks ago: If the present policies persist we will risk not having anymore a British owned manufacturing industry. Then it added the fatal words: This Government have no strategy for industry, no policy for industry and none in the national interest. I should have thought that that opinion is worth considering, bearing in mind the fact that there are people with experience in the other place and that the preponderance of the membership are influential Conservatives.

Have the Government not listened to the present warnings by the Confederation of British Industry? I choose those authorities with a degree of selectivity that is not unreasonable. As recently as today, my hon. Friend the Member for Tyne Bridge (Mr. Clelland) and my right hon. Friend the Member for Salford, East (Mr. Orme) reported that the machine tool industry—once the pride of British industry and the feedstock of our manufacturing —is virtually crippled. A responsible chairman says that, unless something is done, the position will be desperate in a few months' time.

Is the Conservative party not prepared to listen at all? Are they going to sit there like glorified Walter Mittys hoping that something will turn up?

The gentlest words that I can find to describe the situation—although I would like to use stronger words —are political criminality. Consider the Sunderland ship-building yard. The present Secretary of State for Social Services—a much nicer chap than the present Secretary of State for Education and Science—was kept in the dark about what Lord Young, who was once at the Department of Trade and Industry, and his underling, the Secretary of State for Education and Science, had contrived. That great ambassador for the United Kingdom, Commissioner Leon Brittan—one of the holy trinity of conspirators—devised, virtually by fraudulent action, that men working in the Sunderland shipyard were not going to be allowed to work and everyone knew it. Remarkably, the Prime Minister, who served the Conservative party so well, has spoken in favour of the Sunderland shipyard—the most modern in Europe. The Government said that one could do anything with it except build ships there. How crazy.

We have some other little industries to think about: the steel industry, for example. Once upon a time, it was responsible for 20 per cent. of steel making in Europe; since then, it has been continually whittled down, and has become almost insignificant. If a balance sheet is in the black, we call that success. If the Government had gone much further, we would have no steel industry at all—just a balance sheet showing no liabilities and no revenue.

The coal industry is another example. It is calculated that, four or five years from now, about 15 pits will be left. The motion, however, refers to manufacturing industry. Let me give Conservative Members some figures whose significance they may then wish to ponder.

In 1979, 410,000 people were employed in manufacturing industries in the northern region. By December last year, the number had fallen to 270,000—a loss of 140,000 jobs in a decade, or a 34 per cent. cut. In 1979, a total of 7,115,000 people were employed in manufacturing industries in the United Kingdom as a whole; now the number is only 4 million. That is a shortfall of 29 per cent. The number of people employed in the northern region in 1979 has now been cut by one third. The north has experienced the largest loss of employment in the country.

Let us now compare the number of manufacturing employees, in the northern region and nationally, with the total number of employees in the region and the country as a whole. Manufacturing employment has fallen by more than 25 per cent; in one instance, the figure is 30 per cent.

That is a dramatic development. Manufacturing industry is sliding into oblivion. Conservative Members say that everything is all right, and that the economy is soundly based. How can that be so? Manufacturing industry is the lifeblood of the nation. At one time, we used to say, "Export or die."

People talk fiddlesticks about Europe in the House. I wish that the term "common market" had never been coined. We have no common market; it is a political conspiracy. "Common trading market" would make sense. Let us not be diverted from the terms of the notion, however. Manufacturing industry has been sliding into a state of remarkable weakness. Anyone could tell the House that, when a manufacturing base has been cut by 30 per cent. in 10 years, the country is experiencing a crisis.

The House knows full well—

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. I am sorry, but the hon. Gentleman's time is up.

Photo of Mr Winston Churchill Mr Winston Churchill , Davyhulme 7:23, 13 June 1991

The hon. Member for Hartlepool (Mr. Leadbitter) harked back to the old days of labour-intensive manufacturing industry. I fear that those days will never come back, and I think that the hon. Gentleman is mistaken to imagine that they ever could or should. The world has moved on with the introduction of new technology; in Scotland, for instance, more people are now employed in the electronic industries than in the traditional coal, steel and shipbuilding industries. I do not regret that: it is important for Britain to be at the forefront of modern industrial technology.

Photo of John Reid John Reid , Motherwell North

Will the hon. Gentleman give way?

Photo of Mr Winston Churchill Mr Winston Churchill , Davyhulme

I am sorry, but I cannot do so, given the time limitation.

As one who has the privilege to represent Trafford Park—still the biggest industrial complex in the United Kingdom—I can only tell the hon. Member for Dunfermline, East (Mr. Brown) that, under Labour, the devastation of jobs there was colossal.

Photo of Mr Terry Lewis Mr Terry Lewis , Worsley

That is not true.

Photo of Mr Winston Churchill Mr Winston Churchill , Davyhulme

The hon. Gentleman may say that, but in the late 1960s, under a Labour Government, more than 15,000 jobs were lost in Trafford Park in the five years before I was elected to represent Stretford in 1970.

The hon. Member for Dunfermline, East, says that he would like an industrial strategy to be developed for this country. Let me tell him that Trafford Park and other established industrial areas suffered bitterly from his party's so-called industrial strategy. Labour's gerrymandering of industrial development certificates—which no doubt a new Labour Government would try to bring back—was positively ruthless, and caused thousands upon thousands of job losses in the traditional industrial manufacturing areas.

Let me give just one example. When Kelloggs, a major employer in Trafford Park, wanted to expand under the Wilson Government, it was told that it could not do so in Trafford Park. When the company asked where it could expand, the answer that came back from Whitehall was "Huyton". I wonder whose constituency that was. Thank goodness the United Kingdom does not have an industrial strategy like that today.

The opening speech of the hon. Member for Dunfermline, East was long on bombast and short on policy. He was full of rhetoric, but empty of cash or, indeed, any concrete measure to help the unemployed. By contrast, the present Government have been the friend of industry and small businesses, which have been relieved of vast numbers of unnecessary Government controls and a crippling tax burden.

This Government have rolled back the frontiers of state socialism and slashed taxation. They have been the friend of both the taxpayer and the consumer, transforming loss-making nationalised industries into profitable companies that can stand on their own feet. We do not need lectures from the Labour party—the party which brought Britain to economic disaster in the 1960s, and again in the 1970s; a party whose central philosophy of socialism, centralised planning and state control has repeatedly proved disastrous not only in this country but in every one of the eastern and central European nations, which have recently been privileged to have an opportunity to throw that policy, bag and baggage, on to the scrap heap of history where it belongs. Yet Labour now wants to bring back many of those same failed policies. The party seems to have forgotten nothing and learnt nothing.

Labour's most recent policy document, entitled "Modern Manufacturing Strength", promises a "rapid increase in investment". What a hollow sham that is revealed to be when we examine the record of previous Labour Governments who drove investment out of the country. The document speaks of a "national investment bank" to be run on strictly commercial lines If it is to be run on strictly commercial lines, what service can it provide that today's banks do not provide already?

The reality is this: Labour has no credible anti-inflation policy. A Labour Government would bring higher spending, which in turn would bring higher inflation. Labour government would mean higher borrowing—which would drive up interest rates—and higher taxes, which would put more firms out of business and drive away foreign investors. It will give power back to the union bosses, leading to more strikes and industrial disruption. Above all, the sword of Damocles will hang over vast sectors of industry—the threat of renationalisation.

The Labour policy review "Social Justice and Efficiency" states that local authorities will have a role to play in local industry under a Labour Government.

Photo of Mr Winston Churchill Mr Winston Churchill , Davyhulme

The hon. Gentleman says that he hopes so. The possibility of loony left Labour councils being involved in the running of industry and commerce would be the ultimate nightmare. If it happened, it would cause disinvestment and would drive the likes of Nissan and Sony back to where they came from or, more likely, into the arms of one of our competitors in the European Community.

Labour's determination to introduce a national minimum wage would throw tens of thousands of low-paid people out of work, especially the disabled, the elderly, women and ethnic minorities. I am delighted that the hon. Member for Dunfermline, East has returned to his place. He advanced the absurd and false suggestion that Mr. Winston Churchill, when President of the Board of Trade in the Liberal Administration in 1908, favoured or introduced a national minimum wage. He did nothing of the sort. He was determined, rightly, to attack the problem of sweated labour. His Bill covered only 200,000 jobs, 140,000 of them for women and young girls. It had the support of the entire House of Commons—Conservative and Liberal Members.

With inflation falling fast and interest rates set to follow, it will not be long before the British economy moves into a new phase of expansion. When that happens, we will resume—as we did in the second half of the 1980s—our position as the leaders in job creation in the European Community. Until that happens, the Government must maintain their commitment to guarantee every school leaver a job or a training place, and I should welcome an assurance on that point.

The future under a Labour Government would mean economic catastrophe and disaster for this country. Under a Conservative Government—I have every confidence that a Conservative Government will be returned after the next election—we can resume the economic growth that occurred throughout the 1990s and there will be a rise to unprecedented living standards.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody , Crewe and Nantwich 7:32, 13 June 1991

I am not sure who wrote the speech of the hon. Member for Davyhulme (Mr. Churchill), but I suggest that the hon. Gentleman give it back. I do not think that it could have been written by one of his friends.

I thought that this was a serious debate. Only a short time is needed to highlight the problems in my constituency to see what we are really talking about. This highly successful, brilliant, economy-based Government who have produced this miracle of rejuvenation have rapidly changed my constituency. When the Conservative party came to power, Rolls-Royce provided consistent employment and produced high-quality cars. British Rail Engineering Ltd. made high-quality engines, carried out repairs on rolling stock from all over the world as well as Britain and employed large numbers of engineers. Other smaller engineering firms produced and supplied larger firms with high-quality parts. Many were involved in machine tools. Many of the women in my constituency were fully employed in the rag trade. The high-quality clothing they produced contributed large sums to this country's export earnings.

Today, far from a continuing pattern of employment, many people are on short-time working, or have lost their jobs or are likely to lose their jobs in the coming 12 months. Rolls-Royce has had to lay off people for weeks. Through one of its subsidiaries, it has had to close foundries and there is the considerable risk that it will lose more than the 340 jobs to which my right hon. Friend the Member for Salford, East (Mr. Orme) referred. British Rail Engineering Ltd. has been sold off, as has the Royal Ordnance factory just outside my constituency.

The pattern for all privatised industries has been closely followed. First, an industry is sold. Then there are immediate job losses. After that, there is a change in the terms and conditions of the work force, sometimes brought about by unilateral changes in their contracts. Then there is a consistent pattern of increased wages for the directors and worse terms and conditions and redundancies for the people who have given many years of experience.

The Government have developed an even more interesting technique with the Royal Ordnance factory near my constituency. I believe that nearly 900 jobs have gone from the Royal Ordnance factory at Alsager near Radway Green. When I asked the Department of Employment to confirm that, I was told that it was a matter not for the House of Commons but for the director of the agency, who would write to me. In other words, in Crewe and Nantwich and in the areas that have always provided employment for it, not only are jobs consistently lost but they are hidden from sight. We have already lost many of the clothing factories, and we are losing many of the very small businesses.

During the past four months, small business men in my constituency who have not been able to deal with the increased demands made upon them by banks have been called in and, even though they have full order books and are providing high-quality produce, they have been told, "You will go into liquidation in some form or another." Many have come to me knowing that not only are their businesses at risk but their homes and families may be destroyed. It is extremely hypocritical of the clearing banks to take space in national newspapers to tell us that they care about British industry. They have one thing in common with the Government—as small business men know, their businesses are the subject of total lack of interest among Conservative politicians and those who serve them in the City of London.

There has been one guiding light in my constituency —the use of money provided by British Rail, not BREL, to create a development agency. The local authority has made a positive attempt to create new jobs and has spent considerable sums on building a new infrastructure.

For the Conservative Government, the privatisation programme has been almost entirely a matter of looking at factories as if they were a series of sites. If there is one claim that I would make for the Government, it is that they are an estate agents Government. Of course, they concern themselves not with homes but with selling off as many of our manufacturing factories as possible.

Crewe was built to be a home for manufacturing industry. No one could have demonstrated greater flexibility, greater imagination or greater commitment to work than the people of Crewe. Over many years, they have taken lower wages to achieve security, and to ensure that their jobs are safe. The payments that they have received from a Conservative Government are unemployment and disgraceful neglect. In the future, changes will occur, making Crewe virtually a dormitory area for many of the more affluent surrounding constituencies.

The fact that the Secretary of State was today unable to make a serious or considered speech in defence of British industry is a condemnation of the contempt with which the Conservative party treats the people of this country. The sooner the Conservative party is given the opportunity to consider its sins from the Opposition Benches, the happier the future of the nation will be.

Photo of Nicholas Soames Nicholas Soames , Crawley 7:40, 13 June 1991

The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said that neither of the Front Bench spokesmen made a particularly serious or considered speech about British industry. It is to the regret of the House that they both took so long to do it.

It is extraordinary that we can debate such an issue without any mention of the financial services sector, which makes such a major contribution to our economy. I hope that my hon. Friend the Minister for Corporate Affairs will say a few words about that.

It is impossible to deny the real achievements and success of the Government's policies, which have led to an extraordinary and fundamental change in the structure of the British economy over the past 10 years, much of it for the better. None of us seeks to deny that at present we are going through a very rough patch. The reasons why the changes have occurred are clear, and the Government deserve considerable credit for pushing through such important strategic changes.

British industry and commerce throughout the country are without doubt now far fitter and leaner and more capable of competing in both good and bad times. That is indubitably true. The public, too, thank goodness, have a far healthier attitude towards the creation of wealth and the accumulation of profit. That in itself is important for the country's future success. However, there remains the rather sad socialist-inspired envy and jealousy of the salaries necessarily paid to the high-class and successful men and women who run our most successful corporations and professions.

I wish to give my right hon. Friend the Secretary of State what I hope will be constructive suggestions which I hope he will consider. I hope that my right hon. Friend realises—one would be hard pushed to know it—that not one of the brilliant economic successes in this country was created by a Minister or civil servant in the Department of Trade and Industry; they were created by forceful, vigorous and sometimes visionary entrepreneurs and managers operating in highly competitive markets, in many cases on a global basis.

There is no doubt that vigorous domestic rivalry is the key to economic success. In my constituency especially, there has been an enormous amount of that in the past 10 years and the creation of wealth has proved a powerful and beneficial force in our community. However, the Government are still far too involved in interfering with the marketplace. The Department of Transport's recent activities on route licensing are a case in point, and there remains an enormous amount to be done on deregulation and on the removal of vast amounts of red tape which still clog and bind the everyday life of business men.

The Government must not pretend—I do not think that they do—that the United Kingdom economy does not still have some fundamental, deep-seated problems. It is a great sadness to me to see the hon. Member for Dunfermline, East (Mr. Brown), who is a good man, make such a poor, knock-about speech on matters that are so important to the interests of this country.

Many of our problems are deep seated and go back many years. The socialist-inspired anti-industry climate and culture has not yet been properly extirpated from this country. There is still little real appreciation of industry's role as the primary generator of wealth for the country as a whole. There is no doubt about that in Japan or the United States of America. Although I do not expect the Opposition to begin to understand it, it is simple.

The generation of wealth in international and domestic trading by manufacturing and service industry is fundamental to the provision of a higher standard of living for everyone. It is the most basic social service of all. Therefore, it must be a top priority because everything else that the Government do depends upon their being able to provide it and pay for it using money earned by the creators of wealth. Let us be under no illusions: our European partners benefit from a far more appreciative understanding of industry and from a much stronger consensus about economic nationalism throughout their society.

So we return to the inevitable debate on education. As a country, we have much to do in terms of education. As an early step, I congratulate the Government on the brilliant success of the technical and vocational education initiative, which, by any standards, is one of the most radical innovations in the history of British education. Many other important steps have been taken, such as the introduction of the national curriculum. However, we still have to mount a further deliberate and sustained campaign to train ourselves to be a great industrial state. Ministers and the hon. Member for Dunfermline, East are right to emphasise that national education and training, coupled with research and development innovation and marketing, are key instruments to our future success. We must teach our people to acquire the mental equipment and ability and the habits of mind to embrace chance and to continue to search for new and better competing technologies.

The United Kingdom still has substantially lower levels of educational attainments than Germany, France and Japan. Forty-two per cent. of the British work force have no skill qualifications whatsoever, whereas all school leavers in Germany go into training or into further education. In Japan and the United States, the figure is more than 90 per cent.

No real efforts are made to encourage students—especially very good students—to pursue a career in industry. Fisons, when submitting evidence to the Lords Select Committee on industry, stated: Good calibre students … particularly at the secondary level, are discouraged still from thinking of industry as a career. In its evidence, ICI claimed: The sciences and engineering … are not widely or well enough taught in British schools". The source of Japan's technological strength is not its Ministry of International Trade and Industry, or intervention, but education. Universities and colleges are geared towards economic progress, and there is a profound understanding of the relationships that are required between industry and Government and between education and the educators.

As a result, Japan and Germany have a far higher proportion of engineers in their work forces. In France, engineers are the most represented group in management. In Britain, a lot of miserable accountants dominate. In this country the word "engineer" is, in Correlli Barnett's words, synonymous with the chap who fixes the washing machine. In France, the grandes ecoles, the ecole polytechnique and other schools of higher professional and executive training have long enjoyed parity of esteem with the Ecole Normale Superieure.

I shall say a few words about the relationship between business and Government. It is lamentable and unforgivable that so few civil servants have had proper attachments in the private sector, and vice versa. It is a national disgrace which would not be accepted in any other sophisticated industrial country. The Secretary of State, in conjunction with the Minister of State, Privy Council Office, should put in hand at once a programme that will forthwith set out to achieve that. For 40 years, the civil service and the Government have prevaricated, but they must now do something about it.

Equally important, there must be a change in the Government's attitude towards industry. We must establish a fuller and more open working partnership between Government and industry. Such relationships have existed to enormous mutual benefit in France, Germany and Japan, which are light years ahead of us in that respect. The Government should be aware that to this day many senior and important business men in this country believe that industrial success is still assigned a low place in the official order of things and, even with the change of the Government's attitude towards business, there is scope for much improvement.

One of the most irritating things for British commerce is the Government's apparent obsession with small firms. I am a keen supporter of small business and will do whatever I can to encourage it and to advance its claims, because such firms are excellent for morale and need vigorous encouragement, but they will never have a major impact on Britain's world ranking as an industrial power. The Government need to do more, and to have more regard, for the interests of major corporations.

I hope that my right hon. Friend the Secretary of State will read with great care the remarks that were made by many senior industrialists in another place the day before yesterday on the Export and Investment Guarantees Bill. Not one of their Lordships spoke in favour of it. The Government must support the efforts of our major industries to win greater market share, especially in export markets. There is substantial evidence that they have failed to do so. The major corporations insist that the Government should deal as effectively with other Governments as businesses are required to deal with other companies.

Her Majesty's Government have an enormous amount still to do for the advancement of industry and commerce in this country. As a Government, naturally we are not without blame, and I and many others look to my right hon. Friend to pursue with vigour, courage and imagination the interests of all this country's wealth creators and to advance the interests of the United Kingdom.

Photo of Ronnie Campbell Ronnie Campbell , Blyth Valley 7:50, 13 June 1991

During the last election, the subject facing the voters was the British economy. I am sure that the same will be true at the next election. It is interesting to hear Conservative Members talk now about the economy, because I remember sitting in the Chamber a couple of years ago to hear those same Conservative Members telling us that we were having "an economic miracle" that would change this country into the economic super-state of Europe.

As always in debates on the economy, we must examine the figures both for this country and for our competitors in Europe. This country's gross domestic product fell by 1·3 per cent. in 1989, while Germany's GDP grew by 4·5 per cent.; France's GDP grew by 1·8 per cent. and Japan's grew by 4·7 per cent. This country's manufacturing output fell by 5 per cent. in the first quarter of 1990, and our productivity is no higher now than at the time of the last general election. About 62 per cent. of our industrial work force are unskilled, compared with 38 per cent. in Germany, 21 per cent. in Italy and 20 per cent. in France. Those are just a few of the examples of how this country is being outstripped by our European competitors.

Training has been an issue in this debate. Since the Conservative Government came to power, there has been a cut of £245 million in the resources devoted to industrial training.

Let us consider what has happened to trade since the so-called "economic miracle". Our trade deficit for 1990 was £12 billion, which is our worst ever balance of payments record. Our manufacturing deficit is now £10 billion. Conservative Members may well say nice things about manufacturing industry, but in the past 10 years the Tory Government have presided over a £10 billion reduction in the trade of our manufacturing industries. When the Labour Government left office, there was a balance of payments surplus of £2·7 billion. That is never mentioned in the House when the Labour party is criticised, but I put that fact on the record now.

In 1989, under this Conservative Government, investment was down by 8·7 per cent.—again, in the period of the so-called "economic miracle". Manufacturing investment fell by 20 per cent. in 1990 yet the Government have had the benefit of £98 billion-worth of North sea oil revenues since 1979. That is the money that the Government have had in their hands for the past 10 years and which they have squandered as the party that reduced taxes and increased unemployment.

In the past 13 consecutive months, unemployment has risen by 568,000. That is an indictment of a Government who are in their death throes. There have, however, been 30 changes to the unemployment figures since the Government came to power as they have tried to fiddle the figures. There is no doubt that we are heading for an unemployment total of 3 million by 1991 or 1992, when I hope that this Conservative Government's period in office will end. Furthermore, in the second half of last year, 27,000 houses were repossessed by the building societies. That means that 27,000 people—both young and old—have lost their homes during the so-called "economic miracle".

I turn now to the figures for Government assistance to industry in the north to show the House what the Government have done for the north. The figures show why there are not many Tory Members in the north—[Interruption.] Well, there may be one or two, or three at the most, but the mind boggles. In 1979, under the Labour Administration, the north received £349 million-worth of Government assistance to industry. By 1989–90 that figure had decreased to £190 million—another indictment of the Government and their so-called "economic miracle". In 1979, the Labour Government gave £1,344 million in assistance to industry, but by 1989 the Conservative Government were giving only £505 million.

Business failures in the north-east soared by 109 per cent. between 1989 and 1990. In Britain as a whole, they rose by 77 per cent. Unemployment in the north has increased by 51 per cent. and is 10 per cent. higher than in any other region in Britain. In my constituency of Blyth Valley, the number of unemployed people has increased by 640—an increase of 25 per cent. in the past few months, 41 per cent. of whom have been out of work for six months or more; 48 per cent. of whom are aged under 30 and 76 per cent. of whom are male.

The recession in the north-east has begun to bite, especially in my constituency where two companies, which had shown great promise, have gone into receivership. The Burberry clothing factory has closed, with the loss of 340 jobs. Last week, another 240 or 250 job losses were announced at the Blyth power station. The town's larger companies have been laying off at least 5 per cent. of the men and women employed in their factories. Nothing like that has been seen in Blyth Valley since the closure of Bates colliery after the miners' strike, when we lost more than 1,000 jobs.

Those figures are an indictment of the Government. As I have said, the No. 1 issue at the next election will be the economy—it will be the number one issue for the Labour party—and because of it we shall see the end of this Conservative Government once and for all.

Photo of Mr Philip Oppenheim Mr Philip Oppenheim , Amber Valley 7:59, 13 June 1991

We have heard much from Opposition Members about the Government's record. However, they did not mention that there are more jobs in Britain now than there were in 1979. They did not say that, during the 1980s, productivity in British manufacturing industry rose faster than in any other major industrial economy in the world. They did not say that manufacturing output is significantly higher than it was in 1979. Indeed, during the 1980s Britain's manufacturing output rose faster than that of any other major European economy.

I remind Opposition Members, because they attach a great deal of importance to manufacturing industry, that when the Labour party was last in power manufacturing output fell. So much for the supposed devastation of Britain's manufacturing industry under this Government.

Let us examine Labour's policies. We have heard a great deal about the minimum wage. Even the Fabian Society, an in-house Labour group, says that 880,000 jobs would be lost if a minimum wage was imposed. What do Opposition Members' hon. Friends say? The hon. Member for Birkenhead (Mr. Field), a Labour Member and, as we all know, a greatly respected one, has said that the employment consequences of a minimum wage would be nothing short of disastrous.

What about the Opposition's friends in the trade unions? Gavin Laird, a respected trade unionist in the Amalgamated Engineering Union recently said that a minimum wage was nonsense in the private sector. It has never worked in the past. There is no logic for it. It doesn't work in any other country and it certainly will not work in Great Britain. I know what Opposition Members are thinking. They are thinking, "What about Germany?" I have some bad news for them. Germay does not have a statutory minimum wage. However, there is a country in Europe which has a statutory minimum wage. It is France. And France has some of the highest unemployment in the European Community. It is higher than ours.

A recent Organisation for Economic Co-operation and Development report pinpointed the statutory minimum wage in France as one of the major causes of high unemployment there. Only yesterday the French equivalent of the Confederation of British Industry, the Patronat, said that the statutory minimum wage should be abandoned in France precisely because it led to high unemployment. Few things show the fundamental dishonesty at the centre of Labour policies more than their policy of a statutory minimum wage. Labour Members pretend to the public that some sort of free ride is available, but unless pay rises match productivity, those pay rises will equal unemployment.

But there are even more dangerous policies on industry on Labour's menu. First, it says that it would set up a British investment bank. How would it be funded? Would it be funded through pensions? In one of its policy documents, the Labour party says that pension funds will be encouraged to take the status of their regional economy into account. No Opposition spokesman has made it clear exactly what the role of the pension funds will be. What does that statement mean? Or would a Labour Government fund the National investment bank through taxation? If so, will it be a priority for funding?

The Labour party also proposes to establish British Technology Enterprise which apparently will buy equity in high-tech ventures. How will that be funded? Will it be funded by taxation? Labour also proposes tax credits for companies that increase their research and development. Apparently the cost of that would be almost £200 million. What priority will be accorded to that? Will it be accorded "top priority" or "absolute priority"? Have the Labour Front-Bench spokemen consulted the hon. Member for Derby, South (Mrs. Beckett)? She has said clearly on the record many times that the only priorities of a future Labour Government would be pensions and child benefit.

The Labour party is trying to be all things to all men. It pretends to the City that it is now a responsible party which will not indulge in an orgy of public spending. But to its friends in the public sector trade unions and high-spending areas, it promises to shower them with a cascade of spending.

Opposition Members should anyway consider whether research and development is really our problem in Britain. I know that it is fashionable to say that all we need to do is to increase our research and development, but the history of Britain is more that we have lost the ability to exploit the many inventions that we have made, rather than that we do not make inventions. We also have a history of putting huge state subsidies into uncommercial high-tech projects such as Concorde and Blue Streak. Certainly the precedents of Government funding of research and development in Britain are not happy.

Of course we must try to improve the way in which we exploit technology in Britain. That does not necessarily involve simply doing research and development. It can just as easily involve buying in patents and licences from other countries. After all, for many years the Japanese did well by buying in patents and technology from other countries and improving on them. If we want to get to grips with the problem of exploiting technology, above all we must, improve our education, as my hon. Friend the Member for Crawley (Mr. Soames) said in his superb speech. That is far more important than Government-directed research and development subsidies.

Opposition Members pay lip service to the need to improve our education, but the record in areas where the Labour party runs the local education authority is poor. LEAs in all those areas have in common that they spend great sums of money—far more than they did in 1979 on a per pupil basis—but have standards that are far below the national average and certainly far below the standard achieved by many of our competitors. Every time that we have attempted to improve education in Britain—by introducing the national curriculum and testing and through the devolution of power and authority to the schools—we have been opposed tooth and nail by the Opposition.

Underlying many of the Opposition's policies is a belief that Government intervention in the economy is the saviour of manufacturing industry. But their policies on interventionism are based to a large extent on a misreading of Japan. It is easy for politicians and business men to use the Ministry of International Trade and IndustryMITI—as an excuse for Japan's success, rather than admit that the company has not produced competitive products or taken the long-term marketing decisions necessary to beat the Japanese.

The success of many of Japan's most successful industries such as manufacturing tractors, personal computers, photocopiers, motor-bikes and cars has had nothing to do with MITI. Indeed, many have refused MITI's meddling, including the car industry which in the 1950s refused MITI attempts to consolidate the industry and push it into developing a people's car along Volkswagen beetle lines. Even in industries such as computers and semiconductors, which have received help from MITI, that help has been a tiny proportion of the investment that the companies have made. Most sensible surveys of those industries show that MITI had little to do with the success of those industries.

Certainly, OECD figures show that Japanese state subsidies for research and development are way below those that prevail in both Europe and the United States. Subsidies for research and development are anyway too often snapped up by large companies for work which they would do anyway.

The real reasons for Japanese success have nothing to do with MITI and offer little comfort to Labour. Japan has had low public spending, high levels of saving, low taxation, pro-business attitudes and, above all, an excellent, rigorous, vocationally oriented education system. I sometimes wonder why Opposition Members do not look to countries such as India and Brazil, where highly interventionist industrial policies have been abject failures.

The problem with intervention is that too often it promotes inappropriate development, such as computers in Brazil, rockets in India and steel in Nigeria. Too often decisions made by politicians are based on political rather than commercial considerations. Too often the money goes to those with the most lobbying power, and resources are diverted from industries that could use the funds more efficiently.

We have had it all before, not just under Labour. The Macmillan Government forced a private steel company not only to invest in one big integrated plant in Wales, but to split the plant between a site in Wales and an unsuitable site in Scotland. The last time that we had a Labour industrial strategy, it gave us a British Airways which was rated below Aeroflot by its customers, a British Leyland which was an international joke and a British Steel that was the biggest loss maker in the world. How can we expect the hon. Member for Dunfermline, East (Mr. Brown), who has never manufactured anything except dodgy policies, to do any better?

I am sometimes amazed at the arrogance of Opposition Front-Bench spokesmen. None of them has even worked in industry, yet they believe that they can make better decisions than business men themselves. Opposition Members have the cheek to sneer at Hanson, yet it is a successful United Kingdom business which offers good employment to many people, including my constituents in a plant which certainly would not exist if it were not for the huge investment put in by Hanson.

All the Opposition's policies would harm industry. Nothing they would do would help. They would clobber savers with an investment-income surcharge, they would push up taxes and their minimum wage policy would costs hundreds of thousands of jobs. They would meddle with industry and encourage anti-business attitudes by equating enterprise with greed, as they habitually do. The Opposition would renationalise various industries when countries all over the world have been falling over themselves to denationalise. Above all, the Opposition would ensure that our education system did not improve.

The Labour party's policies demonstrate that no amount of flashy, sharp suits or tacky, red plastic roses can hide how little that party has changed its policies from those that proved so disastrous in the 1970s.

Photo of Austin Mitchell Austin Mitchell , Great Grimsby 8:09, 13 June 1991

I will not follow the hon. Member for Amber Valley (Mr. Oppenheim) in his grovelling sycophancy towards Japan. Obviously he is too thin to be a sumo wrestler and not quite smart enough to be a sophisticated apologist for the system.

It is interesting that we have heard two arguments only from the Conservative Benches. The first is that things got better when the right hon. Member for Blaby (Mr. Lawson) was Chancellor. The second is that the country is too poor to afford a minimum wage. That has been the essence of the Conservative argument.

Labour Members have brought home the depth and extent of the depression, which is horrendous. This recession is damaging the industrial base on which everything in this country rests—the standard of living of an advanced society, jobs and growth. Everything that our economy needs rests on that industrial base, but it is being irreparably damaged by what is happening now. That damage will make it much more difficult for the country to expand and grow in the future. Every job lost and every factory closed means that imports will be sucked in by any expansion in the future. That expansion will be strangled because of a balance of payments constraint. That balance of payments is already horrendous.

Deflation is a ruinous policy. I am afraid that the present recession is not an aberration. It is a logical consequence of Government policy and it will be extremely difficult to break out of it.

The Lawson revival was an aberration, not today's recession. That recovery was caused by a number of one-off factors. It was caused by an asset-price inflation, which the Government dare not let loose again. The oil was there to pay for the imports, but supplies are now dwindling. That revival was also caused by a 30 per cent. devaluation in real terms against the deutschmark. This from the Government who claim never to devalue. They won two elections following devaluation. In 1986, there was a 30 per cent. devaluation against the deutschmark. We cannot repeat that now. That revival was also aided by the financial liberalisation that boosted the City. Those were the one-off factors that produced the recovery. Those factors cannot be repeated and now we are locked into deflation.

The tragedy is that what turns the key and nails the lid on deflation is membership of the exchange rate mechanism. We have bound ourselves to tie our exchange rate to that of west Germany. It will be kept within a 6 per cent. band. An essential of the system is to get our inflation down to Germany's abnormal low rate of inflation. However, we have entered the ERM at an overvalued rate, which is more than 20 per cent. higher in real terms than the exchange rate at the end of 1986. We warned about the danger of entering at an overvalued rate.

If every factory held wage increases or gave zero wage increases and if it cut the wage paid to its work force it could still not return to the competitive level vis-a-vis West Germany that existed at the end of 1986. Even then we were not particularly competitive. The Government have followed a ruinous policy that installs permanent deflation.

Where is the locomotive of growth? What will pull us out of the recession? The Minister made a pathetic speech. In answer to my intervention he said that once one got inflation down, interest rates could come down. However, the ERM precludes that because those interest rates support the exchange rate. If that is the central object of policy we are doomed to high interest rates. It means that we cannot reduce those rates by more than half a per cent.—and only occasionally. They are bound to remain high because the pound is overvalued and to keep it in its band in the ERM we must keep interest rates high.

Effectively, the country is no longer run by the Government. They cannot take decisions on interest rates. The country is now run by Robin Leigh-Pemberton—to name but three. The Governor of the Bank of England will decide when interest rate cuts can be made, but they cannot be substantial, and that is the trap. The country and industry are crying out for interest rate cuts, but the Government cannot make them. In that policy lies permanent deflation.

We shall be faced with a sustained diet of what France had to endure during the 1980s. Let us consider the damning OECD report on French competitiveness. That country has come through damaging inflation, but that has not made it any more competitive than Britain. We are now entering the same deflationary period, which will be hard, long and permanent. That way lies disaster for manufacturing. A Government who fight inflation with such techniques ruin manufacturing.

It is easy to bring down inflation, any fool can do it. All one has to do is to deflate the economy so massively that inflationary pressures end. The Government are pursuing that policy, but by doing so they are destroying our manufacturing base, our front line in international competition.

Manufacturing has not caused inflation. Manufacturing wages went up 14 per cent. only, in real terms, during the 1980s, but the wages in non-manufacturing went up by 42 per cent. The non-manufacturing sector has caused the inflationary pressures, but manufacturing has suffered the consequences of high interest rates and an overvalued exchange rate. The manufacturing industry has suffered the closures, but it is supposed to be our front line in the international market. It is supposed to face the trade sectors of other countries.

We are fighting inflation by taking resources out of production and keeping them out permanently. If they are reintroduced inflation must resume because they are the cause of it. All the Government can do is under-run the economy and let unemployment rise. In that policy lies a future of remorselessly rising unemployment. It will go beyond 3 million because there is nothing to stop it. In that policy lies a future of more closures. It is forecast that between 40,000 and 50,000 firms will close this year alone. We are already losing 4,000 manufacturing jobs a week.

We shall have an increasing Government deficit. Government finances have already turned from a surplus of £14 billion to a deficit of about £8·5 billion. That is equivalent to a turnaround of £23 billion. The Government will have to increase taxes next year because corporation tax receipts will go down because profits will be in such a mess because firms are going bust. Expenditure on social security and unemployment will increase because unemployment is rising so rapidly. We shall be faced with a deficit that will rise continuously. There is no way out, because the Government are under-running the economy—that is their only policy.

Such deflationary economics are disastrous. The Government claim that industries and firms are closing because they are not price competitive. They argue that they could improve their price competitiveness by cutting labour costs. However, there is another way, which is to cut the exchange rate which is forcing that deflation upon us.

To make ourselves competitive in overseas trade we should reduce the exchange rate. It is too high and it must come down. The dollar came down to cope with the United States deficit—after 1985 the dollar fell by 50 per cent. That reduction in the exchange rate has been an enormous benefit to the United States balance of trade and its manufacturing sector. The pound must do the same. There is nothing else for it. That is what markets are about. To try to dam up the pound forces deflation on the country.

We should not cut demand, as the Government have done, but expand it and see that it is channelled by the price mechanism to production in this country. We should make it competitive for British industry to produce, to export and to make profits. We should increase the price of imports through the price mechanism to give British industry the advantage that it now lacks. We should give British industry that advantage and stimulate it. If that happened interest rates would come down. Unit costs would also come down because production would increase. The whole economy would pick up as a result and the costs of unemployment would fall. All the burdens facing British industry would fall and we would return to the path of growth. That is the only way out.

The Government will be driven to it sooner or later. It should be sooner because if they allow what is happening to go on, they will be doing irreparable and irreversible damage to the manufacturing base. There is no way that their present policies can improve competitiveness, revive industry and stimulate manufacturing on which we depend. The Government are following a phoenix policy. Phoenixes arise from ashes. The more ashes that are produced, the more phoenixes we shall get, and that is all that the Government can expect to come out of their present policies.

It is essential to expand the economy, to allow industry to generate a profit and to expand as a result of investing that profit. That is the only way forward. The Government are sealing their own fate, but unfortunately they are sealing the fate of the country in a trap of orthodoxy.

Photo of Mr James Cran Mr James Cran , Beverley 8:20, 13 June 1991

Having taken part in a number of like debates since coming to this place, I have concluded that they are becoming progressively drearier. That is happening because Opposition Members use these occasions simply to have a go at British industry and run down British companies and the economy. They also try to give the impression that British companies have the one aim of using downturns in the economy to winkle money out of the Government, which of course is not the case.

I admit that we are in a downturn. None of my hon. Friends has denied that. I, too, have seen CBI surveys. Indeed, I have participated in conducting a few of them in my time. I know, if Opposition Members do not, that British managers are adept at using such surveys to put pressure on the Government of the day, whatever their complexion, and that is happening now.

Whatever else those surveys show, beneath them lies the fact that British manufacturing and other companies are now immeasurably more resilient than at any time in the past 20 years. So I start from the premise that British businesses are among the best in Europe, and I am a bit tired of sitting here listening to a litany of defeatism from Opposition Members.

Photo of Mr Christopher Butler Mr Christopher Butler , Warrington South

This morning I received a letter from a north-west inward investment agency saying that, in 1990–91, it achieved the greatest number of inward investment jobs in the whole of its existence. That proves that overseas investors have more confidence in the future of our economy than have Opposition Members.

Photo of Mr James Cran Mr James Cran , Beverley

There is no doubt about that; my hon. Friend makes an eloquent point.

I was saying that British business was among the best in Europe. Those with knowledge of the subject know that we have some of the best companies on the globe. To listen to Opposition Members, one would think that we had none. Of the top 500 companies in the European Community, 138 are British and only 92 are German. One would have thought, from the remarks of Labour Members, that the Germans would be ahead of us in that regard.

The wording of the Opposition motion is an utter disgrace. One would think that we were experiencing the collapse of manufacturing industry in Britain. I am a northern Member and am interested in manufacturing, although I agree with my hon. Friend the Member for Crawley (Mr. Soames) that the service sector is also important. I have an interest in manufacturing, and apart from this it is clear that all sectors of the economy are interested in having a strong manufacturing base. There is no difference between the two sides of the House on that, yet it is extraordinary that Opposition Members have not conceded what has happened over the years. For example, manufacturing output in the 1970s went down in absolute terms. Under Conservative rule, from 1982 to 1989, it increased in absolute terms. We have heard not a word of that from the Opposition. I was particularly disappointed that my near neighbour, the hon. Member for Great Grimsby (Mr. Mitchell), should have given an impression contrary to the facts.

I have examined a number of company results in the United Kingdom to get to the true position. Consider, for example, the company to which the right hon. Member for Salford, East (Mr. Orme) referred, British Aerospace, Britain's biggest manufacturing company. In his annual statement, dated 25 February 1991, the chairman of that company said: We are pleased to announce record results in this tenth anniversary year of British Aerospace as a public company. That meant pre-tax profits of £376 million, which was a record. If we are to believe the silly motion tabled by Opposition Members, there should have been a turndown in profits. Sales for that year were also a record, at £10·5 billion. Orders for this year stand at a record £11·8 billion—I attempted to explain that to the right hon. Member for Salford, East. In addition, British Aerospace has had a number of orders recently for aircraft, making that figure even greater. Again, that makes nonsense of the Opposition's silly motion.

It may be said that I have been lucky in choosing a company that suits my argument. I will therefore take another, Lucas Industries. Anybody with experience of British business and manufacturing knows that Lucas was an ailing giant when the lot on the Opposition Benches left office in 1979, and many people in the midlands thought that it would close down. The 1990 annual report and accounts for Lucas Industries show that group sales are at the highest level ever and that the same applies to the group operating profits, earnings per share and dividends per share. Perhaps more important, sales per employee are at the highest level ever.

Moreover, I did not know the figures, I would expect that there had been a downturn at Lucas in research and development expenditure. Instead, last year the company spent £99 million on research and development and with the addition of capital expenditure of £136 million. The combined figure is £325 million, 25 per cent. higher than in the previous year.

Those are two significant manufacturing companies at the sharp end of competition worldwide, and they are doing a great deal better than Opposition Members suggest.

While the business sector in Britain has occasionally faced difficulties, under Conservative rule it has managed to achieve levels of profitability never dreamt of when Labour Members had an opportunity to produce results. Business is also concerned about inflation, and it is therefore not accidental that the CBI has put at the top of its "Business Agenda for the 1990's" the question of the control of inflation. Yet the motion does not contain the word "inflation." That is because Labour Members do not understand that inflation kills the prospects of companies, because it erodes their international competitiveness.

We have not done as well as we might in controlling inflation. While I am the first to admit that, the facts show that, whereas our lowest rate of inflation was 2·9 per cent., the lowest inflation rate achieved by the last Labour Government was 7·4 per cent. Inflation is important because, if we could get it down to the German level, business would pay far less in interest—in fact, by about £8 billion a year. British business would also pay far less in corporation tax because with high inflation inflated profits are made.

I am bullish about British business and the industrial sector, especially manufacturing. I echo the point made by my hon. Friend the Member for Warrington, South (Mr. Butler): if the Opposition are correct in saying that the Government do not look after the interests of business, why does this country attract more foreign investment than any country in the European Community? There are more Japanese and American companies in this country than in any other simply because we look after industry.

When the Labour party had an opportunity to do so, it destroyed British business and undermined morale. That is no longer the case, and I expect much from British business in the next few years.

Photo of Mrs Irene Adams Mrs Irene Adams , Paisley North 8:32, 13 June 1991

I was elected to this House in November, just two days after the Prime Minister came to power. Throughout that election campaign people told me, "One thing is sure, Mrs. Adams. Things can't get much worse." At that time I probably agreed with them. How wrong we all were. Six or seven months later, a further 500,000 people are unemployed —people who thought that they had a future.

I listened to the Secretary of State telling us that the standard of living has increased. I wish that he would tell that to the 11 million people who are on the bread-line. The report by the National Children's Home last week said that many children in this country were going hungry. They were malnourished not because their parents were ignorant but because they did not have enough to eat. Their parents knew the right type of food that was required but they simply could not afford to buy it. That is the increase in the standard of living to which the Secretary of State referred.

Scotland has suffered particularly badly in this recession. It is the second round for Scotland, as it is for the rest of the country. When the Government came to power in 1979, my constituency was somewhat different. The town of Paisley was a single constituency. Recently, my hon. Friend the Member for Paisley, South (Mr. McMaster) asked the Scottish Office what was the net increase in manufacturing jobs in Paisley since 1979. The reply was that the net loss of manufacturing jobs was 14,500—in a town of 85,000 people. That probably means that not a single family in that town has not been hit by the loss of a manufacturing job. Those jobs had existed for over a century. They were jobs in cotton—most hon. Members probably had their buttons sewn on with cotton manufactured in Paisley by Coats and Clarkes. We now have two skeleton buildings standing in the middle of our town.

Coats and Clarkes was not the only company to go to the wall. At the end of last year, just as I came to the House, one of those centres of engineering excellence—Howden and Renfrew—disappeared, having been in existence for 120 years. Howden's work force were highly skilled in engineering. It was involved in research and development of renewable energy and was a world leader in that market. It was also involved in the manufacture of tunnelling equipment. I sat on the Committee that examined the Bill to introduce a link from Heathrow airport to central London. Only one company in Britain could manufacture the necessary tunnelling equipment to build that link—Howden and Renfrew. When the Bill's proceedings finished, Howden and Renfrew sold off all its plant and machinery to a company abroad, which will make the same tunnelling equipment for Heathrow. Howden's no longer exists.

Conservative Members asked about skilled engineering. If they would care to come to my constituency tomorrow, I shall show them 400 highly skilled engineers who no longer have a job because Howden's no longer exists. They lost their jobs because of the Government's short-term policies and lack of foresight, and the fact that they are locked into a dogma of the past that would not permit them to enter into a partnership with that industry to help it over a hurdle. The company was asking not for nationalisation but for a partnership to help it when it was experiencing a short-term blip. It had millions of pounds, worth of orders on its books and simply needed a little assistance for a short time. The Government could not and would not give that assistance then, and nor would it now. If we pass a man with a broken leg in the street, do we refuse to send for an ambulance because that is intervention? That is the kind of intervention that was needed at Howden's to help it to pass that stage.

The same happened in construction. Construction of private housing in Scotland has increased by 20 per cent. Unfortunately, construction in public sector housing has decreased by 78 per cent. The same people who have been put on the dole by high interest rates—a policy of this Government—are losing their houses. Because of those high interest rates, they cannot pay their mortgages. They then find that there are no public sector houses for them to move into.

The Government have continued with those policies and appear to have no intention of changing that path. They ask us continually about a standard minimum wage. Are they seriously telling us that they expect people to work for a pittance for ever? They seem to think that it is all right for people, such as those who work in hamburger restaurants or as security guards, to work for £1 an hour. The Government say that a standard minimum wage would create unemployment but 2·5 million people are already on the dole.

When will the Government's policies, about which we so often hear, put people back to work? That has not happened so far, especially in my constituency. We are losing jobs at a record rate, to the extent that I asked the Secretary of State for Scotland to visit my constituency. There is now almost a haemorrhage. In one area, 40 per cent. of males are unemployed and there is no sign of improvement. By the day, we are losing solid, long-term jobs that have existed for centuries and there is nothing to replace them. There has been a net loss of 14,500 jobs. When will the Government finally realise that they are in the death throes and that there is no future for them? When will they move over and let someone else do the job?

Photo of Mr David Shaw Mr David Shaw , Dover 8:39, 13 June 1991

The House should reject the Opposition's motion, which is ill conceived and shows no understanding of the needs of industry, and which fails to mention profits. It is an airy-fairy motion from academics, not from business practitioners. The Opposition have failed to acknowledge Government successes. The car industry, for example, has been turned round from the devastation that it suffered under Labour. The deficit in that industry was growing when Labour left office, but now it is moving towards a surplus in the trade in motor cars and accessories.

The international competitiveness of our industry is growing as never before. We have been immensely successful in aerospace and pharmaceuticals. The Opposition constantly fail to acknowledge the impact of inflation on industry. Perhaps they do so because it hit 27 per cent. under Labour—a subject on which the Opposition engage in a conspiracy of silence. I invite Opposition academics to spend more time studying industry. I recommend that they look at the review by the National Westminster bank of February 1991, which carries an article entitled "How Inflation Undermines Industrial Success". It might as well have been entitled "How Labour's Policies Would Undermine Industrial Success". Labour needs a training seminar on how inflation costs industry so dearly.

Inflation causes higher costs for plant and machinery, and leads to higher working capital costs for financing industrial stocks and debtors. It reduces cash flows and damages industry, so why did the Opposition not mention it in their motion? Why do they ignore the effects of inflation on industry? Why do only the Government recognise how damaging inflation can be to industry? Perhaps it is because Labour's policy of higher public expenditure and a minimum wage would add to inflation. Labour has nothing but inflationary policies that would damage British industry.

The Opposition have missed an opportunity. Their motion could have complained about higher taxes on British business, but that would have drawn attention to the Labour Government's higher tax rates. Some may think it strange that I am drawing attention to taxes on business, but even under this Government, while tax rates have been reduced, our tax allowances are no longer as competitive as they used to be. Tax relief for depreciation must be reduced further.

The Federal Reserve bank of New York published a research paper, No. 8193, which I commend to the House and to Ministers. It has an international study on the competitiveness of the United Kingdom tax allowances and other matters compared with the United States, Japan and Germany. It shows that this country is good on inflation because it is low and that internationally we have low real interest rates. However, it also shows that, on capital allowances, we have some way to go. I hope that the Minister and other Ministers in the Treasury will look at table 1 of that study. It shows that we need to reduce taxation further.

There is no comfort for businesses in the Labour party's policies. Not only would taxation be higher if Labour were in office, but a Labour Government would subsidise industry by attempting to pick winners. I wonder why the Labour party thinks that it can pick winners. Gamblers at the gambling table cannot do it, so what is so special about Opposition Front-Bench spokesmen? They have failed before and they would fail again if they were in office.

The Labour party's ideas on training would also fail. They want to train people for yesterday's jobs, but only business men know what the jobs of the future will be. No Labour politician will have any idea about that. The Government are introducing training and enterprise councils, which will be run by business men who are aware of what the jobs of the future will be. TECs will work and train people for the future.

The Labour party has crazy ideas on research and development. Its policy harks back to Harold Wilson's white heat of technology—the biggest failure the country ever had. Harold Wilson's policies for industry, for selective employment tax and for higher national insurance were failures. The Labour party should be looking forward to the year 2000, rather than back at the 1960s, for its industrial policies.

I was an accountant when investment grants were given for research and development projects. Companies would arrange their accounts so that overheads were included in such projects. Management time and overtime were added to inflate the investment grant.

Photo of Mr David Shaw Mr David Shaw , Dover

No, they do not understand, because they do not have any experience to give them the understanding. Tax credits given in the way proposed by the hon. Member for Dunfermline, East (Mr. Brown) would cause problems. I wish that he were here to listen to the reality. He proposed tax credits, but he knows that they are wrong and will not work. Furthermore, he knows that the shadow Chancellor of the Exchequer would not allow him the money anyway.

Labour still has a policy of nationalisation. For example, it wants to renationalise British Telecom, the one company that has increased its efficiency massively, along with improving its services to industry. It is becoming more efficient each year under the Conservative Government and the policy of privatisation. Privatisation has improved efficiency.

I commend the Government's policies to the House. They are helping industry. We shall overcome any problems that have resulted from the recession. Our industry will come out of the recession strongr and more solid than every before. It will be a world-beating industry, which will not suffer from the negative attitude of the Labour party. The Labour party will never have the chance to run British industry because it will be run by business men, helped and assisted by a Conservative Government.

Photo of David Clelland David Clelland , Tyne Bridge 8:46, 13 June 1991

The hon. Member for Dover (Mr. Shaw) should come to my constituency and explain to the 300 workers at Bridon Fibres, the hundreds of workers at De La Rue on the Team Valley trading estate and the hundreds in the royal ordnance factory in Birtley who have just lost their jobs, that their sacrifice on the altar of Tory economic policy is worth paying.

Unfortunately, the hon. Member for Beverley (Mr. Cran) is not in his place. He quoted, ad nauseam, the Confederation of British Industry, but one has to remember that he was once the chairman of the northern region of the CBI. We all know that the CBI is nothing but an apologist for the Tory Government. Increasingly, we have to look to the chambers of commerce and the industry associations to get the true picture of the state of British industry under a Tory Government.

The northern region was once one of the cornerstones of manufacturing industry, but under this Government it has become a poor relation to Taiwan and South Korea as our manufacturing industries have been run down and closed while theirs have grown and thrived. The industries that have suffered are not, as too often we are told by the estate agents and second-hand care salesmen on the Government Benches, outdated smokestack industries that have outlived their time. All too often they have been industries at the forefront of technology—industries such as Marconi and Plessey. Too often they have been closed not because their products have become extinct but because of the economic policies of remote headquarters and the British Government. This has sometimes been caused by the Government's inaction and sometimes by the direct application of blinkered dogma.

An example of the former was the closure of the Caterpillar tractor factory in Birtley some years ago, when 1,500 workers were thrown out of work as a result of a decision taken in the United States, and one taken purely for the economic convenience of the parent company. That it was not the result of a lack of demand for the earth-moving vehicles that the plant produced is shown by the fact that the plant was bought by the Japanese company Komatsu, which immediately began to produce the same product and thankfully mopped up some of the unemployment caused by the closure. That achievement was down to the Labour-controlled metropolitan county council of Tyne and Wear and the Labour-controlled metropolitan borough of Gateshead. The Government's non-interventionist, hands-off approach did nothing to prevent the closure or to bring about the rescue.

Another example of the Government's contribution to the fate of manufacturing industry in the north is the disgraceful set of circumstances surrounding the close of North-East Shipbuilders on the River Wear. Hundreds of skilled workers were thrown out of work, many having given their lifetimes to the industry. An acknowledged highly technologically advanced and modern facility was closed as a direct result of and for no other reason than the Government's determination to pursue their dogmatic privatisation policies. That happened to such a degree that the wheeling and dealing that went on behind the scenes at the Department of Trade and Industry and among private interests resulted in the yard being forced to close even though other private interests were willing and able to take over the yard and to maintain its shipbuilding tradition on an unsubsidised basis.

As my hon. Friend the Member for Hartlepool (Mr. Leadbitter) observed earlier, the workers were told that they could do anything in the yard except build ships. Anyone who saw the recent "Panorama" programme called "Scuttling British Shipbuilding" will acknowledge that the performance of the Department in this example was as near to corruption as makes no difference. The conspiracy acted out by Ministers in collusion with the deputy chairman of British Shipbuilders, behind the back of his chairman, was a disgraceful episode in our industrial history.

We heard from the right hon. Member for Croydon, South (Sir W. Clark) that living standards have improved over the past 12 years. That is not true of everyone. The gap between rich and poor has undoubtedly grown. Even though it can be argued that, on average, people are better off, that has been the case under every Government since the second world war, so there is no economic miracle in that.

The problem, and the point of the debate, is that the erosion of our manufacturing base means that living standards today are built on shifting sands. Stability and security of employment are less reliable. The reason is that, over the past 12 years, the Government have shown scant regard for manufacturing industry. Ministers have often shown contempt for the manufacturing sector as they have pursued and promoted the interests of the City and of financial and other service industries.

What are the answers? We must organise our fiscal and taxation policies so that they encourage investment in manufacturing rather than in property development and the like. We must produce educational and training policies which are suited to the 21st century and which recognise the importance of vocational as well as academic subjects and qualifications.

It would also help if the Government supported British industry in their own procurement policies. The prevarication over the order for the Challenger 2 tank is a typical example of how the Government play fast and loose with the well-being of British manufacturing and of how they are willing to risk the loss of British tank-making and, far more importantly, the loss of the skills and experience of thousands of qualified engineers.

The motion refers to policies for the regions. That is a vital area in which our industries and communities must develop. Britain has become one of the most centralised and bureaucratic countries in the western world. The Government have no policy for the regions; instead, they have merely extended the tentacles of Ministers into the regions. We in the northern region of England have long recognised that the way out of our problems—short of a change of Government, which is what the country really needs—is to take matters into our own hands.

The local authorities in the region got together and formed the Northern Region Councils Association. That organisation came together with the regional Trades Union Congress and the regional Confederation of British Industry to form a tripartite body which gave birth to the Northern Development Company. That is the embryo of a fully fledged regional development agency, which the next Labour Government will create. That will lead to the creation of a regional assembly for the region which, far from adding to bureaucracy, will draw together, thin out and co-ordinate the myriad ad hoc bodies and quangos set up by the Government over the past 12 years. It will be an assembly under the control and direction of the people who live in and represent the region. It will be formed of people who are elected by the regional electorate and who are not appointed by Ministers.

That system will allow the British people to set their own agenda and to pursue their own priorities. Just as local authorities in the north have been responsible for investment by Nissan, Komatsu and others, for modern transport systems and for quality services, so the regional assembly will be able to begin to build in accordance with the aspirations of its own people the kind of economy and infrastructure that they need. That system works well in other European countries. Incidentally, it gives them greater and more direct access to European funds than our own communities have. It is a more efficient and more democratic system, and it is the way forward in a modern democracy.

Photo of Sir Ray Whitney Sir Ray Whitney , Wycombe 8:54, 13 June 1991

The hon. Member for Tyne Bridge (Mr. Clelland), like his hon. Friend the Member for Dunfermline, East (Mr. Brown), displays—yet again—the same negative attitude to the achievements of British industry which we have come to expect not only from the Labour party but, sadly, from the Liberal Democrats, if we are to judge by the contribution of the hon. and learned Member for Montgomery (Mr. Carlile) who seemed to misunderstand or deliberately ignore what has been achieved since 1979.

We must question whether those parties have the slightest interest in the success of British business, because one of the main points about business is to create a climate of confidence. One understands the motivation of the political climate and of the atmosphere that we generate in the House, but one must realise that confidence and a positive attitude are crucial to the success of business. We have had no glimmer of that from the Opposition, including the hon. Member for Tyne Bridge. As always, the quintessential example was the contribution by the hon. Member for Dunfermline, East.

Of course there are problems; everyone understands that. We understand that at present, British business is encountering difficulties, but it is important to see the matter in the perspective of the achievements since 1979. Those achievements include an eight-year cycle of growth which is quite outstanding over a decade. No one could get that message from what the Opposition have said. In the decade of the 1980s, output in Britain grew faster than the output of France, of Germany and of Italy. Allowing for closures and mergers, the net increase in the number of businesses has been 375,000 since 1980. The standard of living of our people has increased by about one third. Everyone except the Opposition understands that.

The recession is serious and it is not confined to this country. It affects Germany, France, Australia, New Zealand and the United States. We all have problems, including the problem of inflation. My right hon. Friend the Secretary of State explained—I am not sure that he was understood by the hon. Member for Dunfermline, East —the mistakes that were made in 1988. However, the mistakes made by this Government were as nothing compared with the mistakes made by the Labour party in 1988 about the need to maintain a sensible level of interest rates.

The interest rate problem is serious, although, as someone with experience of business, I believe that it is possible to exaggerate it. What is important for business is not only whether the interest rate is 1 per cent. up or 0.5 per cent. down, but whether there is general confidence in the conduct of the economy by the Government of the day. No sensible business could possibly have any confidence in either the Labour party or—after the contribution tonight of one of its members—the Liberal Democrat party. Certainly, interest rates are important and I endorse what my hon. Friends have said about the importance of the banks' contribution.

A disturbing letter was sent to one of my constituents by one of the leading clearing banks to advise him of a forthcoming change in the bank's policy involving the recovery of the interest and service costs on his account. It stated that it did not involve a change in my constituent's business, but that the bank was making a change which hopefully will enable you"— my constituent— to even up some of the peaks when carrying out your cash flow planning. The letter said that my constituent would in future be charged interest at the bank's current preferential business overdraft rate of 1·4 per cent. a month, equivalent to an effective annual rate of 18·1 per cent. My constituent had previously been paying 2·5 per cent. over base rate—14 per cent. As interest rates have come down 3 per cent. in recent months, the bank is doing a so-called generous deal with him. In fact, it was ordering him to pay 18·1 per cent., which is completely unacceptable.

I hope that the banks will listen to the message strongly put to them by the Government. I hope that they will understand the message; the Leader of the Opposition does not. He gave an extraordinary performance the other day, when he said: Small businesses which used to have arrangements to pay 3 per cent. above basic rate on their overdraft facilities are now paying as much as 17 per cent."—[Official Report, 6 June 1991; Vol. 192, c. 403.] The Leader of the Opposition either cannot use English properly—the way that he talked about a single European currency and the 228 words he used to say nothing show that that is a possible explanation—or he may not be good at arithmetic. He appears not to understand the difference between 3 per cent. over base rate and 17 per cent. over base rate. Whatever the explanation, it is worrying to think that the right hon. Gentleman would presume to move into No. 10, and lead the economy and business of this country. He is the leader of a party which has the effrontery to table today's motion. That demonstrates clearly the Opposition's total failure to comprehend what makes markets work.

The same is true of all the Opposition contributions today and is always true of their spokesmen. The shadow Chancellor visits businesses, utters platitudes and comes away saying that the businesses have understood him. If he were present now I would say to him that a number of business men have come to me and said, in the old American cliche, that they have heard what the shadow Chancellor says but, deep down, he is shallow and has nothing to say. That is absolutely true of the policies of the Labour party, which suggests that we do not know how to help businesses, but that it would.

The Labour party has offered many pledges, in addition to which we now have the Beckett formula. None of us knows how to work out the conundrum to which my right hon. Friend the Secretary of State referred—we cannot have additional spending without growth, but we cannot have additional growth without spending. How would the Labour party square that circle? We then have to compare the various pledges made which, it has been estimated, could cost possibly £20 billion or possibly £50 billion a year.

We all know what the impact on business would be of the Labour party's continuing, extraordinary, sad relationship with the trade unions. Many important industries have been increasingly captured by left wingers within the trade union movement. If the Labour party were to come to power, we should be back in the old period of militancy and restrictive practices.

The hon. Member for Dunfermline, East said, with great pride, that he would introduce a national minimum wage, as advocated by Winston Churchill in 1908. We are to go forward with the Labour party to 1908. Even the Fabian Society has suggested that the national minimum wage would result in the loss of 880,000 jobs.

I could say much more, but given the lateness of the hour and the desire of my hon. Friends to make their own contributions, I will bring my remarks to a close. I cannot do so, however, without referring again to the sheer effrontery of the Labour party and of the so-called Liberal Democrats, who demonstrated tonight no comprehension or understanding of business. Labour is unwilling to suggest what its policies will cost. The hon. Member for Dunfermline, East spoke for 39 minutes, and only in the final minute did he refer to his own policies. Did he tell us what their cost would be? No, because the Opposition are scared to give the House and the country that information. The businesses of this country can be safe only in the hands of the Conservative party and of a Conservative Government.

Photo of Dawn Primarolo Dawn Primarolo , Bristol South 9:05, 13 June 1991

The hon. Member for Crawley (Mr. Soames) was cheered by Conservative Members when he stressed the importance of the contribution by engineers and scientists to high-tech industries. In the aerospace and defence industries today, those very workers are being made unemployed because of the Government's strategy, and they are forced to join the dole queues because no alternative employment is available to them. That is a criminal waste of the very skills that the Government claim with such determination they want to encourage.

South-west England's aerospace industry is being devastated by Britain's changing defence needs and by the general rundown of the country's manufacturing capacity as a result of the Government's economic policies and the recession. Aerospace has been a distinctive feature of the south-west's economy since the beginning of the 20th century. The region accounts for more than 10 per cent. of all aerospace employment and for more than one third of the industry's manufacturing capacity.

In the south-west, the defence sector employs directly or supports 155,000 jobs, which represents the highest degree of job dependency of any region in the United Kingdom. When one speaks of manufacturing industry in the south-west, one is talking about high-tech industries involved in aerospace and defence work—but they are suffering unguided and unplanned changes as a consequence of the Government's economic policies.

A recent report conservatively estimated that 60,000 direct jobs and 12,000 support jobs will be lost in the aerospace and defence industries. That would have a devastating effect on the south-west. Earlier, the Secretary of State made a statement on Cumbria, and spoke of the importance of not allowing a region to decline. The south-west is on the verge of just such a decline.

The south-west has 49 aerospace establishments employing 32,000 workers, scientists, and engineers. They are in the forefront of a technology that is vital to the future and security of our manufacturing base. The names of the companies involved are world famous. They include British Aerospace—the biggest manufacturing employer. Ten years ago, it employed 10,000 people, but now has a work force of only a few thousand. It has made particularly dramatic cuts in its dynamics sector in Bristol. There is no long-term security for British Aerospace in Plymouth.

Rolls-Royce, another giant manufacturer, has consistently shed jobs over the past 10 years. Dowty Fuel Systems, Aerospace, Normal Air Garrett, Westland Helicopters—the list goes on. Thousands of jobs are being lost now in our region, and thousands more will follow. If we add to that the fate of Plymouth dockyards, Devonport, and the dramatic reduction in the work force there, we can see the Government's criminal waste of the most highly skilled members of our industrial manufacturing companies.

But there are alternatives to such comprehensive cuts in the south-west economy. It is important that aerospace and civil aerospace are strengthened and that we find ways of using the skills of the workers who will undoubtedly become unemployed, and rightly so, as we shift and reduce our defence expenditure so that they are no longer needed to produce the weapons of destruction. But do not believe that those skills are not needed in our economy, because they are—desperately.

All those problems are caused by interest rates, the exchange rate and the fact that the Government have done nothing to stop the growth in international subcontracting whereby British companies which have the contracts give the work to workers in other countries—contracts subsidised by British taxpayers, who are giving work to people in Texas instead of in Bristol, Hatfield or anywhere else in Britain.

If we reduce our defence expenditure, something to which I am passionately committed, billions of pounds will become available for a range of alternative spending. But part of it must go on retraining and the encouragement of alternative sectors.

Let us consider what the workers are capable of doing. Environmental technologies are so desperately needed now as we face the problems of our environment. Those people have the skills to respond in those industries. Space and telecommunications research and development need those workers. We need efficient, effective, cheap and environmentally friendly transport systems. Those workers have the skills to produce them. We talk about high tech and we emulate and praise the Japanese and the Germans. We have the skills and the workers, but we refuse to invest in their talents and abilities to build a strong manufacturing base for the future which will produce the value-added goods that we so desperately need.

Let nobody say that it is up to the companies only. The Government, through their various policies, can have a dramatic effect on the future of those high-tech workers. First, they should make up their mind on their defence policy and stop the indecision in their procurement policies, which is making the future of those companies so insecure. They should decide on our defence needs and what we need to produce, and then transfer the workers to diversification to ensure that we use their skills. The Government should do something about interest rates and exhange rates and ensure that, instead of allowing companies to have money from British taxpayers to employ people in Texas, it is a condition that they employ people here in Britain.

Those people have enormous skills and talents. That the south-west can benefit from and contribute to the future of a strong, vibrant high-technology base is indisputable. If the Government do not respond to the crisis that the companies face, they will be wasting skills. Their talk of education and high skills will be nothing but rhetoric and they will deserve the contempt in which many of the electorate in the south-west hold the Government.

Photo of Mr John Marshall Mr John Marshall , Hendon South 9:13, 13 June 1991

The Opposition's motion is one of sheer effrontery. The most brazen piece of effrontery was when the hon. Member for Dunfermline, East (Mr. Brown) talked about the need for unity in respect of Europe. He should have seen the look on the face of his right hon. the Member for Bethnal Green and Stepney (Mr. Shore) and he should have listened to the pregnant silence of the hon. Members for Bradford, South (Mr. Cryer) and for Bolsover (Mr. Skinner).

It is also an act of sheer effrontery for the Labour party to pose as the friend of industry. It is as hypocritical for it to do that as it would have been for King Herod to join the Royal Society for the Prevention of Cruelty to Children.

The Labour party does not understand the role of profit in the economy. It does not understand that prosperity comes only by industry producing the right goods of the right quality at the right price. Labour fails to recognise that the only way to secure prosperity in an economy is to have economic change.

This evening, the Opposition have come here hankering after the sunset industries and the past. The hon. Member for Tyne Bridge (Mr. Clelland) said that the Government do not have a policy for the north. Little do he and the hon. Member for Blyth Valley (Mr. Campbell) realise that the hundreds of millions of pounds poured in to British Shipbuilders by the last Labour Government was money wasted. Little do they recognise that attracting Nissan to Sunderland has done more for the prosperity of the north of England and for the motor car industry than anything that the last Labour Government did.

We have listened to the Labour party talking about the need to produce the conditions for greater prosperity. Yet Labour Members opposed the Education Reform Act 1988. At a time when people are worried about technological education, what is Labour's reaction? It is to promise to get rid of city technology colleges—to return to the past.

At a time when people thought that industrial relations could not be reformed, the Labour party opposed every change that was made to improve industrial relations in our country. The Labour party supported the bully boy and the thug—it supported Scargill rather than the right of individuals to work.

The part of British industry that is thriving today, that is enjoying massive increases in productivity and investment and is meeting the needs of consumers is the sector of industry that was privatised by the Government. There is as much as 60 per cent. growth in productivity in privatised industries and increases in investment of up to 50 per cent., but Labour opposed every step that produced those circumstances. The Labour party is the natural party of unemployment.

Photo of Mr John Marshall Mr John Marshall , Hendon South

No, I shall not give way because there are only a few minutes left and the hon. Gentleman has only just come into the debate. I will give him a lift home tonight, but I will not let him interrupt my speech.

The Labour party is the natural party of unemployment. All Labour Governments have left office with unemployment higher than when they entered office. The Labour party is committed to a minimum national wage. It says that that will not create another two million unemployed—only another I million or 1·5 million. Whatever the figure, it is a national scandal that any Member of Parliament should seek to legislate another person into unemployment. How can any member of the Labour party go to the country and say that he or she has a social conscience when Labour Members are condemning some of their constituents to the dole queue? That is an act of gross inhumanity and deserves the condemnation of all hon. Members.

We heard the hon. Member for Dunfermline, East quote City circulars, like some third-rate secondary banker. He forgot to tell us that Goldman Sachs has said that a Labour Government would lead to a 3 per cent. increase in interest rates. One cannot borrow or spend on the scale that he proposes without raising interest rates, and higher interest rates would lead to lower and not higher investment.

The Labour party is committed to policies which would ruin British industry. The prosperity of this country will come not through socialism but through the social market economy.

Photo of Mr Dennis Turner Mr Dennis Turner , Wolverhampton South East 9:17, 13 June 1991

I commend the Opposition motion, which speaks up for the thousands of businesses, large and small, that have been driven to the wall by the damaging effects of this Government's economic policies.

The motion also acknowledges the shock waves of deep recession that have reverberated throughout every region of our country, not least the west midlands, which has once again been ravaged by the slump. The motion recognises the real personal casualties of this crisis—hundreds of thousands of men and women. Many of them have been cast on the scrap heap of unemployment for the second time in the past 13 years of this wasted Government, with the financial and psychological damage attendant on the loss of a job, the loss of dignity and the loss of the pay packet, which is the only real sense of independence that is worth having for people in this society. When I read the Government's amendment, I was stunned by its deceptively self-congratulatory tone, which insults the business men and women who are now desperately trying to save bankruptcies and closures.

Hon. Members may know the old saying "Some chicken! Some neck!" What a nerve the Government have —telling us in their amendment that they welcome the transformation of the British economy over the last 12 years". The past 12 years of this Administration, in the so-called "enterprise culture", would be more accurately described as 12 years of candy floss culture. No better example of the Government's economic policies, and the failure of those policies, can be provided than the decline of manufacturing in the west midlands over the past 12 years. The Government's bequest to the people of Britain has been the experience of two major slumps and a mad inflationary rush to win the 1987 general election, along with a deteriorating share of world trade and world economic influence.

In the past year, the economy of the west midlands has become considerably poorer. Both the west midlands CBI and the chambers of commerce paint a depressing picture: They show the region to be in a deepening recession, with 15 per cent. of firms saying that they expect demand to fall in the next four months. None of them expects it to rise. Only in Wales were business men more pessimistic about the level of business confidence; it is not surprising that it is lower in the west midlands than in any other English region.

Investment is also suffering as a result of the Government's economic policies. The west midlands chambers of commerce said recently that the deepest recession was being felt there, and that home manufacturing orders were at their lowest, with 58 per cent. of companies reporting a fall. The quarterly economic survey shows that manufacturing companies of all sizes expect domestic and export orders to fall by a large percentage.

The latest quarterly economic figures of the chamber of commerce in my own town, Wolverhampton, lists some depressing trade and industry statistics. Only 3 per cent. of companies report any improvement in home deliveries, while 54 per cent. report a decline; 11 per cent. report a rise in home orders, while 54 per cent. report a fall. As for productivity in manufacturing—there are 12,000 jobs in engineering—only 3 per cent. of companies say that they are working to full capacity. Eleven per cent. are working to 80 per cent. of full capacity, while 64 per cent. are working to below 60 per cent. capacity; 22 per cent are in such a state that they will not survive, and will be forced to go bankrupt.

Only 3 per cent. of companies have increased staff numbers, while 61 per cent. have reduced them and 36 per cent. say that they intend to lose more workers in the next few months. Those are the grim realities in Wolverhampton, and in many other towns.

I should have liked to say more about the complacent attitude of the Department of Trade and Industry, and the role that Ministers have played in this sorry tale. Companies in my constituency that turned to the DTI for help were turned away as though they did not exist. They have not received the help that they should have been given.

I wish to finish on what, for us, may be a happier note and quote the words of Omar Khayyam: Ah Love! could thou and I with Fate conspireTo grasp this sorry Scheme of Things entire,Would not we shatter it to bits—and thenRe-mould it nearer to the Heart's Desire! The heart's desire of the people is to start again and to have a new Government and new policies. We shall receive their support and there will be a new Labour Government in the next 12 months.

Photo of Ms Joyce Quin Ms Joyce Quin , Gateshead East 9:25, 13 June 1991

This has been a timely debate on a vital subject and there were some powerful contributions to it. There were also, however, some somewhat strange speeches, given the economic situation, particularly by Conservative Members, not least the Secretary of State for Trade and Industry. I was certainly alarmed that he did not seem to recognise the escalation in unemployment and the misery that that represents, and there was no real recognition of the depth of the recession which is affecting people in Britain much more dramatically than people elsewhere.

There were, of course, the usual cheap jibes about my hon. Friends and I on the Labour Trade and Industry Front-Bench team. I am happy to let industry judge at the next election which policies it prefers—the choice will be clear, and I think I know which choice it will make.

Not surprisingly, all my right hon. and hon. Friends referred to the steep rise in unemployment. There is obviously great concern about it in each of their constituencies. My right hon. Friend the Member for Salford, East (Mr. Orme) listed redundancies in the north-west. My hon. Friends the Members for Hartlepool (Mr. Leadbitter), for Blyth Valley (Mr. Campbell), for Crewe and Nantwich (Mrs. Dunwoody), for Paisley, North (Mrs. Adams), for Tyne Bridge (Mr. Clelland), for Bristol, South (Ms. Primarolo) and for Wolverhampton, South-East (Mr. Turner)—I apologise if I have missed anyone—gave vivid examples from their areas.

Among the features of the debate were the contributions by hon. Members from different regions, all of them worried about the effects of the recession. Last time we had a severe recession, in the early 1980s, it particularly affected certain regions, including mine. I derive no satisfaction, however, from the fact that the current recession affects Britain as a whole. All regions are affected. Manufacturing and service sectors and traditional and modern industries are affected. It is clear that the recession is affecting the heartlands of Conservative Members. For that reason, at the next election it will not be possible for the Conservative party to try to make some exclusive appeal to areas that are not suffering. The effects of the Government's policies will be clear, even to their supporters.

Unemployment will be a big issue until the election. Even according to the Government's fiddled figures, to which my hon. Friend the Member for Blyth Valley referred, the level is appallingly high and there are worries that it will top 3 million before long. Allied to that is the concern over the number of business bankruptcies in recent months. Many examples were quoted during the debate. In addition, once again, there is a worsening trade balance. The figures this week were twice as bad as expected, with both visibles and invisibles doing badly.

In this distressing picture, it appears that accountancy is the only growth profession. This week, I read that in 1990 Britain's eight big accountancy firms earned fees totalling £226·4 million from receiverships, liquidations and administrations—an increase of 63 per cent. on what they had made from insolvencies the previous year.

I was interested also to read in the press this week that the Government were thinking of linking in some way to performance the salary of the next head of the Central Statistical Office. I am sure that Employment or Trade and Industry Ministers would not like to be subject to performance-related pay at present. They would find that, with industry in recession and unemployment rising, their pay would be dropping dramatically.

In one of my local newspapers—the Newcastle Journal —I read a brief description of the Government's economic record, written by one of the paper's economic commentators: My recollection of the 10 years is of two recessions and a middle bit of rampaging borrowing and rampaging prices which led to rampaging inflation and rampaging interest rates. A fair summary?The middle bit boom—nobody seems to call it 'the miracle' any more—was consumer-led as booms tend to be, and consumers were borrowing like mad, and companies were borrowing like mad to keep up with them, and we all wound up the creek. It is clear that the recession in Britain is deeper than that elsewhere. This week we also heard the predictions of the Organisation for Economic Co-operation and Development that Britain under its present Administration would be the slowest to recover from it.

It was clear from the debate that wide-ranging criticisms of the Government's general economic policies are being voiced by those who were once thought to be the Government's friends and by groups in industry at the sharp end trying to produce, sell and export in today's recessionary circumstances.

The Engineering Employers Federation has reported a dramatic fall in engineering orders, with the slide expected to last well into next year. The construction sector also experienced a sharp fall in output in the first quarter, compared with the last quarter of 1990. Eighty per cent. of construction firms expect lower output during the next 12 months.

The balance of payments deficit in specific sectors is very great. In electronics, it now runs to billions of pounds, having increased from the small deficit that existed when the Conservatives came into office. It is not surprising that many of my hon. Friends also mentioned the machine tools sector, as it is vital to a manufacturing economy. However, that sector is in considerable difficulty.

Many more examples could be quoted. For example, I noticed this week that shoe imports now represent 72 per cent. of the market, which is another alarming figure.

Photo of Ms Joyce Quin Ms Joyce Quin , Gateshead East

In that picture of gloom, neither the Department of Trade and Industry nor the Treasury seem to have any idea what to do about it. The Chancellor had his one weapon of interest rates, but I think that he will be dubbed—

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

Nearly all Labour's policy prescriptions involve the expenditure of more public money. Will the hon. Lady tell the House how much extra money above our spending levels she can pledge for the DTI's budget?

Photo of Ms Joyce Quin Ms Joyce Quin , Gateshead East

Perhaps the Minister should wait for the first Budget of a Labour Government. Indeed, I do not know of any Government who have made the detailed prediction for which he asks.

Neither the DTI nor the Treasury seem to have any idea what to do in the circumstances. I believe that the Chancellor will be dubbed the Mr. Micawber Chancellor who is waiting for something—anything—to turn up. The faintest stirrings seem enough to give him hope that something will turn up.

During the debate there have been criticisms of specific policies. Several hon. Members mentioned especially the weakening of our export services and the Bill that is currently going through the House to privatise the Export Credits Guarantee Department or, at least, its short-term division. It is not only the privatisation that is causing concern in industry, but the fact that we charge higher premiums than our competitors.

I should like to point out the irony of the fact that the Government are rightly under pressure because of the effect of bank charges on small businesses. However, the Government's own financial arm—the ECGD—charges much higher premiums to industry than do most of its competitors in Europe. Unfortunately, the ECGD seems to be able to cover fewer and fewer markets, even though, at a time of great trade deficit, one would think that we would want to encourage access to more markets for the future. That loss of markets at a crucial time is grave, and perhaps the Government should read the swingeing criticisms in the report of the export group for the construction industries, which is entitled "Farewell to the Third World". It laments the fact that Government support for access to third-world markets is practically non-existent these days.

The Government have also introduced policies such as the sale of the British Technology Group, which has been described as one of the most successful technology transfer companies in the world but, as we know, the Government do not like to hear about any successes in the public sector. Senior scientists have protested that Britain is falling behind its international competitors in research and have accused Ministers of a lack of encouragement and cash commitment. Labour published its own science programme earlier this week.

Not surprisingly, several hon. Members, including many of my hon. Friends, have referred to the difficulties that small businesses are experiencing. Small firms are caught deep in the recession, with output during the past four months plunging more quickly than at any time in the past four years. According to the CBI survey, three out of four small firms are now working below capacity. Besides having difficulties with the banks, small firms have also encountered other difficulties, some of which are the result of Government policies.

Small businesses are worried about the uniform business rate, plus that fact that many small business men, especially those who live in flats above their shop, are also faced with paying expensive poll tax bills, often for inadequate accommodation. There is also the problem of the bad debts that small companies have to face, added to which has been the problem of the over-zealous VAT man, who has pursued small businesses, often causing them considerable difficulties.

Photo of Mr Ian Bruce Mr Ian Bruce , South Dorset

A moment ago, the hon. Lady said that we would have to wait for the first Budget of a Labour Chancellor. However, the Labour party's own document contains one commitment—to a minimum wage. Can the hon. Lady tell all the small business men in my constituency exactly how they would be helped immediately a Labour Government came to power if they had to pay a minimum wage to every single person in their organisation, amounting to £136 per week, which Labour would then raise to a minimum wage of £204 a week to achieve two thirds of the median?

Photo of Ms Joyce Quin Ms Joyce Quin , Gateshead East

I do not accept the hon. Gentleman's figures hut, given all the discussions about a minimum wage, I am absolutely amazed that no Conservative Member has talked about the problem of low pay in our country today. If the hon. Gentleman looks at the wage differentials in France and in Germany, he will see that they have remained more or less the same during the past decade, whereas in Britain the gap between the well-off and those at the bottom of the scale has widened dramatically. I should like to hear Conservative Members expressing some concern about that fact.

Small businesses have experienced a great deal of difficulty in recent weeks and months and it is a tragedy that there is no overall Government policy for small businesses. Conservative Members should consider the range of policies that affect small businesses at present. Not content with clobbering small businesses, the Government have been making life difficult for this country's large businesses. Perhaps the Government's only small business creation policy has been to make life so difficult for the large businesses that they are forced to contract.

Many hon. Members of all parties have referred to ICI and to Hanson's possible acquisition of it. Although Conservative Members who have spoken about that matter this evening have tended to support their Minister's view, there are deep divisions about this issue in the Conservative ranks. It has been reported that the hon. Members for Macclesfield (Mr. Winterton), for Slough (Mr. Watts), for Stockton, South (Mr. Devlin) and for Chichester (Mr. Nelson) are all opposed to Hanson making a take-over bid for ICI, and that they would press for its referral to the Monopolies and Mergers Commission. That contrasts with the hands-off or non-interventionist approach of the Secretary of State for Trade and Industry.

It is a tragedy that some of our large businesses and industries have contracted so dramatically during the Tories' term of office. Many hon. Members have mentioned shipbuilding, and I fully share their concerns about the scandal of the closure of the Sunderland shipyard. We are worried about the future of other yards, too.

The Scottish steel industry has also been forced to contract dramatically. It is a tragedy that the Clyclesdale tube works closed on the day of the ceasefire in the Gulf when the Secretary of State for Trade and Industry was urging British firms to become involved in opportunities in rebuilding the middle east. The Clydesdale tube works produced a product which no other firm in the United Kingdom produced, so its closure was a blow not only to the Scottish steel industry but to our future balance of payments.

I realise that I have little time left if I am to keep within the time that I have been allocated. Many criticisms have been made of the Government's policy by not only Opposition Members but by Conservative Members. I suggest that the Secretary of State for Trade and Industry and his colleagues look closely at the House of Lords Hansard for Tuesday of this week. In the debate on the Export Credits Guarantee Bill, 19 Members of the other place spoke. Only one spoke in favour of the Government's proposal and that was the Government's spokesperson. The other 18 spoke against the Bill and they included two former Tory Cabinet Ministers, two former Ministers of State with responsibility for trade and export credit and many senior industrialists from our major industries. All of them opposed what the Government are doing. No wonder that at the end of the debate the Government spokesperson, beleaguered as he was, said that he did not know which was worse, having to face the rifle fire from the Government Benches or having to listen to the menacing rumble of the heavy artillery behind him.

An ex-Cabinet Minister quoted in The Guardian today —it is a quote taken from the Washington Post, so someone else is going round the world talking about the Government's record—spoke about the Department of Trade and Industry and the Government. We haven't got a team and we haven't got a theme. There is no sense of direction. When you've been in power 12 years there are no alibis. You can't blame Labour or the unions or the bloody foreigners. Precisely. There is no scapegoat. It is the Government's responsibility and it is the Government who are to blame.

I saw a recent headline in a newspaper about the forthcoming speech by the Secretary of State for Trade and Industry. It said: Lilley sets out to woo industry. Some courtship. If the Secretary of State went ahead and booked a table for two with industry he would end up either staring at the candlelight alone or finding himself in an almighty row with his partner. If his recent actions are part of a courtship with industry, how on earth does he behave when the relationship turns sour?

My hon. Friend the Member for Hartlepool (Mr. Leadbitter) said that, if the Government were so proud of their record and so happy about what was happening in industry at present, why did they not call a general election now? The truth is that industry has been dosed with the wrong medicine for far too long. It is not only industry's health which is suffering badly as a result; it is that of the country as a whole. Only a change to Labour would bring us back to health and give hope for the future to industry and those who work in it.

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry) 9:43, 13 June 1991

Today we have heard clearly the difference between the two sides of the House. The Opposition have an industry policy that looks back to the 1960s and 1970s, which failed then and would fail again. We have an industry policy which is in line with the best experience around the world and gives British industry the opportunity and the conditions in which it can compete and become world-beating.

I agree with the right hon. Member for Salford, East (Mr. Orme) and the hon. Member for Hartlepool (Mr. Leadbitter) that manufacturing is important. My experience in manufacturing taught me that. It taught me how crucial manufacturing industry is to Britain and its future. That is why I and my hon. Friends welcome the record levels of orders reported by my hon. Friend the Member for Beverley (Mr. Cran) at British Aerospace and why we are proud of many of the successes that British industrial companies are recording day after day. They are doing extremely well in international markets.

Opposition Members should move that the way to help British industry is to be confident about it and to be proud of its achievements, not to run it down constantly and accentuate the negative and the lousy, which they always have a habit of finding.

My right hon. Friend the Member for Croydon, South (Sir W. Clark) rightly asked where the money was coming from to pay for the policies that some Opposition Members espouse. Where is the beef in that policy? We heard again from the shadow spokesperson, the hon. Member for Gateshead, East (Ms. Quin), that there is no extra money. She was unable to tell us of a single extra penny over and above the current Department of Trade and Industry budget. We know that the shadow Cabinet will not allow any extra money for industry. The basis of Labour party policy is nonsense. It cannot deliver, and it knows that its policy would not work.

The hon. and learned Member for Montgomery (Mr. Carlile) ran down British design and research. Why did he not tell us of the successes of the pharmaceutical industry? Why did he not tell us that motor industry manufacturers are coming to this country to recruit engineers and designers to plan and make their new models? The car industry is flourishing despite the problems with domestic demand because it is exporting, exporting and exporting again. It is now making models in this country that people want to buy on the world market. They are produced at the right price in the right quantity. The hon. and learned Gentleman, who is the industry spokesman for the Liberal party, seemed totally unaware of that party's policy on motor cars. It wants to tax them and tax them again to drive them off the road. Some support that would provide to the industry.

Photo of Mr Edward Leadbitter Mr Edward Leadbitter , Hartlepool

Does the Minister consider that a 51 per cent. increase in unemployment during the years of the Conservative Administration is a successful hallmark of industrial policy?

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

Every Labour Administration has raised unemployment. Since 1979, under the policies of the Conservative Government, hundreds of thousands of new jobs have been created and many new companies have been established. The hon. Gentleman knows that, but he cannot bear the truth. In many constituencies held by the Opposition, unemployment is lower today than it was at the previous election. They know that, and we know that, and they should be pleased about the way in which industry has developed.

My hon. Friend the Member for Brigg and Cleethorpes (Mr. Brown) rightly pointed out that many aspects of Labour policy could be a violation of the treaty of Rome. The Labour party, in its new European clothes, should take that matter far more seriously than it seems to be doing.

My hon. Friend the Member for Davyhulme (Mr. Churchill) enriched our debate with his account of the history of Trafford Park under a Labour Administration. He reminded us just how difficult it was in those days for industries to grow and develop because they did not get a fair deal from Government. They get justice and fairness from the Conservative Government in decisions that are made which affect the lives of those industries. I can reassure my hon. Friend about training. There is a guarantee of a training place for all 16 and 17-year-olds not in employment or education. We are rightly proud of that pledge, and we intend to honour it.

The Opposition should also note that the Department of Employment's expenditure on training, enterprise and vocational training is two and a half times more in real terms than the amount that the Labour Government spent in their last full year of office. There is the policy on training, there is the commitment and there is the money to pay for it. The money is there because we have presided over a successful economy in the past decade, and we have generated the wealth and the tax revenues to provide that money.

Photo of Ronnie Campbell Ronnie Campbell , Blyth Valley

Will the Minister tell the House where on earth is the economic miracle of the Tory party?

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

If the hon. Gentleman waits a little, he will hear about the successes we have had in rebuilding the country's economy and developing it in a way in which his party was unable to do.

Photo of Mr David Ashby Mr David Ashby , North West Leicestershire

In my constituency there are 1,000 more jobs than there were in 1979. Unemployment was 14 per cent., but it is now 5 per cent. That is the economic miracle.

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

I am grateful to my hon. Friend for that powerful intervention, which speaks for itself.

I agree with my hon. Friend the Member for Crawley (Mr. Soames) about the importance of entrepreneurs, deregulation and a competitive market. That is the proper industrial strategy that gives entrepreneurs the ability to compete and do well. I am grateful to my hon. Friend for his praise of the technical and vocational education initiative, TVEI, which has been a successful programme. My hon. Friend is also right to stress the need for interchange between business and the civil service. We have already established the Bridge programme. We have been recruiting experts from the private sector into the Department's insurance division because we believe that such interchange is most useful and that there are things to learn both ways.

I was sorry to hear of the job losses in Crewe, Paisley North, Wolverhampton and Blyth Valley and of the pain that the downturn in demand has caused—[Interruption.] Of course I am, as are all of my hon. Friends, and it is humbug to suggest otherwise. My hon. Friend the Member for Amber Valley (Mr. Oppenheim) put it in context and made it clear that the interventionist policies recommended by Opposition Members would make the position worse rather than better. The policy of trying to back winners would back losers and waste money. The policy of intervening in British industry would mean industry performing less well than it does when left to its own decision-making powers.

The hon. Member for Great Grimsby (Mr. Mitchell) won the prize for the worst joke of the debate with his bad joke about the Governor of the Bank of England. As my hon. Friend the Member for Beverley said, Labour Members are always running down industry. He rightly pointed out that we have many fine companies, and he enlivened the debate with some good examples and positive information to show how industry is doing well.

My hon. Friend the Member for Dover (Mr. Shaw) spelled out the great dangers of Labour levels of inflation——

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

I have been given little time in which to reply to a long debate. 1 cannot give way to the hon. Gentleman, much as I should like to do so.

I will make sure that the Treasury is aware of the concern expressed by my hon. Friend the Member for Dover about taxation. He is right about inflation. It must be curbed for the benefit of industry and commerce.

I did not recognise the one-sided picture of Tyneside described by the hon. Member for Tyne Bridge (Mr. Clelland). He made insufficient mention of the massive new foreign investment that has come into the area. He neglected to talk about the recovery in spending and activity seen on Tyneside in recent years and welcomed by my hon. Friends.

My hon. Friend the Member for Wycombe (Mr. Whitney) made an important case about interest rates and banks. 1 will ensure that the Chancellor's attention is drawn to it before the conduct of his review on the important matter of interest to British industry.

The hon. Member for Bristol, South (Ms. Primarolo) is right to take an interest in the switch from military to civil work. She should also take an interest in her party's defence policies, which would mean a massive reduction in demand for defence supplies, far worse than anything envisaged in the review of "Options for Change" that we have carried out.

My hon. Friend the Member for Hendon, South (Mr. Marshall) was right in what he said about Labour and Europe. The Opposition are certainly split on Europe. He was also right about the true origins of prosperity and the need for structural change.

The hon. Member for Dunfermline, East, at the end of an extraordinary bad speech, made six very modest policy recommendations as an afterthought. The six points would, he said, transform British industry. He said that Labour would modernise regional grants, but he did not say that they had any new money with which to modernise them. We are still waiting to hear what a modern regional grant looks like compared with our targeted sensible regional grants, about which we heard earlier in a statement on Barrow and Furness.

The hon. Gentleman said that the important point was that the Opposition would tell British Steel what to do. In other words, they would replace the successes generated by the management and employees over the past 10 years with the disasters of the 1970s and interventionist policies.[Interruption.] These recommendations were given by the hon. Member for Dunfermline, East, and I am responding to the pathetic list of things that he said would represent Labour's policy.

He said that Labour would try to block a takeover bid that has not yet been mounted. He said that we should legislate on cartels. We have been getting on with the work of busting them. We busted eight cartels last year, and we shall bust any others where the evidence becomes available.

The hon. Gentleman said that Labour would set up regional development agencies. That would be another adventure in quangoland for the Labour party, and most of the money would go on the quangos and not on the people who should benefit from it. He also promised to boost research and development expenditure, at industry's cost, without saying how he would encourage it and without offering a penny of Labour's public money that it does not have. At the same time, industry's profitability would be demolished by all of Labour's other policies of high inflation, high taxation and hostility to profits.

Every statement coming from the Labour Front Beach these days exudes hatred of profitability. The Opposition still do not understand that profitability is necessary for investment and that, if we want to invest in water, telephones and new utility systems, we need profits to do so.

Photo of Mr Merlyn Rees Mr Merlyn Rees , Leeds South and Morley

The motion refers to small firms. I declare an interest as the chairman of a small firm. I would like to take back an answer from the Minister to the young men out of whose efforts, I guarantee, I get nothing. We are not paid by big firms. They are using us as a bank. What does the Department of Trade and Industry intend to do about that?

Photo of John Redwood John Redwood Minister of State (Department of Trade and Industry)

I am well aware of the problem of late payment and will deal with it later, if time permits.

The most heartening aspect of today's debate is that the hon. Member for Dunfermline, East should have chosen to discuss the recession. Whenever he has highlighted an issue in the past and said that no solution was in sight under this Government, there have been improvements in the following year. On 24 October 1989, the hon. Gentleman told us that the trade deficit was worsening. He accused the then Chancellor of denying that there was a problem and said that he had no solution to it. In September 1989, the deficit was £1,994 million. Just one year later it had fallen to £88 million. Where is the apology for that howler?

On 22 November 1989, the hon. Member for Dunfermline, East told the House that no problem that Britain and British industry faced was greater than the trade deficit. He again implied that the Government had no answer. A year later, in November 1990, the deficit was £1,349 million lower than when he spoke. Again, the hon. Gentleman did not even say sorry.

On 6 March 1990, the hon. Member for Dunfermline, East criticised me for saying in a speech that his timing OM the trade deficit was all wrong. I had said that it would fall, and he had said that it would not. He became quite dogmatic when challenged on the issue. In March 1990, when I made my speech, the trade deficit was more than £2,000 million. It fell to about £750 million just one year later. What has the hon. Gentleman to say about that now? Why should we believe any of his other predictions when he has such a bad forecasting record?

On 22 March 1990, the deceptive misuse of statistics and forecasts by the hon. Member for Dunfermline, East took a decisive turn for the worse. That was just possible, despite the previous record. He said that we had a deficit in invisibles, but in 1990 we recorded a surplus of mere than £4,000 million in invisibles—[HON. MEMBERS: "And now?"] We are still recording a surplus. The hon. Gentleman said that in aviation, shipping, services and consultancies we were running a trade deficit, yet last year all the services yielded a huge suplus of more than £5,000 million. The hon. Gentleman has made blunder after blunder.

The hon. Member for Dunfermline, East is obviously hoping for an opportunity in a leadership election, because the defects of the current Leader of the Opposition are becoming all too clear. That was evident in his most recent statement on European monetary union. I wonder whether, when Opposition Members are given time in another debate, they will be able to explain what the Leader of the Opposition meant by his extraordinary 228 words on the subject of monetary union. No newspaper or independent commentator could understand it, and leading experts gave it marks of 0 out of 10 or 3 out of 10. They all marked it as a failure, and so do we.

I understand why the hon. Member for Dunfermline, East is keen to move on from trade and industry and why he thinks he may soon have a chance, with a possible challenge to the leadership. The Leader of the Opposition is said to have purged his party of Militant and to have put behind him the spectre of division. He will certainly need to do so if the Labour party is ever to be credible to British business. However, that claim appears absurd today because, in Wirral, the hard left faction suffered a reversal through the electorate. In Liverpool's council, a large Militant faction opposes a Labour faction, and in Liverpool, Walton, the new unity of the Labour party is displayed by the fact that two socialist candidates are on offer in the next by-election there.

The Leader of the Opposition is also said to have united his party on Europe. He has united it behind a seventh change in policy. In 1983, he said that he wanted the country out of the Common Market, but he now poses as a good European. In 1988, he said that Britain's membership of the Common Market had brought few of the benefits anticipated by its advocates. But he now sings vague love songs about a more European policy to benefit the British economy. Are Opposition Members happy with the policy that their leadership is putting forward on that subject? I am sure that they are not. I am sure that the right hon. Member for Chesterfield (Mr. Benn) is not happy about transferring more economic powers to Europe.

I wish that the hon. Member for Bolsover (Mr. Skinner) were in his place. I am sure that he does not want to lobby European Commissioners instead of raising issues on the Floor of the House. Nor do the right hon. Member for Bethnal Green and Stepney (Mr. Shore) and many trade unionists wish to see social policy and trade union matters taken out of their hands, if the Labour party were ever in a position to do that. No wonder that the hon. Member for Dunfermline, East senses that his time might be coming.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 183, Noes 277.

Division No. 174][10.00 pm
Abbott, Ms DianeBattle, John
Adams, Mrs lrene (Paisley, N.)Beckett, Margaret
Allen, GrahamBeith, A. J.
Archer, Rt Hon PeterBellotti, David
Armstrong, HilaryBenn, Rt Hon Tony
Ashley, Rt Hon JackBennett, A. F. (D'nt'n & R'dish)
Ashton, JoeBermingham, Gerald
Banks, Tony (Newham NW)Boateng, Paul
Barnes, Harry (Derbyshire NE)Boyes, Roland
Barnes, Mrs Rosie (Greenwich)Bradley, Keith
Barron, KevinBray, Dr Jeremy
Brown, Gordon (D'mline E)Lewis, Terry
Brown, Nicholas (Newcastle E)Litherland, Robert
Brown, Ron (Edinburgh Leith)Livingstone, Ken
Caborn, RichardLofthouse, Geoffrey
Callaghan, JimLoyden, Eddie
Campbell, Ron (Blyth Valley)McAllion, John
Carlile, Alex (Mont'g)Macdonald, Calum A.
Cartwright, JohnMcFall, John
Clarke, Tom (Monklands W)McKelvey, William
Clelland, DavidMcLeish, Henry
Cook, Frank (Stockton N)McMaster, Gordon
Cook, Robin (Livingston)McNamara, Kevin
Corbett, RobinMcWilliam, John
Corbyn, JeremyMadden, Max
Cox, TomMahon, Mrs Alice
Cryer, BobMarshall, David (Shettleston)
Cummings, JohnMarshall, Jim (Leicester S)
Cunliffe, LawrenceMartin, Michael J. (Springburn)
Cunningham, Dr JohnMartlew, Eric
Dalyell, TarnMeacher, Michael
Darling, AlistairMeale, Alan
Davies, Rt Hon Denzil (Llanelli)Michael, Alun
Davies, Ron (Caerphilly)Michie, Bill (Sheffield Heeley)
Davis, Terry (B'ham Hodge H'l)Michie, Mrs Ray (Arg'l & Bute)
Dixon, DonMitchell, Austin (G't Grimsby)
Dobson, FrankMoonie, Dr Lewis
Doran, FrankMorgan, Rhodri
Duffy, A. E. P.Morley, Elliot
Dunnachie, JimmyMorris, Rt Hon J. (Aberavon)
Dunwoody, Hon Mrs GwynethMowlam, Marjorie
Eastham, KenMullin, Chris
Edwards, HuwMurphy, Paul
Ewing, Mrs Margaret (Moray)Nellist, Dave
Fatchett, DerekOakes, Rt Hon Gordon
Faulds, AndrewO'Brien, William
Fearn, RonaldOrme, Rt Hon Stanley
Field, Frank (Birkenhead)Patchett, Terry
Fields, Terry (L'pool B G'n)Pike, Peter L.
Flynn, PaulPowell, Ray (Ogmore)
Foot, Rt Hon MichaelPrimarolo, Dawn
Foster, DerekQuin, Ms Joyce
Foulkes, GeorgeRadice, Giles
Fraser, JohnRandall, Stuart
Fyfe, MariaRedmond, Martin
Garrett, John (Norwich South)Rees, Rt Hon Merlyn
Godman, Dr Norman A.Reid, Dr John
Golding, Mrs LlinRichardson, Jo
Gordon, MildredRobertson, George
Gould, BryanRobinson, Geoffrey
Graham, ThomasRooker, Jeff
Grant, Bernie (Tottenham)Ross, Ernie (Dundee W)
Griffiths, Nigel (Edinburgh S)Rowlands, Ted
Griffiths, Win (Bridgend)Ruddock, Joan
Grocott, BruceSheldon, Rt Hon Robert
Hain, PeterShore, Rt Hon Peter
Hardy, PeterShort, Clare
Harman, Ms HarrietSkinner, Dennis
Haynes, FrankSmith, Andrew (Oxford E)
Healey, Rt Hon DenisSmith, C. (Isl'ton & F'bury)
Henderson, DougSmith, Rt Hon J. (Monk'ds E)
Hinchliffe, DavidSmith, J. P. (Vale of Glam)
Hoey, Ms Kate (Vauxhall)Snape, Peter
Hogg, N. (C'nauld & Kilsyth)Soley, Clive
Home Robertson, JohnSpearing, Nigel
Howells, Dr. Kim (Pontypridd)Steinberg, Gerry
Hughes, John (Coventry NE)Straw, Jack
Hughes, Robert (Aberdeen N)Taylor, Mrs Ann (Dewsbury)
Hughes, Roy (Newport E)Thompson, Jack (Wansbeck)
Hughes, Simon (Southwark)Turner, Dennis
Ingram, AdamVaz, Keith
Janner, GrevilleWallace, James
Jones, leuan (Ynys Môn)Wardell, Gareth (Gower)
Jones, Martyn (Clwyd S W)Wareing, Robert N.
Kinnock, Rt Hon NeilWatson, Mike (Glasgow, C)
Lambie, DavidWelsh, Andrew (Angus E)
Lamond, JamesWelsh, Michael (Doncaster N)
Leadbitter, TedWilliams, Rt Hon Alan
Leighton, RonWilliams, Alan W. (Carm'then)
Lestor, Joan (Eccles)Winnick, David
Wise, Mrs AudreyTellers for the Ayes:
Worthington, TonyMr. Eric Illsley and
Young, David (Bolton SE)Mr. Thomas McAvoy.
Aitken, JonathanFairbairn, Sir Nicholas
Alexander, RichardFallon, Michael
Allason, RupertFavell, Tony
Amess, DavidField, Barry (Isle of Wight)
Amos, AlanFinsberg, Sir Geoffrey
Arbuthnot, JamesFishburn, John Dudley
Arnold, Sir ThomasFookes, Dame Janet
Ashby, DavidForman, Nigel
Aspinwall, JackFox, Sir Marcus
Atkinson, DavidFranks, Cecil
Baker, Nicholas (Dorset N)Freeman, Roger
Baldry, TonyFrench, Douglas
Batiste, SpencerFry, Peter
Bellingham, HenryGale, Roger
Bendall, VivianGardiner, Sir George
Bennett, Nicholas (Pembroke)Gill, Christopher
Benyon, W.Gilmour, Rt Hon Sir Ian
Bevan, David GilroyGlyn, Dr Sir Alan
Biffen, Rt Hon JohnGoodhart, Sir Philip
Blaker, Rt Hon Sir PeterGoodlad, Alastair
Body, Sir RichardGoodson-Wickes, Dr Charles
Bonsor, Sir NicholasGorman, Mrs Teresa
Boscawen, Hon RobertGorst, John
Boswell, TimGrant, Sir Anthony (CambsSW)
Bottomley, PeterGreenway, Harry (Ealing N)
Bottomley, Mrs VirginiaGreenway, John (Ryedale)
Bowden, A. (Brighton K'pto'n)Gregory, Conal
Bowden, Gerald (Dulwich)Griffiths, Peter (Portsmouth N)
Bowis, JohnGrist, Ian
Boyson, Rt Hon Dr Sir RhodesGround, Patrick
Brandon-Bravo, MartinGrylls, Michael
Brazier, JulianGummer, Rt Hon John Selwyn
Bright, GrahamHague, William
Brooke, Rt Hon PeterHamilton, Hon Archie (Epsom)
Brown, Michael (Brigg & Cl't's)Hamilton, Neil (Tatton)
Browne, John (Winchester)Hanley, Jeremy
Bruce, Ian (Dorset South)Hannam, John
Buck, Sir AntonyHargreaves, A. (B'ham H'll Gr')
Butcher, JohnHargreaves, Ken (Hyndburn)
Butler, ChrisHarris, David
Butterfill, JohnHaselhurst, Alan
Carlisle, John, (Luton N)Hawkins, Christopher
Carlisle, Kenneth (Lincoln)Hayes, Jerry
Carrington, MatthewHayward, Robert
Carttiss, MichaelHeathcoat-Amory, David
Cash, WilliamHeseltine, Rt Hon Michael
Channon, Rt Hon PaulHicks, Mrs Maureen (Wolv' NE)
Chapman, SydneyHicks, Robert (Cornwall SE)
Chope, ChristopherHigglns, Rt Hon Terence L.
Churchill, MrHind, Kenneth
Clark, Dr Michael (Rochford)Hordern, Sir Peter
Clark, Rt Hon Sir WilliamHowarth, Alan (Strat'd-on-A)
Clarke, Rt Hon K. (Rushcliffe)Howarth, G. (Cannock & B'wd)
Colvin, MichaelHowell, Rt Hon David (G'dford)
Coombs, Simon (Swindon)Howell, Ralph (North Norfolk)
Cope, Rt Hon JohnHughes, Robert G. (Harrow W)
Cormack, PatrickHunt, Sir John (Ravensbourne)
Cran, JamesHunter, Andrew
Curry, DavidHurd, Rt Hon Douglas
Davies, Q. (Stamf'd & Spald'g)Irvine, Michael
Davis, David (Boothferry)Irving, Sir Charles
Day, StephenJack, Michael
Devlin, TimJanman, Tim
Dickens, GeoffreyJessel, Toby
Dicks, TerryJohnson Smith, Sir Geoffrey
Dorrell, StephenJones, Gwilym (Cardiff N)
Douglas-Hamilton, Lord JamesJones, Robert B (Herts W)
Dover, DenKilfedder, James
Dunn, BobKing, Rt Hon Tom (Brldgwater)
Dykes, HughKirkhope, Timothy
Eggar, TimKnapman, Roger
Evans, David (Welwyn Hatf'd)Knight, Greg (Derby North)
Evennett, DavidKnight, Dame Jill (Edgbaston)
Knowles, MichaelRidley, Rt Hon Nicholas
Knox, DavidRoberts, Sir Wyn (Conwy)
Lamont, Rt Hon NormanRoe, Mrs Marion
Latham, MichaelRossi, Sir Hugh
Lawrence, IvanRost, Peter
Leigh, Edward (Gainsbor'gh)Rowe, Andrew
Lennox-Boyd, Hon MarkRumbold, Rt Hon Mrs Angela
Lester, Jim (Broxtowe)Ryder, Rt Hon Richard
Lilley, Rt Hon PeterSackville, Hon Tom
Lloyd, Sir Ian (Havant)Sayeed, Jonathan
Lloyd, Peter (Fareham)Scott, Rt Hon Nicholas
Lord, MichaelShaw, David (Dover)
Luce, Rt Hon Sir RichardShaw, Sir Michael (Scarb')
Lyell, Rt Hon Sir NicholasShelton, Sir William
McCrindle, Sir RobertShephard, Mrs G. (Norfolk SW)
Macdonald, Calum A.Shersby, Michael
MacGregor, Rt Hon JohnSims, Roger
MacKay, Andrew (E Berkshire)Smith, Tim (Beaconsfield)
Maclean, DavidSoames, Hon Nicholas
McNair-Wilson, Sir MichaelSpeller, Tony
McNair-Wilson, Sir PatrickSpicer, Sir Jim (Dorset W)
Madel, DavidSpicer, Michael (S Worcs)
Malins, HumfreySquire, Robin
Maples, JohnStanbrook, Ivor
Marland, PaulStanley, Rt Hon Sir John
Marlow, TonySteen, Anthony
Marshall, John (Hendon S)Stern, Michael
Marshall, Sir Michael (Arundel)Stevens, Lewis
Martin, David (Portsmouth S)Stewart, Allan (Eastwood)
Mates, MichaelStewart, Rt Hon Ian (Herts N)
Maude, Hon FrancisSumberg, David
Mawhinney, Dr BrianSummerson, Hugo
Mayhew, Rt Hon Sir PatrickTapsell, Sir Peter
Meyer, Sir AnthonyTaylor, Ian (Esher)
Miscampbell, NormanTaylor, Teddy (S'end E)
Mitchell, Andrew (Gedling)Tebbit, Rt Hon Norman
Mitchell, Sir DavidTemple-Morris, Peter
Moate, RogerThompson, D. (Calder Valley)
Monro, Sir HectorThornton, Malcolm
Montgomery, Sir FergusTownsend, Cyril D. (B'heath)
Moore, Rt Hon JohnTracey, Richard
Morris, M (N'hampton S)Tredinnick, David
Morrison, Sir CharlesTrotter, Neville
Morrison, Rt Hon Sir PeterTwinn, Dr Ian
Neale, Sir GerrardVaughan, Sir Gerard
Needham, RichardViggers, Peter
Nelson, AnthonyWaldegrave, Rt Hon William
Neubert, Sir MichaelWalden, George
Newton, Rt Hon TonyWalker, Bill (T'side North)
Nicholls, PatrickWalker, Rt Hon P. (W'cester)
Nicholson, David (Taunton)Wardle, Charles (Bexhill)
Nicholson, Emma (Devon West)Wheeler, Sir John
Onslow, Rt Hon CranleyWhitney, Ray
Oppenheim, PhillipWiddecombe, Ann
Page, RichardWilkinson, John
Paice, JamesWilshire, David
Patnick, IrvineWinterton, Mrs Ann
Patten, Rt Hon JohnWinterton, Nicholas
Pattie, Rt Hon Sir GeoffreyWolfson, Mark
Pawsey, JamesWood, Timothy
Porter, David (Waveney)Woodcock, Dr. Mike
Portillo, MichaelYeo, Tim
Powell, William (Corby)Young, Sir George (Acton)
Price, Sir David
Primarolo, DawnTellers for the Noes:
Redwood, JohnMr. David Lightbown and
Riddick, GrahamMr. John M. Taylor.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No, 30 (Questions on amendments), and agreed to.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

forthwith declared the main Question, as amended, to be agreed to.

Resolved,That this House congratulates Her Majesty's Government on its determination to defeat inflation and on the increasing success of that policy; recognises that industry's first priority is the defeat of inflation so that growth can be resumed; welcomes the transformation of the British economy over the last 12 years; rejects the pro-inflationary policies of the Opposition who would increase public spending and borrowing, provoke a pay explosion and take risks with the exchange rate; and condemns their anti-industry policies of nationalisation, intervention and punitive taxation which would threaten the Government's remarkable achievement.