Orders of the Day — Car Tax (Abolition) Bill

Part of the debate – in the House of Commons at 8:18 pm on 25th November 1992.

Alert me about debates like this

Photo of Richard Burden Richard Burden , Birmingham, Northfield 8:18 pm, 25th November 1992

I will not detain the House for long because I know that it wants to make progress. Conservative and Opposition Members are unanimous on one point: we welcome the abolition of the tax. There is no doubt about that, and there is no fudging it.

We welcome the abolition of the tax. Industry in the west midlands, where I come from, has called for this measure for a long time. Trade unions and both major political parties have called for it for some time. So the abolition of the tax is welcome. I have little doubt that it will give a necessary boost to the motor industry. However, the size of that boost is highly debatable. Today a figure of 70,000 cars has been bandied about. The Society of Motor Manufacturers and Traders gave a figure of about 60,000 cars. But they are only estimates.

There is no doubt that the price of a car alone does not determine whether the motor industry thrives. We have already had a substantial reduction in prices. We saw the first reduction in the special car tax in the Budget, and a price reduction arose from the VAT on top of that. Many deals were undertaken over the summer. All of them have provided some boost to the industry. I will not deny that, and I am sure that the industry will not deny that. But it is not enough, because in a climate of recession and rising unemployment the idea that the removal of the special car tax, or any other tax, will regenerate either the car industry or manufacturing industry in general is totally misguided.

The car industry has been doing a magnificent job. The investment that Rover has put into the Longbridge plant, in Northfield, is magnificent, as are the efforts of the work force in changing their working practices. The training initiatives are to be applauded, too.

Both sides of the industry are keeping up their end of the bargain. Component manufacturers have been mentioned tonight, and they, too, have been doing what they can to compete and to thrive. But in a climate still dominated by the dead hand of recession, what they can do is limited.

After the autumn statement, growth will still be pitifully low during the coming year. Unemployment will rise; even the recorded level will rise to more than 3 million. Investment has plummeted in recent years, and at best is likely to stagnate next year. In such a climate, the efforts of the industry and of the people who give their lives to that industry can be only partially successful.

In an earlier intervention I mentioned the recent launch of a campaign by the Engineering Employers Federation. I had not intended to mention that again, but I feel that I must, because it is worrying that either Conservative Members have not bothered to read what the federation says, or they have not been able to understand it. So I shall quote from the press release by the director general of the federation—not a body which historically has been over-supportive of the Labour party—about whether his interpretation of the document is the same as that of Conservative Members, who believe that the federation applauded what the Government are doing.

Referring to the Department of Trade and Industry, the press release says: We need a department with vision and a clear commitment to the success of UK plc. We stand ready to give such a department, which should be part of the DTI, our full and enthusiastic support, but in recent weeks industry itself has been doing the job of the DTI—fighting for a voice and fighting for action within Government. I believe we have a right to expect a more effective and committed champion. If the DTI lacks the vision, the competence or the determination, or if it is simply too busy with short-term issues to deal with long-term strategy, perhaps we should look to the creation of a specialist Treasury section to do that vital work". There are two possible interpretations of that press release. I suppose that it would be possible to say that the Engineering Employers Federation is very unhappy with the DTI, yet totally happy with the performance of the Treasury—but I do not think that that would be correct. It would certainly suggest an unfortunate division in the ranks of the Government. The only other interpretation is that a major representative organisation of manufacturing industry considers that the Government are not delivering or keeping their side of the bargain—that they are not doing what is necessary to stimulate manufacturing industry.

The Government are still obsessed with short termism. They are not developing the kind of long-term strategy which manufacturing industry needs. To continue in that way is a recipe for disaster, not only for big manufacturers such as Rover and Ford but for hundreds and thousands of smaller firms—component manufacturers and so on —which depend on manufacturing industry.