First Year Allowances: Machinery and Plant

Part of Orders of the Day — Finance (No. 2) Bill – in the House of Commons at 9:45 pm on 12th May 1993.

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Photo of Mrs Anne Campbell Mrs Anne Campbell , Cambridge 9:45 pm, 12th May 1993

I do not intend to detain the House very long, but I want to deal with the appalling results of the Government's lack of an industrial strategy in the past 14 years.

The Government's strategy has been based on one simple numerical indicator—getting down inflation. As a result of their rather bungled attempts to reduce inflation we have lost a huge part of our manufacturing industry.

Manufacturing's share has fallen by 6 or 7 per cent. of GDP since 1979. I am sure that, in time-honoured fashion, the Minister will say that it has fallen in other countries and that it is due to the world recession, increased productivity and so on, but it has fallen by only 3 per cent. in Germany and by only 2 per cent. in France. Those figures are not comparable with Britain's huge deficit.

The Government should have looked carefully at the industrial strategy that the Labour party proposed before the last election. By the end of this Parliament, they will have come round to our view, and probably will adopt many of our ideas.

We said that more investment should be made in capital equipment, in training and education and especially in industrial research and development. Such investment is sadly lacking in this country. A comparison of capital spending per employee in other countries shows clearly what that lack of investment is doing. If we take the United Kingdom's base line as one, the United States and Germany spend about one and a half times as much. France spends 1.6 times as much per employee on capital equipment, and Japan 2.7 times as much. That is why they have better equipped factories, better motivated workers and better management.

11 pm

It is important to explain that, as my hon. Friend the Member for Warwickshire, North (Mr. O'Brien) said, everything is linked, and the lack of training sometimes deters managers from introducing new machinery. It is true that the poor level of training of the average British worker means that in British factories it takes longer to train workers when new equipment is installed than it does in Germany or France. That is due not to an inherent lack of skill in British workers but to a lack of training, and it often makes it difficult for managers to install new machinery.

Incentives are therefore needed. It is right that the time limits should be extended, and I hope that Ministers will consider that idea carefully. We now have an enormous trade deficit in some extremely important goods, such as electrical goods, motor vehicles, textiles, footwear and clothing—all of which are categories in which Britain used to reign supreme, certainly in Europe and probably in the world.

It may seem curious that I, as the hon. Member of Parliament for Cambridge, should speak about manufacturing industry, although most of the companies in my constituency are small high-tech firms. However, several firms in my constituency supply machinery to larger manufacturing industries, and that is the cause of my concern. If the Government provided some incentive for firms to equip themselves better with plant and machinery, the businesses in my constituency would benefit, as they would supply the equipment.