Competitiveness White Paper

– in the House of Commons at 3:32 pm on 13th June 1996.

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Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister 3:32 pm, 13th June 1996

With permission, Madam Speaker, I should like to make a statement about the Government's third competitiveness White Paper.

The Government's objective is simply put. It is to make this country the enterprise centre of Europe, which will lead to improved living standards and a better quality of life for all. The White Paper reports on progress towards that objective, and on further actions in hand and in prospect.

As the 1996 survey of the United Kingdom by the Organisation for Economic Co-operation and Development recently reaffirmed, progress has been highly impressive. Over the last economic cycle, gross domestic product in the UK grew faster than in any other G7 country except Japan. The International Monetary Fund expects the United Kingdom to grow faster than the G7 average in both 1996 and 1997.

Since 1979, UK business investment has risen by over a third and has accounted for a higher proportion of GDP than in France, Germany, Italy and the United States.

As we heard this morning, inflation has now been below 4 per cent. for 44 consecutive months—the best performance for almost 50 years. That has allowed the Chancellor to cut interest rates four times since December, without jeopardising the Government's inflation target.

As we heard again yesterday, unemployment continues to fall. It is more than 800,000 lower than in December 1992. The unemployment rate is lower than in all other major European Union countries. We have combined that continuing fall in unemployment with a significant closing of the productivity gap, the best industrial relations performance for a century and one of Europe's highest levels of employment, while our refusal to embrace the social chapter means that our indirect wage costs remain competitive—indeed, the lowest among the G7 countries.

Exports, too, are growing strongly. They are up by 9 per cent. by volume in 1995.

The most visible demonstration of our success in making the British economy the most enterprising in Europe is that we have the highest level of inward investment as a proportion of GDP of any developed country. We attract more than a third of all inward investment into Europe, and that is the biggest vote of confidence that we could have. Those huge investment decisions are freely taken by world-class companies from the United States, Japan and Korea—but also from countries within the European Union, led by Germany and France. Siemens, Samsung, QVC, Ford and many others have invested billions of pounds over the past 12 months alone.

White Papers are a focus for our determination to improve performance year by year, in all the key areas that contribute to our competitiveness. They provide objective analysis and, where necessary, set out the action needed to bring this country's performance up to the standards of the best.

I draw the House's attention particularly to three matters. Last year, the Government promised to audit skill levels in the United Kingdom against international standards and to publish the results. The full skills audit report is published today and covers France, Germany, Singapore, the United States and the UK. It shows that the UK is strong in the areas of higher education, lifetime learning and young people's information technology skills.

Photo of Stuart Bell Stuart Bell , Middlesbrough

In relation to whom?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

In relation to all the countries compared, self-evidently.

The audit report shows that more of our work force have higher-level qualifications than any of the audit comparator countries except the United States. It also shows that we are doing better than in the past, but that we need to continue to improve our performance, particularly in basic literacy, numeracy and key skills.

Yesterday, my right hon. Friend the Secretary of State for Education and Employment announced far-reaching proposals to reform teacher training and to promote self-improvement in schools. She announced that the Government would publish a White Paper on schools, focusing on extending self-government, choice and diversity, and that we would legislate in the autumn to bolster schools' authority to deal with discipline problems.

The competitiveness White Paper sets out the action being taken to continue the transformation of this country's education and training system, building on the extensive programme of improvements on which the Government embarked in the mid-1980s.

The Government are also committed to build on our regional diversity. Over the next few weeks, each Government office in the English regions outside London will publish a document, on behalf of local partners, describing the contribution that their region makes to the UK's competitiveness and setting out actions to improve that contribution.

Moreover, my right hon. Friend the Secretary of State for Wales is today publishing a competitiveness report on Wales.

The Government have concentrated particularly on the creation and growth of small businesses. Today there are over 1 million more businesses in Britain than there were in 1979. Those firms are at the heart of our national competitiveness. We have created the most comprehensive support system we have ever had for such companies.

Ninety-three per cent. of small and medium-sized firms in England are within easy reach of a local business link outlet. There are now nearly 230 such outlets. Nearly 700 specialist advisers are in place and 90 per cent. of the personal business advisers have managed a small business. At the last count, more than 617,000 businesses were registered on business link databases and around 6,000 businesses a week have been using business link. The Government will continue to give the highest priority to developing the business link network, so that it can realise its massive potential for helping our smaller firms.

Over the past year, the Government have undertaken a series of formal consultations with the people running smaller businesses in this country. We have listened carefully to what they have told us. The deregulation initiative has swept away a whole raft of outdated, unnecessary and over-burdensome rules. We are reviewing the working of the system of uniform business rates and the rates burden on small firms. We are also looking at the possibility of raising the threshold of the statutory audit requirement, and we shall consult on industrial tribunal claims and procedures. Tax administration is being simplified. We have consulted particularly assiduously on the proposal for a statutory right to interest on late payments.

Eight of the nine small firms' organisations support the Government's view that legislation in that area would not be appropriate. We intend, however, shortly to publish a consultation document on whether public limited companies and large subsidiaries should be required to publish their payment performance, and tough new targets for Government Departments have been published today.

A further strong message was that the Government's support for business was over-complicated, with too many schemes with confusing objectives run by too many Departments. We are therefore launching a major consultative exercise todayon how best to target and simplify our support in order to meet business needs, building on the success of training and enterprise councils and business links.

We propose that Government support for small and medium-sized enterprises will be brought together into a £200 million local competitiveness budget, up to 25 per cent. of which will be made available on a challenge basis. We propose also that sectoral support across Government be combined as a new sector challenge budget, building up to £40 million a year. Trade associations and other sector bodies will be asked to design programmes to improve the competitiveness of their industry.

This White Paper bears testimony to the vigour of our economy and provides a clear basis for further improvement of the skills infrastructure, managerial ability and entrepreneurial drive that are enabling this country to win. It sets out clearly why and how this country, incontestably, is becoming the enterprise centre of Europe. I commend it to the House.

Photo of John Prescott John Prescott Shadow Secretary of State, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee, Deputy Leader of the Official Opposition

I welcome the latest White Paper on competitiveness—the third in a row—especially if it does anything to improve the prosperity of our country and its people. It is certainly bigger than before and fatter than before; it has more pictures than before and there is more than a whiff of the forthcoming general election about it. Of course, hon. Members will require some time to digest the detail. Can the Deputy Prime Minister tell us when the House will have an opportunity to debate it, as I assume it will?

This is the third such White Paper. The title of the first in 1994 was "Helping Business to Win". The second was called "Forging Ahead". They are positive titles, but what have they achieved?

Photo of Mr Jacques Arnold Mr Jacques Arnold , Gravesham

The best economy in Europe.

Photo of John Prescott John Prescott Shadow Secretary of State, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee, Deputy Leader of the Official Opposition

I think that the hon. Gentleman has been reading the White Papers, but we cannot rely entirely on what they say.

Does the Deputy Prime Minister accept that it is hard to judge what has been achieved, when it is so difficult to trust the Government's own statistics? We are told that unemployment is falling—something that the House would welcome—but can he confirm that the official unemployment figures measure not the full extent of unemployment, but only the number of people seeking work and receiving benefit? Will he confirm that recorded unemployment has risen by more than 1 million since 1979 on the present fiddled figures, our work force having fallen by more than 1 million since 1990?

Is it not true that the Government have tried to condition us by accepting some of those shortcomings? The Deputy Prime Minister told the Japanese chamber of commerce on Tuesday: There is plenty of good news, but in some areas we are still behind". That is quite an understatement. The House has a better idea of what he means.

Has not the Deputy Prime Minister published his third White Paper in the 18th year of a Tory Government, during which the United Kingdom has slipped from 13th to 18th in the prosperity league? The House will have noticed that the right hon. Gentleman relies a great deal on the OECD country survey of the United Kingdom, but what really matters are the comparisons with our major competitors. International comparisons show that we are down in education, competitiveness, skills and qualifications.

Every time the Deputy Prime Minister publishes a White Paper, the United Kingdom seems to slip further down the international league tables. Is he aware that we fell from 15th to 19th in the International Institute for Management world competitiveness league? Even the World Economic Forum's global league table—which is more favourable to the Government and which they quote—puts us in 15th place. In respect of gross domestic investment, we are 48th out of 49 countries. For the supply of skilled labour, we are 34th out of 48 and in education standards, we come 35th.

I know that the right hon. Gentleman hopes—and it is the aim of his policy—that Britain will become the enterprise centre of Europe, but on that analysis, we are light years away from ever achieving it.

We welcome the skills audit—an idea that I proposed several years ago. Clearly, the Deputy Prime Minister has been reading my documentation. We also welcome his intention to utilise the private finance initiative, as I advocated in the House well before the Government, although they still have not managed to implement it properly. I know that imitation is the sincerest form of flattery, but why do they keep making a mess of good Labour ideas?

The skills audit report published today confirms that the United Kingdom has fewer entrants and a smaller proportion of the total population qualified to level 2 and above than France and Germany. The figures for new entrants are 58 per cent. for the United Kingdom, 65 per cent. for France and 70 per cent. for Germany. Those are international comparisons—the figures that really matter.

Can the Deputy Prime Minister confirm that a recent internal Treasury paper admitted that things were going from bad to worse and forecast that, on present trends, within five years we shall be out of the premier league altogether and vying with Thailand for our place? There are lies, damned lies and Heseltine statistics.

The thrust of the White Paper relates to the skills audit, and we welcome that. It also demonstrates the Government's conversion to the idea that regions can play a major part in developing economic prosperity—another idea that Labour set out in considerable detail.

Although the Deputy Prime Minister promises small businesses a great deal, more than 200,000 were made bankrupt last year. Does he accept that many small businesses will be listening once again to his recommendations of more deregulation, help with tribunals, a review of value added tax and so on—which he has promised year after year after year? What he has said today is not a conclusion, as there is to be a further review. Small businesses play an important part in the development of the British economy. They will get no comfort from what he has said today, which will riot help them to contribute to making the United Kingdom the enterprise centre of Europe—the target of the White Paper.

The White Paper is the work of a Government trying to make a virtue out of managing decline and manipulating propaganda. We need investment in manufacturing, skills and education and proper support for industry. This is the third and last White Paper from the present Government. What the country really needs is not the last in a series of White Papers, but a change of Government.

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

May I say how much I appreciate the generosity of the right hon. Gentleman's tribute to the White Paper? He was fulsome in his welcome. It is an interesting contrast with what his hon. Friend the Member for Livingston (Mr. Cook) said three years ago when we introduced the concept. He dismissed the whole thing as a coffee-table document.

It is, of course, no small measure of the degree of cultural conversion achieved by the competitiveness agenda that there has been an internecine war in the shadow Cabinet for the privilege to respond to this White Paper. The shadow Secretary of State for Trade and Industry, the shadow Chancellor and the deputy leader of the Labour party have all been hoping to have the chance to take this issue on as theirs. At least I have achieved something: I have got the members of the shadow Cabinet talking to each other—even if it is at the top of their voices in a bar-room brawl.

I should like to help the right hon. Member for Kingston upon Hull, East (Mr. Prescott). I was intrigued by some of the statistics that he quoted. He was talking, for example, about the skills audit, which is arguably one of the most important things that we have done. We have said to ourselves as the Government that we shall analyse on a peer-group basis British education, which everyone knows has been a source of concern since the end of the 19th century, with a determination to drive up our standards to the best. That is what we have set out to do.

Every change that we have introduced in the education system since 1986 to drive up standards has been resisted by the Labour party—every single one. If Labour Members have the first idea how to drive up standards in our schools, and as they now control most of those schools, why do they not do it? Before anyone talks about undermining confidence, they should consider that the person who has done more to undermine confidence in the local education system is the right hon. Member for Sedgefield (Mr. Blair), who moved his child out of Islington because he thought that standards were quite inadequate. The hon. Member for Peckham (Ms Harman) moved her child from Southwark to Bromley because she knew that, under the Labour party, schools would never be properly run—[Interruption.]

Photo of Mr Gerry Bermingham Mr Gerry Bermingham , St Helens South

On a point of order, Madam Speaker. I know that it is the season of the mad cow, but could the Deputy Prime Minister please explain what children's schooling has to do with efficiency, bureaucracy and time-saving? I thought that we were here to debate serious matters, not to have a knockabout, silly-billy session.

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Although I doubt that that is a point of order, I think that we should keep our discussion within the context of the White Paper. I have already made a statement this month about how Ministers might handle questions and deal with such matters.

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

The deputy Leader of the Opposition referred extensively to the White Paper on the skills audit, which is published today. I am making a statement about that White Paper's central, new initiative. The idea that the competitiveness of our education and training is not the most vital ingredient after the macro-economic condition displays a degree of naivety that would terrify any observer of the scene.

I shall deal with what I regard as the most deplorable part of the Labour party's tactics in response to the White Paper. It has today put out a statement, to which the right hon. Gentleman referred, that we have slipped from 13th to 18th in the prosperity league table while the Government have been in office. It has done that with the backing of the OECD and the Library of the House of Commons. In order to make the position worse, Labour has included Hong Kong and Singapore in the statistics, which of course are not members of the OECD. [HON. MEMBERS: "You did last year."] They are not members. In order to make the position look as bad as possible, Opposition Members choose an arbitrary position so as to put those two countries into the chart, in which, as they are not members of OECD, they are not entitled to appear. The Opposition have decided to fiddle the figures.

Indeed, the Opposition have done worse than that. I have a certain sympathy with the right hon. Gentleman, because his difficulty is that the latest figures from the OECD do not include 1979. The document that I have here contains the latest figures. So the Opposition have had to rely on another document. The difficulty for the right hon. Member for Kingston upon Hull, East is that that other document was revised by the OECD.

Far from being 13th in 1979, we were 15th, so according to the OECD's analysis, our relative position has moved from 15th to 16th.

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

Let me help the right hon. Gentleman, who patently has not read the OECD report. Why was the economy deteriorating in the 1979 period? What do we read in the OECD report about that time? First, we read that by the end of 1978 British external competitiveness was at its worst level since 1966". That was another Labour record, the record that we inherited, and we have had to address the issues. The difference today is that whereas we inherited a persistent decline in Britain's rating, we are now seeing an improvement in that rating. We went down from 15th to 19th and now we have recovered to 16th. That is the fundamental difference. Under the structural changes that we have brought about, this country is now improving its relative performance.

The OECD report dated 1996 says: UK economic performance remained good in 1995 following the previous year's strong results.In the longer term, the economic outlook is good".

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

That is the OECD paper, referring to the prospects for the British economy. It continues: International cost competitiveness remains sound. After the structural changes of the past 17 years, we have now reached the position in which all independent analysis outside this country agrees that we are attracting 40 per cent. of all the inward investment coming into the European Union.

That is not the judgment of the Labour party or of the trade unions, but the judgment of the men and women who have to invest their money in the best economic circumstances to earn profits and to make a return. According to their judgment, we are the best country to choose. That is why we believe that we are the enterprise centre of Europe.

Photo of John Redwood John Redwood , Wokingham

Will my right hon. Friend write to all the poor-performing education authorities in the country drawing attention to the problems of numeracy and literacy? Will he ask them to introduce more whole-class teaching, better methods of teaching reading and writing, and more learning of tables and other traditional methods that work elsewhere, yet are being denied to the children in those authorities' schools? As new Labour is finding it so difficult to get its message across to its own supporters, perhaps my right hon. Friend will invite the Leader of the Opposition to co-sign the letter.

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

We know what the Leader of the Opposition would do: he would opt out of the process. That is exactly what he does. I wholly agree with my right hon. Friend, and if the Labour party knew what to do, it could do it now. The Labour party controls most of the schools in this country. But the fact of the matter is that Labour has neither the will nor the ideas to take on the unions in those educational establishments and to take the necessary action to drive up standards. That is why my right hon. Friend the Secretary of State for Education and Employment is so much to be admired. With her predecessors, she has reversed the decline in our education standards to a point at which we can look forward to closing those gaps.

Photo of Nick Harvey Nick Harvey Shadow Spokesperson (Trade and Industry)

The Deputy Prime Minister presented an upbeat picture this afternoon, but what would he say to the 250,000 people who lost their jobs in the first quarter of this year, the highest number since the winter of 1992–93? Will they enjoy the better quality of life for all that he has talked about? Was he not nearer the mark when trailing the White Paper in yesterday's Financial Times? He said: We must now further raise the quality of our education system, training, innovation and a host of other factors if the UK's performance is to match the rest of the world. After 17 years of Tory government and a raft of education measures, is not the right hon. Gentleman acknowledging that the triumph that he has proclaimed this afternoon is a long way from reality?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

I would say that unemployment has fallen by 800,000 in the past three and a half years and that we have the highest proportion of our population at work. If one wants to prejudice that, the surest way to do so is to impose social costs or to raise income taxes, which both Opposition parties stand for.

Photo of Mr Andrew Rowe Mr Andrew Rowe , Kent Mid

My right hon. Friend is right to draw attention to the extraordinary increase in the number of prosperous small businesses in this country. Will he spare a thought for very small village pubs, which are an essential part of the framework of our society? Will he consider including among the imaginative ideas that the Government have canvassed, for rate relief for post offices, a similar measure for small village pubs?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

My hon. Friend knows that we take extremely seriously the representations that have been made to us, and we are considering them. We have taken steps regarding small businesses in rural areas, and they will be considered carefully.

Photo of Dennis Skinner Dennis Skinner Member, Labour Party National Executive Committee

Is the Deputy Prime Minister aware that his statement is an insult to the people out there in Britain, including the 4 million who do not have a job? That is the total—never mind his fiddled figures. The public sector borrowing requirement has increased by £10 billion, by the Government's own calculations, in the past 12 months. The Government are privatising British Rail and handing over £850 million a year to subsidise it, and they are stuffing nuclear power with another £1 billion a year. He talks about competitiveness, but he closed the last 31 pits, all of them in north Derbyshire. A survey in my constituency found that unemployment stands at more than 60 per cent. in three of those pit villages. That is the reality of 17 years of Tory government, and it is high time somebody else blackmailed them. We could then get rid of them and make a fresh start.

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

It is precisely because the hon. Gentleman and so many of his hon. Friends talked such nonsense in the post-war world that the coal industry was destroyed. They sold the miners down the river. If the miners had achieved the productivity under Labour that they are achieving today, there would he more profitable pits exporting coal, and everyone knows that.

Before the hon. Gentleman gives his customary diatribe, he might bear it in mind that he was content to support a Labour Government in 1979, when only a quarter stayed on at school—the figure is now up by 60 per cent.—and when only one in eight went into higher education. The figure is now one in three. He talks loudly about helping people, but his views, philosophy and negative attitude are wholly destructive of their interests and of those of this country.

Photo of Mr Michael Grylls Mr Michael Grylls , Surrey North West

Will my right hon. Friend take encouragement from the figures that he announced this afternoon, showing that 1 million new firms have been created during the past 17 years? That is in no small measure due to the enormous number of changes that we have made in legislation, to encourage small and medium-sized firms. Will he continue that work? Will he also ensure that large public companies state how many days they take to pay their bills, so that people can look in their accounts and see what they are doing? Will he examine the statutory audit? I know that he mentioned that earlier, but it is important that the exemption limit is raised, because if it is not, we shall still be at a disadvantage compared with most of our main competitors.

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

I very much agree with my hon. Friend, who has done so much to argue the cause of deregulation and lightening the load on small businesses. It is right that one of the most successful aspects of the rejuvenation of our economy is the fact that there are now more than 1 million more small businesses and that their number is rising as we lead Europe out of recession.

To start a small business, money must be retained in the hands of society at large. It is interesting to compare the tax situation in the OECD report of 1979 with that in the recent one. The 1979 report states: Amendments to the Finance Bill in Parliament"— led by the Opposition, who were then the Conservativesled to a reduction in the basic rate of income tax from 34 to 33 per cent. That is an example of how then we were trying to force the Labour Government to reduce the basic rate of tax from 34p to 33p. Today, we are looking at a chance to move the basic rate from 24p to 20p. That is a fundamental ingredient of a situation in which small businesses are worth starting, and in which, when they start, they can keep enough money to expand.

Photo of Geoffrey Robinson Geoffrey Robinson , Coventry North West

The right hon. Gentleman has a justifiably high reputation as a successful business man. What would he say to a manager running one of his businesses who started with a struggling company placed 15th in the sales league and whose 17-year performance took it down to 19th and then back up to 16th, one place below where he started? Would he not have sacked that manager long ago and does not that fate—with justification, for having just such a record—await the Government?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

But if the alternative managers had been responsible for creating the conditions that nearly destroyed this country's economy and if every time they had been elected, they had devalued the currency in a crisis, forced up taxes and inflation and put the unions in power, one would not spend 30 seconds making a choice about leaving the Government in power. The hon. Gentleman should join us, because he knows as well as I do that there is only one party with any understanding of the challenges and opportunities of running a capitalist society. We are that party and the Opposition had better remain glued to their Benches.

Photo of Mr John Butcher Mr John Butcher , Coventry South West

Taking the company analogy further, does my right hon. Friend agree that a company that seeks to remain competitive in world terms has to be honest in the appraisal of its weaknesses and must always have its door open to new ideas, which is precisely what the White Paper does? I congratulate him on his approach in it. Does he agree that we can learn two things from Germany? It is folly to load on-costs on to the costs of employing people—to the extent that, in April, Germany laid off 180,000 workers. We can learn also from Germany's great advantage in what management trainers call the mastery of detail in their middle managers. The management of detail through their meister and techniker classes is something that we could perhaps mirror and improve on. I urge him to put his full weight behind the national vocational qualification programme and modern apprenticeships, because it is in that middle area that we have some catching up to do.

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

I wholly agree with my hon. Friend and I appreciate his view, which I think is the mature political view, that starting the process of catching up in areas where the comparisons are not satisfactory requires frank analysis. That is what we have done. We have great strengths, but there are some areas that need improvement.

The easiest way to destroy our competitiveness is to increase the on-costs of employing people. That is one of the issues that divides the two sides of the House starkly and absolutely. We will not accept the social chapter. The truth is that we shall be proved right, as we have been on so many other occasions, because the Europeans know that they are going to have to make adjustments to the structure of their social funding to lighten the load. They know perfectly well that German, French and Dutch firms are moving to Britain because of the relative costs. To undo the advantage, as the Labour party would do, would severely prejudice the British national self-interest.

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

Because we live in an open society. Here we have a fascinating example of the narrow-minded view of the Labour party. Labour Members cannot understand that if we invest overseas, earnings are repatriated to this country. The obsession of the Labour party is not with the British economy, but with the 20 per cent. of the economy that the manufacturing economy represents, where Labour's trade union paymasters are the strongest.

Let us take the most obvious example. We have a trade deficit with Japan, but we have a balance of payments surplus with it because repatriation of earnings through tourism and other invisible earnings more than make up for the trade deficit. The Labour party has to come to terms with the fact that this is a global world. The Labour party talks about protectionism and stopping the ex-flow of capital. Is the Labour party going to do that?

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Speaker of the House of Commons

Order. I am now weary of comments from a sedentary position from the Opposition Front Bench. [Interruption.] Order. A number of Members are impatient to put their questions and I am impatient to call them. At this rate, they will not all be called.

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

I simply make the observation that there is an in-built hostility to British investment overseas. Labour Members do not understand the nature of the global world in which we operate.

Photo of Mr Gerry Bermingham Mr Gerry Bermingham , St Helens South

Perhaps the Deputy Prime Minister will answer me three straight questions without a tirade. First, why is it that, with the reduction in safety measures that has resulted from the removal of red tape and bureaucracy, there are more accidents? Why is it that, with the removal of many safeguards, abattoirs have not been able to cope with bovine spongiform encephalopathy, simply because we no longer have the right regulations for rendering plants and abattoirs? Thirdly—here I declare a professional interest on behalf of many professional men—why are the Government the slowest payer of any body with which we deal?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

The hon. Gentleman will, of course, find it easy to make such allegations. If he can show me scientific advice to the Government in respect of BSE that the Government have not meticulously followed, I should like to see it. If he can show me safety measures that the Health and Safety Executive—a tripartite body representing the trade unions as well as the employers—has urged the Government to introduce and which we are not introducing, I should be interested to see them. The fact is that he cannot. All that he can do is indulge in the worst sort of scare tactics and unsubstantiated allegations, without any regard to the damage that they do to the national interest, presumably in order to make some cheap publicity and in the hope that the harm that it does is forgotten the day after. It is a deplorable abuse of the House that an hon. Member is prepared to make allegations of that sort about safety without backing them up.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown , Cirencester and Tewkesbury

My right hon. Friend said in his opening remarks that we had the greatest growth in the economic cycle of any country in Europe, but does he agree that the important fact is not only that, but that our growth has been greater than inflation for the first time in many decades, so we are making real strides in improving our economy?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

My hon. Friend is right. There are numerous examples of the strength of the British economy. It is today looking forward to one of the most exciting prolonged periods of expansion that any of us can remember.

Photo of Barry Sheerman Barry Sheerman , Huddersfield

Many of us came here to have a serious discussion on the White Paper that the Deputy Prime Minister has introduced. We have had three White Papers on competitiveness, because our economy is in a very serious situation. There is no doubt that some of the White Papers have tried to remedy the situation. But the fact is that we have the White Papers—they are a symptom of something deeply wrong with our economy and with the management of it for the past 17 years.

Does not the Deputy Prime Minister have to accept the fact that, if one wants to destroy an economy, one fails to invest and one fails to educate and train the population to a sufficiently high level? That is the accusation against the Government. The right hon. Gentleman reduced the tone of the debate this afternoon when he referred to the education of the children of my right hon. Friend the Member for Sedgefield (Mr. Blair). [Interruption.] Yes, he did—and the tone of the debate dropped. The Deputy Prime Minister and his Cabinet colleagues have never supported public education. We have failed to educate and to train the ordinary children of this country sufficiently well.

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

If the hon. Gentleman thinks that it is not of political significance when the Leader of the Opposition takes his child out of a Labour borough's education system and if he thinks that that is not a reflection of the quality of education in Labour authorities, I do not know what is. [Interruption.] Of course he is entitled to do so—and I suppose that it is his responsibility, as a member of the Opposition, to put forward the most gloomy view. I have to ask myself a different question. The OECD, in surveying the British economy, said: UK economic performance remained good in 1995 following the previous year's strong results.In the longer term, the economic outlook is good". Do I believe the OECD or the Labour party? That is not a difficult question for me to answer.

Photo of Mr Richard Tracey Mr Richard Tracey , Surbiton

My right hon. Friend will realise that competitiveness and enterprise are most particularly driven in detail at local level. He said a good deal about education now being stultified by local education authorities that are controlled by the Opposition parties. Does he agree that, at the local level, the Opposition parties that are in control of councils produce far too much bureaucracy and far too many petty officials, and constantly come forward with silly ideas for regional authorities, such as a reborn GLC?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

I agree with everything that my hon. Friend said. I have another criticism: in too many Labour authorities, there is no real awareness of the need to drive up standards. They are preoccupied with spending money—they are on the side of the producer, not the consumer. The essence of the Government's competitive thrust is to be preoccupied with what the market will require and with what the customer expects on an international and national basis. That is the only way to succeed.

Photo of Mr Peter Pike Mr Peter Pike , Burnley

I accept what the Deputy Prime Minister said about the importance of business links. He indicated that 7 per cent. of small and medium-sized enterprises are not in easy contact with a business link. East Lancashire still does not have a business link. Whose fault is that? Is it the Government's fault? Is it the East Lancashire training and enterprise council's fault? Will he give a kick, where necessary, to ensure that we have a business link as soon as possible?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

That is a serious question, and I shall deal with it seriously. Quite frankly, the disputes locally have not been resolved, and I regret that—it is of ill service to the local industrial and commercial communities. I believe that the arguments are not valid. They are born of rivalries—perhaps they are historic or personal. It is apparent that we have put a business link chain more or less throughout England, to the immense benefit of small businesses: 6,000 of them use it every week. It is regrettable that there is not a business link in east Lancashire because they have not been able to get their act together.

Photo of Mr Patrick Thompson Mr Patrick Thompson , Norwich North

I congratulate my right hon. Friend and his colleagues on reaffirming the vital importance of education and the basics to industrial competitiveness. Is it not a fact that the announcement by the Secretary of State for Education and Employment yesterday, about the reform of teacher training colleges and a close examination of what happens in those colleges, is of vital importance to the policy that he has put forward this afternoon? Will he confirm that that will be a root-and-branch look at those colleges, to drive forward the policy that he has so ably put forward this afternoon?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

My hon. Friend has deep personal experience of the education world, and I appreciate that. The Prime Minister made it clear—I repeat it on his behalf—that nothing is more important than to drive up this country's education standards. It is of fundamental importance to our competitiveness agenda. That will happen only if we apply a range of policies throughout the education world. In 1986, the ground of opportunity was laid by my right hon. Friend the Member for Mole Valley (Mr. Baker). From that moment on, in the teeth of resistance, we have introduced the necessary reforms. The benefits are now beginning to flow, but we have not yet closed all the gaps, particularly at the lower level of some skill requirements. We must do so and we shall put our whole endeavours into achieving it.

Photo of Mr Roy Beggs Mr Roy Beggs , East Antrim

Does the Deputy Prime Minister recognise that yesterday's investment of £113 million by Emersons and Caterpillar in F. G. Wilson in Larne in my constituency, which will create nearly 2,000 jobs in Larne, Monkstown and west Belfast, is a vote of confidence in the UK economy and in the education and training provided in Northern Ireland? In today's statement, he referred to this country and to England and Wales. Will he assure me that the policies being pursued will be brought to the attention of the Secretaries of State for Scotland and for Northern Ireland, so that all of us in the UK can benefit?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

I am grateful to the hon. Gentleman for giving me the opportunity to reaffirm that. The competitiveness agenda is, in the main, dealt with in England, Wales, Scotland and Northern Ireland. The other day, I had the privilege of visiting Northern Ireland. It was one of my most exciting visits, and that is sincerely meant. I saw some of the most exciting companies that I have come across. Recently, I took 270 companies on my visit to China. Some of the most forceful were from Northern Ireland. They enjoyed their visit as much as we enjoyed having them.

Photo of Nicholas Winterton Nicholas Winterton , Macclesfield

The UK economy is prospering and the White Paper's measures will further assist in advancing our economy's interests, but does my right hon. Friend agree that manufacturing is a vital sector of our economy? We need to encourage more investment, albeit that investment has increased recently, but from a fairly low level. Has he any plans to seek to improve the investment level? There is undoubtedly a problem in respect of capital spending reductions in higher education, and the private finance initiative has not yet taken off. Will he consider that matter, to find out whether he can, through his Department, assist in ensuring that capital expenditure reductions in higher education do not prejudice the tremendous success of higher education, which is vital to our economy?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

My hon. Friend is absolutely right about the tremendous success and tremendous expansion of higher education. We consider carefully—we shall do so again in the forthcoming public expenditure round—the requirements of the higher education sector, indeed, the whole education sector. The extent to which the private finance initiative is beginning to become adopted in that sector, which has great benefits, and the degree of partnership that is being established between academia and the British industrial and commercial base, are encouraging. Manufacturing industry is, of course, a critical part of our economy. One cannot preserve sectors simply because they are historically excellent, but investment is flowing into some of the more advanced technologies in manufacturing today, which is extremely exciting.

My right hon. Friend the President of the Board of Trade has in place about as effective a means of support and sponsorship of the sectors for which he is responsible as there has ever been. One of the things that we have introduced in this year's competitiveness White Paper is a list of sponsorship responsibilities for each sector of industry, Department by Department, to focus attention clearly on where companies can turn for the support that the Government now give. We do not subsidise them or have cosy relationships with them, but we work together to try to increase their opportunities.

Photo of Andrew MacKinlay Andrew MacKinlay , Thurrock

Will the Deputy Prime Minister address himself to section 6 of the White Paper, relating to competition in transport? Why does it mention all modes of transport except aviation and airports? There is a clear lack of competition in that field, as the British Airports Authority has a monopoly vested in the three principal London airports and British Airways recently announced its intention to join American Airlines—a move that is being challenged by a number of people in the market who believe that it represents unfair competition. Therefore, is there not a case for making a statement or producing a supplement to the White Paper, in order to address—via legislation in this place and references to the Monopolies and Mergers Commission—the question of the monopoly in London's airports and the threat to competition posed by British Airways' tie-up with American Airlines?

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

Nobody would support the hon. Gentleman more than me, in paying tribute to the remarkable achievements of the civil aerospace and aviation industry in this country. It has been a great triumph since it was privatised. [Interruption.] There is no comparison between the scale of the British aviation industry or the British Airports Authority, their national and international roles and effectiveness as major players now, and their positions before privatisation. I know that, because I was the Minister who sponsored them in the mid-1970s.

The hon. Gentleman raised some competition policy issues. There are several controversial matters on the tapis at the moment, so he will understand if I am not drawn into discussing them. He knows that there are regulatory authorities, and it is not for me to double-guess them.

Photo of Bernard Jenkin Bernard Jenkin , Colchester North

I ask my right hon. Friend to look again at the Davos World Economic Forum global competitiveness league, to which the right hon. Member for Kingston upon Hull, East (Mr. Prescott) referred rather selectively. Does it not show that Britain has been promoted from 18th to 15th place, while Germany and France have been relegated to 22nd and 23rd places? That means that Britain is No. 3 in Europe, and demonstrates that we are becoming the enterprise centre of Europe.

Photo of Mr Michael Heseltine Mr Michael Heseltine First Secretary of State and Deputy Prime Minister

I am most grateful to my hon. Friend. We look very carefully at the World Economic Forum reports. Their analysis is often conducted on the basis of surveys of industrialists—which is a very interesting means of analysis. We think that the forum tends to be rather more selective in its sampling and more subjective in its judgments than the analysis that we have tried to introduce into our White Paper. If I had sought to put a gloss upon the improvement in Britain's competitiveness, I could have easily switched the basis of calculation and chosen the most favourable existing surveys—I assure the House that there are more favourable surveys than the ones that we have produced. As to the integrity of the competitiveness agenda, the vital factor is that we do not change the basis of comparisons year by year.