Manufacturing Industry

HC Deb 19 February 1991 vol 186 cc205-48

Mr. Speaker

I have selected the amendment in the name of the Prime Minister. As a large number of hon. Members wish to participate in the debate, it would be helpful if the Front-Bench spokesmen would trim their speeches and if Back Benchers would limit their speeches to about eight minutes each. Then I think that every hon. Member who wished to be called would be.

7.16 pm

Mr. Gordon Brown (Dunfermline, East)

I beg to move, That this House condemns Her Majesty's Government for creating a recession which has led to falling output, falling investment and rising unemployment; deplores the damage that the recession in inflicting on Britain's manufacturing base and all regions of the country; and calls on the Government to prepare a budget for industry and adopt the policies for training, technology and the regions that will build a stronger industrial base. The motion contains three urgent proposals which will determine the size and success of British manufacturing. The first, is our proposal for a budget containing investment incentives targeted on manufacturing industry. The second is our demand for an industrial policy for training and technology, and the third is our call for balanced economic growth through a modern regional policy.

Our argument is that manufacturing matters, that even our service sector depends ultimately on modern manufacturing strength and that the real challenge facing Britain is not to replace manufacturing by services, as some Ministers have argued, but to upgrade our manufacturing industry to make it, once again, the most modern in Europe.

But let us be clear about the extent of the crisis that we face. As Thursday's figures showed, manufacturing output has now fallen £5 billion, a catastrophic loss of production unique in western Europe. Manufacturing employment is now falling below 5 million people to its lowest point in our history as an industrial economy this century—30 per cent. of our manufacturing employment gone for ever under the Government. Manufacturing investment has registered one of its steepest declines since figures were first recorded—a 15 per cent. fall during recent months. Even manufacturing exports are now falling.

Can the Secretary of State name another country in the EC where manufacturing employment, investment, industrial output and exports are now falling at one and the same time? Can he name one country in the EC which is simultaneously cutting its industry and training budgets?

This is a British recession, created by mistakes made first at 11 Downing street and now being compounded by mismanagement at No. 10. Unemployment is up by 53,800 in London and the south-east since the Prime Minister took over in November; unemployment is up by 73,000 in the south as a whole; unemployment is up by 43,000 in the north and the midlands. The Prime Minister, who boasted of a classless society and opportunity for all, has presided over a 125,000 increase in unemployment even before he has completed his first 100 days as Prime Minister.

This is the Government who told us that they were creating real jobs, lasting jobs, jobs in new areas, jobs even in new industries. The truth is that they are now creating real unemployment, lasting unemployment, unemployment in new areas and unemployment even in new industries.

Mr. Tim Devlin (Stockton, South)

What does the hon. Gentleman say to Dr. John Bridge, chairman of the Northern Development Company, who says that this recession is different from those in the past because it is hitting the north last rather than first, and that that is because the diversification and change in the industrial structure in the north of England which has taken place under this Government has strengthened its ability to withstand the shocks of the international market in the future?

Mr. Brown

Is it any consolation for people in the north who are losing their jobs—thousands are now losing their jobs—that they were the last to be hit by recession? The hon. Gentleman has simply admitted the fact that the north is suffering a recession. The unique feature of the recession is that it has hit north and south, high-tech and traditional industry, manufacturing and services, offices and factories. If the hon. Gentleman will not face up to it, I believe that a verdict will be passed on him soon by his electorate.

Let us remember what we have been told by Ministers. It was not just that the Prime Minister, when Chief Secretary, told us that we have an economic miracle at present where Germany had only the economic miracle of the past. As late as June 1990 he was boasting of what he called an astonishing economic transformation. What about the Trade and Industry Secretary in those heady days of the Budget of spring 1988? What did he say? He said that the supply side of the economy had been transformed, and that we were on top of the world league both in manufacturing industry and in growth. He is nodding. What of the Under-Secretary of State? What did he say in 1988? In his bid for office he said that the 1988 Budget was the last goodbye to the low-growth economy of the 1970s.

Mr. Quentin Davies (Stamford and Spalding)

Is the hon. Gentleman suggesting that, if we had a Labour Government, they would abolish the trade cycle and that we would no longer have recessions? Is he aware that in the 1980s we had the longest boom this century?

Mr. Brown

The hon. Gentleman would do well to listen to some of his constituents. As I calculate it, his constituency has experienced a rise in unemployment of 26 per cent. over the last year.

Mr. Davies

indicated dissent.

Mr. Brown

He denies it.

Mr. Davies

The rise of which the hon. Gentleman is speaking is a rise from 3 to 4 per cent. It was a rise from an extremely low base. Once again, he is confusing the House with illusory statistics.

Mr. Brown

The hon. Gentleman will have to face his electorate one day. May I remind him of what he said to his electorate in 1987: Interest rates, vital to every home-owner and every family in business—we have brought them down…Let's continue to keep inflation down. That was just before the Government doubled it, and doubled it again. [Interruption.] Hon. Members are expressing astonishment. It was Conservatives who told us that they had abolished the economic cycle. They gave us the impression that the economic cycle was a thing of the past. It was Conservative Ministers who said that we were on a self-propelling plateau of growth.

Let us examine what is happening round the country. The president of the Engineering Employers Federation says: The country will crash into the buffers". He also says that the Government seem hell bent on moving towards a peasant economy. Why? Because policies have been based on a short-term fix. Let us consider what other business men are saying. Mr. Keith Goodman, of Leonard Curtis, says: It is a blood bath. This year is going to be horrendous, far worse than 1990. What about Mr. Taylor, managing director of Britain's biggest machine tool producer: I feel bitter about this economic cycle. Industry has had to foot the bill. Companies are going bankrupt not because they are overmanned, overcommitted, overmanaged, overunionised or overcommitted to obsolete technologies or products. The companies that are now being lost in hundreds are fit, well-managed companies in the forefront of new technology. They are not going bankrupt because of fundamental failings of the work force or of management, because of a lack of will to sell and to survive, or because of a lack of dynamism or ingenuity, but because they have been weighed down and overburdened by the highest interest rates in western Europe, twice what they were three years ago. Interest payments are a £30 billion burden on British industry; in 1979 they were £6 billion. Interest rates have been too high for too long, at too great a cost to too many companies.

Mr. William Cash (Stafford)

Has the hon. Gentleman looked at the unemployment figures which came out this afternoon? Has he also observed that the 17 constituencies which have the highest unemployment rates are Labour constituencies? However, many of them have a net increase in employment.

Mr. Brown

I do not know where the hon. Gentleman has been for the last 11 years. Unemployment is higher in the constituencies of all my hon. Friends than it was in 1979, and in most cases it is more than 50 per cent. higher. If the hon. Gentleman will not face up to the fact that unemployment is rising not only in Labour constituencies but in Conservative constituencies, I fear for his future even as a Member of Parliament.

Mr. Keith Mans (Wyre)

Does the hon. Gentleman agree that excessive wage claims lead to high unemployment?

Mr. Brown

The hon. Gentleman does not seem to have been here during the last few years. Of course, wages have an influence, but everybody knows that companies are going bankrupt because they have faced high interest rates for the last two and a half years, and that those high interest rates have eventually pushed them under.

Mr. Patrick Nicholls (Teignbridge)

rose—

Mr. Brown

I am not giving way. I gave way to the hon. Gentleman twice in the last debate when he clearly did not know what was happening.

Mr. Frank Haynes (Ashfield)

Is my hon. Friend aware that he is so good at his job that the central control office of the Conservative party has told all the Conservative Members to rough him up?

Mr. Brown

I, too, have read a newspaper report, but I wish to keep to the subject.

Several Hon. Members

rose —

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. Many people, including me, would like to hear the debate.

Mr. Brown

The interventions are so incompetent that they will make no difference to the case that I am putting forward.

Mr. Phillip Oppenheim (Amber Valley)

rose—

Mr. Brown

I am not giving way. Mr. Speaker made it clear at the beginning of the debate that I should limit the number of interventions so as to allow other hon. Members to make their contributions. Unfortunately," on this occasion that is what I will have to do.

Let us examine what has happened to manufacturing since 1979. Since 1979 production in manufacturing has increased by 22 per cent. in Germany, by 20 per cent. in Italy, by 19 per cent. in Spain, by 30 per cent. in the Netherlands, by 37 per cent. in America, by 57 per cent. in Japan but by only 7 per cent. in Britain. Production in mechanical engineering is down by 5 per cent., in metals by 9 per cent., in textiles by 26 per cent. and in man-made fibres by 35 per cent. Britain's manufacturing economy has fallen behind France; during the lifetime of the Government it has fallen behind Italy and it is falling to the size of Brazil.

Mr. Anthony Coombs (Wyre Forest)

rose—

Mr. Brown

I am not giving way.

The old west Germany now exports two and a half times as many manufactured goods as Britain. Imports of computers have increased by 500 per cent. since 1979, of electronics by 161 per cent., and of precision and optical instruments by 297 per cent. In a debate on manufacturing the single fact that damns the record of the Government is that manufacturing output at home has increased by 7 per cent. while manufacturing imports have increased by 236 per cent.

What of investment for the future? Italy has increased its manufacturing investment by 30 per cent., Netherlands by 50 per cent., France by 57 per cent., Germany by 60 per cent., and countries such as Luxembourg, Belgium and Ireland by more than 100 per cent. Britain has increased it by it total of 5 per cent. only—and that has fallen as we debated these matters during the past few weeks.

The Government say that the prize at the end of this recession is an inflation figure comparable to that in Italy, Germany and France. The truth is that the price we will pay for this recession is a permanent reduction of industrial capacity, taking us down far below the levels of France and Italy—falling, I am afraid, to the levels of Brazil.

What have Ministers done about these issues? They were warned in 1984 by the Trade and Industry Select Committee that the Government must take further action to prevent the…decline of the UK's manufacturing base". In 1985 the Government were warned by the House of Lords, in a much-reported document, about the disastrous consequences of letting manufacturing decline. In 1986, the former Cabinet Minister, who is now a Cabinet Minister again, the right hon. Member for Henley (Mr. Heseltine), made a plea that manufacturing should be taken seriously with his call for an industry and a regional policy. In 1987 the Department of Trade and Industry Select Committee called for a strategy, particularly for the new industries in information technology.

In 1988, the Government's own Advisory Committee on Science and Technology recommended action on Opto electronics and yet the Government did nothing. The CBI warned that we faced the prospect of falling behind, and now the CBI is calling for a technology policy. The Advisory Committee on Science and Technology is calling for new measures to help growing firms. The Policy Studies Institute is worried about the Government's failure to take the long-term seriously and still the Government do nothing. What have they done over the past few weeks? The only thing that they have done is publish the autumn statement with their proposals for investment by the Department of Trade and Industry in the future. Planned investment in collaborative research is to be cut by 35 per cent.—

The Secretary of State for Trade and Industry (Mr. Peter Lilley)

The hon. Gentleman said that the CBI was critical of some technological policy. Is he aware of the press release that it has issued today, responding to some measures that I have announced in the past few weeks? It states: This is just what we wanted, and goes a long way towards meeting the recommendations designed to help innovative smaller firms made by the CBI last year".

Mr. Brown

It is a pity that the scheme that has been reintroduced by the Minister is very similar to the scheme which was cut by his predecessor. Even the SPUR scheme—many members of the CBI feel strongly about this—is for only £10 million a year which is £30 million after three years. Cuts in research and development and cuts in the technology transfer budget are going ahead. Regional industrial incentives are being cut by 35 per cent; export services have been cut by 13 per cent. At a time when we have a huge trade imbalance, there are cuts in support for trade fairs and for the export marketing research scheme.

The do-nothing Department is now ensuring, by its failure to act, that thousands more will soon be condemned to do nothing because of it. What alone in the DTI's budget has seen a very big increase? Only the budget of the insolvency service, whose responsibility it is to wind up the affairs of failed companies. There has been a 30 per cent. increase in the budget for the insolvency service. With productivity savings, that means that it will be able to deal with the insolvency affairs of 50 per cent. more companies in the coming year.

At a time when Britain's industry needs support for training, for technology, and for investment, what is the best that the Department of Trade and Industry can offer the companies of Britain? A bigger, better, and more efficient burial service for companies.

Trust Government Ministers to find the only part of their budget that deals with the demise of companies and increase it, while denying funds for everything else. The Secretary of State is like a clergyman presiding over a crumbling congregation, no longer officiating at baptisms or marriages, only at funerals—[Interruption.]

Madam Deputy Speaker

Order. I would be obliged if hon. Members would not comment from sedentary positions. If they are seeking to intervene, then they should do so, but such comments do not improve the standard of debates in this House.

Mr. Brown

What does the Conservative party, say when the Labour party voices the concerns of manufacturing industry? I have here a document, issued by the Conservative party entitled—and it does seem an irony now—"The Revival of British Industry" in which it said: An abiding feature of the Labour party's industrial policy is its obsession with manufacturing industry". It goes on to characterise the Labour party's view as "this outdated attitude". Is it outdated to say that we should do our best to succeed in an area which employs more than 20 per cent. of our work force, and is responsible for 80 per cent. of our visible exports? Is it an obsession to say that manufacturing matters? Do they say that in Germany, France or in Italy? Do they talk about people being obsessed or outdated when they voice the concerns of manufacturing industry?

Is not it the case that, in every area where the Government should have enabled industry to succeed, the Department of Trade and Industry has done absolutely nothing? Without putting in place the technology transfer network that we have proposed, and without creating the one-stop small business service, which is essential if small businesses are to develop in this country—

Mr. Lilley

Is the hon. Gentleman unaware that there are 12 regional technology centres providing precisely the technological transfer service that he recommends? It already exists.

Mr. Brown

I am not only aware of its existence; I am also aware that the Government are cutting the budget for technology transfer centres.

Let us consider what the Government have taken away. They have abandoned the micro-electronics applications project, they have abandoned MAP training, they have abandoned the efficient ship programme and the resources from the sea programme—

Mr. Lilley

The hon. Gentleman said, sotto voce, that I had cut the innovation budget. That is up by 19 per cent. in real terms.

Mr. Brown

The right hon. Gentleman should listen to what I said, which was that the Government had cut the technology transfer budget.

Mr. Lilley

That has been doubled.

Mr. Brown

The right hon. Gentleman should consult the public expenditure White Paper, issued by his Department last Tuesday. He will find that the technology transfer budget has been cut by 2 per cent. Perhaps Ministers are no longer told what cuts are taking place in their own Departments.

What of the regions? Britain needs a regional policy, in the interest not only of the north but of the south. It is in the interests of the whole economy, because it creates balanced economic growth, without which this country cannot succeed. At least the Minister cannot deny the strength of what is happening in the regions because of cuts made by his Department. He has cut the value of regional incentives by nearly 40 per cent. The Department has spent £9 million on regional enterprise grants, which were to be the shining light of his Department and on which £42 million was to have been spent in the past two years—it has under-spent by £33 million which is almost 75 per cent. of the budget.

Mr. Nicholls

Will the hon. Gentleman give way?

Mr. Brown

No.

Mr. Nicholls

On a point of order, Madam Deputy Speaker.

Madam Deputy Speaker

Order. Is it a point of order, or a point of annoyance?

Mr. Nicholls

It is a point of order. The Chair always protects the right of Back Benchers in the House so that we can join in debates. The hon. Member for Dunfermline, East (Mr. Brown) is refusing to give way—my right hon. Friend the Member for Shropshire, North (Mr. Biffen) had to point that out in the last debate in which the hon. Gentleman came to the Dispatch Box. You reprove us, quite understandably, for making sedentary interventions, but the hon. Gentleman will not give way to standing interventions.

Madam Deputy Speaker

Order. If an hon. Member refuses to give way, I have to protect him if he has the Floor. I would do exactly the same if the hon. Member for Teignbridge (Mr. Nicholls) had the Floor.

Mr. Brown

I recall giving way on about 14 occasions in the last debate, including twice to the hon. Member for Teignbridge (Mr. Nicholls), and I regretted it afterwards because he did not know what we were talking about during that debate.

Let us consider what is happening in the north-west of the country, which is vital to our manufacturing future and yet 290,000 jobs have been lost there during the period of this Government. It is obvious that we should create a regional development agency for the area. We need regional incentives that are targeted on technology and training. We need to build a modern technology transfer network that is first rate and not underfunded. We need a proper company service for small businesses. However, Ministers persist in doing absolutely nothing.

During the last few weeks I have looked at what has been written by the No Turning Back group. The Secretary of State is a member of that group. Moreover, the Minister of State and the Under-Secretary of State responsible for regional policy are also members of the group. What message are they sending out to the north-west, to the regions and to the electors of Ribble Valley? According to a publication entitled "Industrial and Regional Policy"—a document about Europe, though it ventures into other areas, as ideologues are often wont to do—they say: Neither Government nor the European Community can create real jobs. They can only arbitrarily shift opportunities from the naturally successful part of the economy to the naturally ailing. There is no clearer illustration of this than the so-called regional policy. Those are not the ravings of a Young Conservatives fringe meeting. They are the stated views of the No Turning Back group which only a few months ago published that document. It went on: The money might…have created economic activity and jobs for which there was a demand rather than the phoney activities sustained by Government. Now we know the real views of the Under-Secretary of State, who is responsible for the regions, as well as the real views of the Minister of State, who was a co-author of the document, and of the Secretary of State, who, as a Government Minister, was unable to sign it, but who clearly is very much in touch with the views represented by that group.

Germany and Italy invest twice as much in the regions as we do. In France there is a regional technology organisation of considerable stature. Japan has invested in technopolies to safeguard the future of its industries. Japan does not consider, as Ministers in this Government apparently do, that regional policies represent a phoney activity. It does not want its regions to be ailing parts of the economy; it believes that a sound regional policy can make a difference to the overall economy. However, what do Government Ministers who are members of the No Turning Back group say? According to the document, they say that If national governments choose to spend money on providing special forms of assistance, it should be their own, not Europe's. Countries which choose to do so will pay a price by handicapping successful industries … Even the massive training and start-up schemes initiated by all European Governments, including our own, can be questioned. That is an argument not just against a regional policy but also against a training policy and a small business policy.

Are those Ministers who signed the document and who support the group saying that there is no case whatsoever for any form of regional industrial policy in this country and that there is no case for assisting balanced economic growth throughout the country? If that is what they say, they should tell the voters of Ribble Valley and all the voters in the north-west. They will never convince the regions that a policy of opportunity for all, which is what a regional policy ought to be, should be replaced by the No Turning Back group's policy, which is based on a free-for-all.

The Government ought to prepare a budget for industry that includes incentives for industry and puts industry—

Mr. Nicholls

How much would it cost?

Mr. Brown

The Government ought to put industry before the top rate tax cuts that have dominated this Government's philosophy since 1988, when the hon. Member for Teignbridge supported a Government who throughout the last three years have given £8 billion to those in the top rate tax bracket. That money could have been better used for other purposes. Nevertheless, they have questioned our public spending policy.

Mr. Nicholls

Will the hon. Gentleman give way?

Mr. Brown

They have spent—

Mr. Nicholls

Will the hon. Gentleman give way?

Madam Deputy Speaker

Order. The hon. Gentleman is not giving way.

Several Hon. Members >

rose—

Madam Deputy Speaker

Order.

Mr. Roger King (Birmingham, Northfield)

On a point of order, Madam Deputy Speaker. You may have noticed that the digital clocks have stuck at 5.17. The hon. Gentleman is making a long speech, but it is not quite as long as that. If we have to use the analogue clocks at either end of the Chamber, will you make a request that the television lights should be turned down? It is a little difficult to see the clocks because of the reflection of the lights on the glass covers.

Madam Deputy Speaker

This is a very short debate. I think that anyone with common sense will want the House to make progress.

Mr. King >

rose—

Madam Deputy Speaker

Order. That was not a point of order.

Mr. David Shaw (Dover)

On a point of order, Madam Deputy Speaker. Could you please ensure that the Vote Office has adequate supplies of the annual report—

Madam Deputy Speaker

Order. The Vote Office has all the papers that are necessary for the debate.

Mr. Shaw

rose—

Madam Deputy Speaker

Order.

Mr. Brown

If Conservative Members do not want to hear about manufacturing industry and its future, we shall certainly make sure that the country hears about it.

I was talking about the claims that the Conservatives made about the difference that their 1988 Budget, and successive Budgets, would make to the fortunes of industry, particularly manufacturing industry. In 1988 the Secretary of State for Trade and Industry said that the Budget would powerfully reinforce the measures that had revitalised our economy during the last eight years and that it would bring us prosperity, generate jobs and restore national pride. The Minister who is now in charge of regional policy said that words such as "historic" and "radical" were not enough—that words such as "progressive" and "exciting" summed up a Budget on which he warmly commended the Chancellor of the Exchequer.

We were told at the time that the top rate tax cuts announced in the Budget would transform British industry. We were also told that they would propel us irreversibly towards a new phase of endlessly renewable prosperity. We were told that the top rate tax cuts would stop tax evasion, raise charity donations, cut the emigration of top scientists and engineers, enhance the performance of top management in industry and, by the trickle-down mechanism, make even the poor less poor. What has happened since those claims were made in 1988? As is the way with false prospectuses, nothing is quite what it seems. Donations from the rich have fallen, tax evasion has continued, poverty has soared, scientists—as we saw this week—are leaving this country in record numbers.

Mr. Nicholls

rose—

Mr. Brown

What of the biggest and most important economic goal of all—that British industry would be galvanised into making new and effective efforts? Where is the evidence for the cost effectiveness of handing out £10 billion of public money in tax cuts by the end of this financial year?

Mr. Nicholls

rose—

Mr. Brown

What value for money has been achieved for the British taxpayer and what difference has it made to British industry?

Mr. Nicholls

On a point of order, Madam Deputy Speaker. The hon. Gentleman is making various claims. Are we not entitled to give an answer?

Madam Deputy Speaker

If there is time, I hope to be able to call the hon. Gentleman to answer those claims.

Mr. Brown

What evidence is there for the cost effectiveness of the 1988 Budget? I have just read a study published in the past few days. Only 1 per cent. of the beneficiaries of top rate tax cuts, according to the study, claimed that, as a result of the hand-outs that they received, they had worked harder. Almost as many conceded that after receiving the tax cuts they had decided to work less hard. In a study specifically of accountants—men in suits, not fast-lane speculators; accountants whose job is to be responsible about money—did they save, invest, give to charity? Twenty-five per cent. said that they spent more, 13 per cent. simply went on more holidays and, after two years of tax cuts, 10 per cent. had decided to retire early.

This has been the result of the £10,000 million to be given away by April 1992, yet the same money could have financed investment in skills and technology; it is being thrown away in a consumer boom, in holidays and in early retirement. The Government tell us that they are the efficient and responsible managers of the economy. If that is what was intended at that weekend in Chevening in January 1988, attended by the then Chief Secretary, now Prime Minister, by the then Financial Secretary, now Chancellor, and by the then Economic Secretary, now Trade and Industry Secretary, and if all these are the effects of that £8 billion give-away so far, that weekend must surely go down as the most expensive in British history.

The weekend, the first gathering of the men of Chevening, was not a one-off event. The three—Chancellor, Trade and Industry Secretary and Prime Minister in their new roles—met again in January 1989 to plan another Budget, and when it was clear that what they had discussed in 1988 had gone wrong they took further action and interest rates went up again. They met again in January 1990, when it was clear that what they had discussed had gone wrong again. They decided to compound their previous offences, so the economy has been pushed into recession. These are the men who, after failing in the past and creating the problems that we now face, have the audacity to tell us that they can solve the problems of the future.

It would be more convenient for the Trade and Industry Secretary if he could have moved straight from the City to his job at the DTI; it would be more convenient for the Prime Minister if he had moved from his position as social security Minister before 1987 to Prime Minister with no intervening period of economic responsibility, but the truth is that the present first Lord of the Treasury was also very recently the second Lord and before that the Chief Secretary. For three years the three talked and acted as if manufacturing industry did not matter—as if the trade deficit was of no consequence, as if a policy for industry was some sort of outdated, Marxist conspiracy. For three years their actions were entirely consistent with their words. How can they expect now to have any credibility when they tell us, in contrast to everything they said and did before, that now somehow manufacturing matters, that somehow industry is a matter of close concern and that somehow the trade deficit is something that they recognise to be a problem?

They cannot change their story, cover their tracks, deny responsibility or minimise the consequences of what they have done to manufacturing industry. We know where they were, what they said and what they did, and we know what has happened to British industry as a result. As their own Department of Industry inspectors would have it, they are not fit and proper persons to run an economy.

As is now clear, Britain needs a new policy for industry, and that will require a new Government. We need a policy for industry to bridge the training gap with our competitors by setting high-quality standards and targets in a national strategy locally delivered, with a guarantee that all young people can enjoy training and all employers undertake it. We need a strategy to bridge the technology gap by encouraging companies to invest in civil research, encouraging more small firms to do more in near market research and by encouraging technology transfer in each region in a high-class scheme, so that even the smallest businesses have access to new technology as fast as possible. We need a policy to bridge the regional gap by creating regional development agencies and a new technology service in the regions—policies which we have proposed and will develop in our industry policy document, to be published next week.

Here we have a Government whose Prime Minister promised us a classless society and opportunities for all. They are guilty of unfairness and incompetence, injustice and inefficiency. Britain needs a society that is built on social justice and on economic prosperity, where growth is both sustained and shared. For that, people will have to look to Labour.

7.54 pm

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Lilley)

What a tour de force! Almost every fact that can be checked was wrong. Almost every policy that the hon. Member for Dunfermline, East (Mr. Brown) attributed to me was that of another group, laid out in a document that I neither wrote nor signed; and he brought forth not a single policy of his own of which any details were available.

The hon. Member for Dunfermline, East poses as a friend—

Mr. Gordon Brown

Just on one of the many proposals that I put forward, what is the Secretary of State's objection to regional development agencies in England?

Mr. Lilley

The fact is that they already exist.

Mr. Brown

Will the Secretary of State, who seems to be an expert on these matters regional, tell us where these regional development agencies exist in Britain?

Mr. Lilley

We have a budget of £4 million devoted to them every year. They cover a variety of regions.

Mr. Brown

Does the Secretary of State agree that there are regional development agencies in Scotland and in Wales—the one in Scotland is to be renamed Scottish Enterprise—but that at the moment there are no regional development agencies similar to those in England? If he does not know that, he is not fit to be Trade Secretary.

Mr. Lilley

I am perfectly aware that the regional development agencies that exist do not have the full powers and budgets of those in the regions.

The hon. Member for Dunfermline, East three times repeated that we should introduce regional technology centres. They already exist. The hon. Member for Dunfermline, East poses as a friend of manufacturing industry, but he has never had a single good word to say about the achievements of British industry in the past decade. Yet everyone actually involved in manufacturing knows that industry has been transformed since the 1970s. Every manager I meet knows that productivity has been transformed. Every employee I meet knows that industrial relations have been transformed. Every customer, particularly overseas customers, that I meet recognises that the quality of British products and the speed and reliability of their delivery have changed out of all recognition.

The hon. Member for Dunfermline, East described the past eleven and a half years as "a complete failure". Most people in business regard that as an ignorant insult. The Opposition may wish to return to the overmanned, unmanageable, strike-ridden, loss-making, state-dominated industry of the Labour 1970s—but no one else does.

It is very much the hon. Member's style to denigrate what he pretends to befriend. He claims to be the friend of manufacturing but rubbishes its achievements. He claims to be a friend of Scotland but constantly runs down his country's performance. He claims to like the market but constantly harps on its failures, excesses and shortcomings. I suppose that I should take his personal criticisms of me as just an overture of friendship.

The transformation in individual firms shows up in the performance of entire industries. Let us take the motor car industry, for example. During the 1960s and 1970s it received every kind of help that Labour Governments know how to give. They reorganised it, subsidised it, regionalised it, nationalised it and unionised it practically out of existence, until output was halved. Yet last week Hamish McRae, writing in The Independent said: Amid the recessionary gloom, some cheer: one British industry is undergoing an utter renaissance. Within the next few years it will be in overall balance of trade surplus for the first time since the 1950s… it is the automotive industry, for so long the lame duck of British manufacturing… Export production over the six months to end-January was up 90 per cent. over the same period a year ago. That is the consequence of eleven and a half years of the policies that the hon. Member for Dunfermline, East described as "a complete failure."

As for manufacturing as a whole, the most important change of all is the turn-around in manufacturing productivity growth. In the 1960s we were bottom of the major industrial countries league, at two-thirds the average growth of productivity of the rest. In the 1970s, we were bottom again, and had slipped to half the average. Yet in the 1980s we saw the fastest rise in manufacturing productivity—faster even than that in Japan and more than twice as fast as that in Germany.

Of immense long-term significance has been the secular recovery in profitability in the latter half of the 1980s, to the best levels for nearly 20 years. How significant, therefore, that the hon. Member for Dunfermline, East did not even utter the word "profits". It is profits—not Government subsidies, penalties or cajoling—that are the key to improved investment, more research and development and better training. Profits make spending on those activities both possible and attractive. Since 1979, business investment has risen by 50 per cent.—again faster than in both France and Germany. Manufacturing investment is as high a proportion of value added in this country as it is in Germany and a higher proportion than it is in the United States of America.

In today's markets, it is not just quantity but quality that counts. My Department has led the way in encouraging total quality management systems. The British standard established in 1979 has effectively become the European and international standard. British companies are way out in front in gaining certification for quality. Already, 12,000 have done so. That compares with just 200 in France; and in Germany the process is only just getting off the ground. Does the hon. Member for Dunfermline, East think that that is evidence of a complete failure of industrial policy? What an insult to 12,000 high-quality companies.

The growing competitiveness of British goods is demonstrated above all by the rise in exports—a rise of more than 50 per cent. over the past decade. Let us not forget that Britain exports 20 per cent. more per head than do the Japanese.

The Labour party has opposed and criticised almost every measure that we have introduced to help and encourage British business.

Mr. Tony Worthington (Clydebank and Milngavie)

If we are so successful, why is it that we cannot afford to let the economy grow because our exports will be dwarfed by our imports?

Mr. Lilley

The reason why we have to have a tough period of tight monetary policy is to get inflation down, as the hon. Gentleman well knows.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Is not the money supply now firmly under control? Is not the Government's target of M0 between 0 per cent. and 5 per cent. per annum? Is not it rising at a little over 2 per cent? Is not the problem today that we have excessively high interest rates because we are in the ERM?

Mr. Lilley

My hon. Friend is right to point out that the money supply is within its target. I am not sure why he objects to that or to the measures that have brought it about.

As I was saying, the Labour party has opposed and criticised almost every measure that we have introduced to help and encourage British business. When we cut corporation tax to one of the lowest rates in any of the industrialised countries, the Labour party opposed it. When we tackled the excessive union powers to which the Labour party's trade union paymasters were attached, Labour Members opposed every reform. When we returned 42 nationalised industries—many of which had cost taxpayers billions of pounds in subsidies—to the private sector, the Labour party opposed every single denationalisation. Nowadays, Labour Members claim that they accept virtually all of the changes that they have opposed so vehemently over the years.

Mr. Richard Caborn (Sheffield, Central)

The right hon. Gentleman has referred to the return to the private sector of publicly owned industries. Industry has to be helped with its electricity bills. The electricity bill of United Engineering Steels in my constituency—it is not a small company—is to rise by about 30 per cent. or £12 million. It was paying out about £50 million for electricity. That company has pointed out that that figure is 17 per cent. above what the French pay and 10 per cent. above what the Italians pay. It has been making strong representations because such an increase represents hundreds of jobs lost in the industries to which the right hon. Gentleman has referred, whose productivity has been increased once more and which have good industrial relations but which are now being crippled by an increase of about 30 per cent. in electricity charges.

Mr. Lilley

The hon. Gentleman knows that overall tariffs came down and that individual large users are in a position to negotiate better deals if they wish.

Nowadays, the Labour party claims that it accepts all the changes that we have introduced and that it opposed. Can anyone doubt, however, that if Labour got back into power, it would tax and regulate, and renationalise, British industry as it has always done? British industry certainly does not need friends like that.

I know that the present recession is painful, although this time manufacturing is bearing proportionately less of the burden than in past recessions, and services are bearing rather more. The defeat of inflation has to be our overriding priority. The very severity of the present measures means that inflation is likely to come down all the more rapidly.

Mr. Giles Radice (Durham, North)

The Minister may have seen the latest CBI report, which shows that manufacturing investment is going to fall very sharply; indeed, it is already falling. What do the Government propose to do about that?

Mr. Lilley

The hon. Gentleman will hear shortly of some measures that I am introducing, which have been announced today. [HON. MEMBERS: "What are they?"] I shall come to them shortly.

As a result, subject to the disciplines of the exchange rate mechanism, in time, interest rates will come down further too. Output will recover and non-inflationary growth will resume. By contrast, the siren voices of Opposition Members urge us to cut interest rates prematurely and push the pound down. That would give a jolt to costs and inflationary expectations. The agony of getting inflation down would be indefinitely prolonged. Cannot Opposition Members see that?

There is a clear choice—on the one hand, an inevitably painful recession, resulting in the prize of low inflation and a rapid return to non-inflationary growth, and, on the other, a self-defeating attempt to escape the pain, which would entrench inflation, bring back high interest rates and result in the prolonged agony of stagflation.

The most significant thing about the speech by the hon. Member for Dunfermline, East is what he did not say about inflation. He did not say that Labour would make the defeat of inflation a priority. That is all the more odd because the Opposition are pretty promiscuous with their priorities. The hon. Member for Dunfermline, East last week made a reduction in interest rates his top priority. On the "Today" programme during the week, he added Government investment in industry as top of his "rigorous choice of priorities".

Tonight he has added getting output rising again, training, regional assistance and investment in the regions to his growing list. The Labour party's approach to priorities reminds me of that of the Congolese president who, to cope with discontent in his army, promoted everyone to the rank of colonel. Labour has promoted almost everything to the rank of priority.

There is one conspicuous exception. Labour Members have not mentioned the defeat of inflation as one of their priorities. To be fair, they have never really pretended that it is a priority. We can tell that from their attitude to interest rates—whatever the level, they advocate a cut, regardless of its impact on sterling in the ERM. The House knows that they have no response to inflation—except, when it comes to it, devaluation. Labour has always been the party of devaluation: it is still, at heart, the party of devaluation. It is the party that fuels inflation rather than defeats it.

Mr. Budgen

My right hon. Friend refers to devaluation, but devaluation does not cause inflation, does it? My right hon. Friend will agree that devaluation has an effect on some prices but not on all prices.

Mr. Lilley

Measures that cause the weakness of the pound cause inflation.

Mr. Alex Carlile (Montgomery)

Are we to take it from what the right hon. Gentleman has said that the Government are ruling out completely any question of devaluation, whether under that or any other name?

Mr. Lilley

Of course we do; of course. There is no question, having entered the exchange rate mechanism, of not sticking by the disciplines of it. [Interruption.] That is scarcely a discipline.

Mr. Worthington

Will the right hon. Gentleman give way?

Mr. Lilley

I have given way to the hon. Gentleman once already; I shall not do so again.

Let me deal now with the subject of innovation. The hon. Member for Dunfermline, East was right to emphasise its importance—particularly for manufacturing. It is absolutely crucial. But saying that it is important is not a policy. Denigrating industry's achievements in innovation is not a policy. Saying that there is not enough research and development is not a policy.

The hon. Member for Dunfermline, East simply has no coherent policy on the issue. The key is to recognise that the prime source of spending on research and development must be companies themselves. In the late 1970s, when profits were squeezed to the bone and the tax rate was 52 per cent., it was small wonder that spending on research and development was pitiful. But as profits have been restored, spending on research and development has accelerated. Over the last five years for which figures are available, it rose by nearly 50 per cent. in real terms and any research and development problem that this country may have certainly does not spring from lack of spending by Government.

The British Government spend nearly £3 billion a year on civil research and development. That is more, as a percentage of gross domestic product, than Japan and the United States. What is more, our academic scientific research effort has been outstandingly successful. Our scientists have won more Nobel prizes than those of any other country except the United States, and 13 times as many as the Japanese.

But, as a country, we have not until recently been successful at exploiting industrially that wealth of scientific talent. The Government have to help to bring industry and the scientific community together. One way to do so is by establishing industrial science parks alongside our universities.

I was delighted to see that Labour's previous policy document recognised the value of science parks. But the previous Labour Government treated them with what George Brown once called "a total ignoral". There were just two science parks at universities when they came to power, and there were still only two when they departed in 1979. Today there are 39 science parks in our universities—and 22 more are planned.

Mr. Keith Vaz (Leicester, East)

Does the Minister accept that it is not just about winning prizes? Mention has been made of the firm Bridgeport Manufacturing in Leicester, which won the Queen's award for industry in 1986. However, six months ago it had to make 100 people redundant because of Government policy. What words of comfort can the Minister offer the employees of Bridgeport Manufacturing, which now faces closure?

Mr. Lilley

It is not just a question of winning prizes, which was my earlier point. I know that it is painful for many companies facing the current recession, but it would be far more painful to act foolishly, cut and run, and take soft options. That would mean a prolonged agony rather than a short, sharp shock.

Smaller firms play an important part in science parks and can play a particularly impressive role in bringing new technology to the market place. Two weeks ago, I announced a new scheme, SPUR—support for products under research—which provides 30 per cent. grants up to a maximum of £150,000, for the development of new products and processes.

Today, I have announced two further schemes to help smaller firms. One of those schemes will provide grants of up to £50,000 for expert consultants to help firms introduce modern manufacturing systems. The second scheme will help smaller firms to use local experts—from universities, polytechnics and research organisations—to solve technological problems. Together with SPUR, they will give a £50 million boost to innovation by smaller companies. That is a 25 per cent. increase in the grants available for smaller firms to encourage innovation.

The Confederation of British Industry has welcomed those measures, saying: This is just what we wanted and goes a long way towards meeting our recommendations". The hon. Member for Dunfermline, East made a number of mistakes in his speech, but the most glaring of all was his suggestion that we had cut the technology transfer budget by 22 per cent.

Mr. Gordon Brown

I said 2 per cent.

Mr. Lilley

The hon. Gentleman is wrong either way, because the figure is on page 12 of the report. [Interruption.] The hon. Gentleman has the report, and that makes it all the more reprehensible that he gave a false figure. The report shows that technology transfer will almost double from £11 million to £21 million over the next year. Will the hon. Gentleman withdraw his allegation?

Mr. Brown

The report states that, for 1991–92, £21 million will be spent and that for 1993–94, £20 million will be spent. If that is not a cut, what is? That does not take account of inflation, so the real value is being cut.

Mr. Lilley

The hon. Gentleman calls that a 2 per cent. cut, but the amount will be nearly doubled over the next year.

Mr. Brown

The House should be aware that the forecast for the Minister's budget for 1991–92 is £21 million; for 1992–93 it is £20 million; and by 1993–94 it will be £20 million—a cut from £21 million to £20 million, and the figure stays at £20 million. The real value is cut even further

Mr. Lilley

That illustrates the hon. Gentleman's use of statistics. For the last full year the outcome was £11 million. In the current year it is estimated to be £18 million and the budget for next year is £21 million.

This is an Opposition day so it was a reasonable hope that we would get an opportunity to discuss Opposition policies in depth. Labour's advance publicists have been trailing for some weeks the impending publication of the party's new industry policy. We were told it was at the printers in January. Then it was being revised in early February. Then it was due to be endorsed by the National Executive yesterday, to be issued in time for this debate.

An eager world opened its newspapers this morning hoping that news of Labour's new policies would provide light relief from news of the Gulf war—only to find no mention of any policies. Perhaps the hon. Member for Dunfermline, East can tell us what has become of them. Were they rejected by the NEC? Is the Labour party still searching for a policy? Was it afraid to expose its new policies to the rigours of a parliamentary debate that Labour Members called?

Mr. Brown

Let us get things right. I said that the document would be issued today. Does the right hon. Gentleman not recall that I said at the end of the debate that the document would be issued on Monday?

Mr. Lilley

The hon. Gentleman's friends in the press have been widely trailing its publication for some time and he did not bother to deny those reports. Today, he has made it clear that he will deliberately not publish the document until after today's debate. That is a contempt of Parliament. What would happen if the Government called a debate and announced that they would publish their policy document the week afterwards? Unfortunately, the hon. Gentleman's speech did little to fill the gap left by the failure to publish the document.

Whenever it comes to talking about Labour's policies the hon. Gentleman is as coy as a Victorian spinster talking about sex. He prefers to avoid the subject, refuses to discuss the interesting details and, if forced to discuss it, takes refuge in euphemisms. His speech today and previous policy documents are full of vague words about partnership and co-operation, about encnuraging this, helping that, sustaining the other and supporting almost everything else. Gone is the old coarse vocabulary of socialism.

I thought that it might help hon. Members if I gave them a glossary of Labour newspeak; culled from Labour's existing policy documents. Partnership state means corporate state, a levy means a tax, training investment contribution means another tax, help means subsidise, support means subsidise, sustain means subsidise a lame duck, encourage means compel, fairer taxes means higher taxes, close tax loopholes means higher taxes, a strategy means the absence of any policies, new strategy means ditching old policies without replacing them and social ownership means nationalisation.

The hon. Gentleman has to revert to that code because of Beckett's rule: Labour will not make any new spending commitments "until resources allow". Therefore, it is reasonable to ask whether the plans that the hon. Gentleman claimed to present to the House this evening—for training, technology, the regions and a budget for incentives—would increase public spending. Have they been cleared by the hon. Member for Derby, South (Mrs. Beckett)? In the hon. Gentleman's view, should those policies be implemented today or must they wait until resources allow? The hon. Member for Dunfermline, East has been keen to intervene. Can he give us the answer to any one of those questions? I shall give way to the hon. Gentleman. [HON. MEMBERS: "Answer."] The hon. Member for Dunfermline, East is now even more coy than he was before. If he cannot tell us whether his policies cost anything, they cannot add up to a row of beans.

The Labour party may have abandoned its old rhetoric and ceased to use its old socialist vocabulary, but it has not lost its old prejudices. When considering policies, it still automatically thinks in terms of extending state control over businesses and people's lives and of controlling industries through subsidies and state handouts.

Dr. Kim Howells (Pontypridd)

I shall quote in oldspeak from the latest edition of the magazine of the National Federation of Self Employed and Small Businesses, which states: Even at this late hour we call upon the Government to act with a greater degree of responsibility and thought for the future of Britain's business. There is little point in carrying out major surgery if the majority of patients die from lack of oxygen. That is straightforward oldspeak—what will the Secretary of State do about it?

Mr. Lilley

The Opposition singularly fail to tell us what they propose to do in the short or long term. We have made it clear that our priority is to reduce inflation. The Opposition have not mentioned inflation and have no policies for getting rid of it. They did not spell out their policies for the longer term, but spelt out their prejudices. They still ultimately believe in picking winners, steering investment and setting priorities for British industry. Those are the sort of policies that we have seen from successive Labour Governments over the years—we have seen everything from groundnut schemes to De Lorean motor cars. Labour economics are De Lorean economics—plausible, expensive and fundamentally fraudulent. By contrast, our policy is tried and tested. It is to remove regulations and controls, reward success and enterprise by cutting taxes, privatise state industries, promote competition and open markets abroad by enthusiastically supporting the European single market and the GATT free trade talks. As my announcement today demonstrates, we vigorously support industrial innovation.

Our industrial policy has laid the foundation for British manufacturing to emerge from the recession stronger, healthier and more prosperous in the 1990s than ever before.

8.21 pm

Mr. Ken Eastham (Manchester, Blackley)

There is no doubt that we are now in a deep recession. It is the second recession in 10 years. Some people call it a slump. I was thinking about the subject only this morning and decided to look at the dictionary. The definition of "recession" includes A period… reduction in trade. The definition of "slump" was a decline suddenly in value, volume or esteem. I believe that the word "slump" is appropriate in today's debate because we are in a grave position. Despite the claims made in 1980 and 1981 that all the sacrifices the workers had made would bring an improvement on the industrial front with prosperity for all, we have nothing. Now, 10 years later, we are in a far worse slump than we had in 1980–81.

I am a member of the Amalgamated Engineering Union, which has prepared a survey called "Crisis at Home", published on 14 February 1991. I think hon. Members will agree that it is current and completely up to date. It analyses the job loss announcements made in February this year. The survey is divided into seven regions. The first region, Scotland, forecast job losses for February 1991 of 1,653, The second region, the north-west and north Wales, has predicted job losses of 3,461. The third region, the north-east and Yorkshire, has predicted job losses of 4,804. The fourth region, the west midlands, has predicted job losses of 7,542. The fifth region, the east midlands and east Anglia, has predicted job losses of 4,991. The sixth region, the south-west and south Wales, has predicted job losses of 3,907. The seventh region, the south-east and London, has predicted job losses of 7,330. The total of declared job losses for February 1991 is 33,688.

Mr. Roy Beggs (Antrim, East)

Does the hon. Gentleman agree that the job loss figures do not include those for Northern Ireland? It is a disgrace that, after so long, Northern Ireland employment figures are not available with those of other regions.

Mr. Eastham

I readily agree with the hon. Gentleman. We often forget to include the dreadful Northern Ireland figures. When he replies, perhaps the Minister will spend a little time trying to explain the Government's position in relation to the whole of Britain, including Northern Ireland.

The job losses I mentioned will be in spite of the sacrifices made by, and the co-operation of, people in industry. Employers called for flexibility and co-operation and the Government spoke about it time and again, but we now face massive job losses.

The British Foundry Association has just completed a report, which was published in January 1991. The foundry industry is important, despite its serious problems of the past 10 years. The report stated that in 1988 the industry employed 52,000 workers, many of whom now find their jobs under serious threat. Coming as I do from the engineering industry, I am conscious of the foundry industry's special problems in relation to the environment and pollution. Those problems are serious, but they could be dealt with if there were Government support.

Countries such as Germany, France and the Netherlands also have foundry industries, but they are given considerable Government support to overcome the pollution problems. My question to the Government and the Minister is: why does not British industry receive the same support as Germany, France and the Netherlands? Within the foundry industry there is also increasing competition from India, China, Poland and Turkey.

A simple example of the day-to-day problems in the industry involves a rather humorous but important aspect of the industry—manhole covers. The current output of manhole covers in the foundry industry is 80,000 tonnes a year, but 60,000 tonnes of covers are under threat from imports from third-world countries. In 1986 only 622 tonnes of manhole covers were imported from India and China. However, in 1990 the figure increased to 12,000 tonnes worth £3.2 million. The Government must recognise that the foundry industry is vital and that it deserves valid and serious support.

A few years ago the British machine tool industry was considered to be the world leader. Only this morning I spoke to representatives from that industry and I asked them about the current position. One representative told me that it was absolutely horrible. He told me that in December 1990 new orders for the last quarter of that year were down 31.5 per cent. in comparison to the same quarter in 1989. He put that down to interest rates, exchange rates and a lack of confidence generally in the industry. The machine tool industry is suffering as a consequence of the lack of confidence in the engineering industry generally. There is no opportunity to plan for the future.

Last December I attended a meeting in the House with Professor Roland Smith about British Aerospace and the declaration that 3,000 jobs would soon be lost in the industry. Professor Smith outlined the grave situation facing the industry and said that there was a serious possibility that two factories would close. During the meeting he said that, with the present combination of high exchange rates, high interest rates and high inflation, not even the Archangel Gabriel could manage a business successfully. He said that, of those three factors, the exchange rate was the most serious. He said that politicians and the Government must decide whether Britain wants an aerospace industry which at present is number one in Europe. It is obvious that the Germans are waiting in the wings hoping that the Government will ultimately destroy our aerospace industry so that they can become prominent in that vital industry.

On the industrial front nearer to home, Ferranti's Moston factory is in my constituency. The company was established in about 1906 and now 650 jobs are threatened at the factory. Earlier today the trade union representatives advised me that they no longer have craft apprentices in the company and there are no plans for them in future. There are two other Ferranti companies close to Manchester. At the Cairo mill 400 jobs are at risk, and at the Derker mill another 200 jobs are seriously threatened.

Workers were encouraged to buy shares in Ferranti when the shares were selling at about 70p each. Some workers spent their life savings on shares. Those shares are now valued at about 9p. As we see Ferranti tottering under this Government, it is interesting to note that the Labour Government, through the National Enterprise Board, saved Ferranti from liquidation. They revived it. After 10 hard years of this Tory Government, Ferranti is once again tottering and may collapse completely.

There is no doubt that there is a national haemorrhage of jobs. The newspapers are full of the complete loss of confidence in commerce and industry. Indeed, when I read of bartering for goods in the high streets, I am reminded of my days in the Army. British shopping centres now seem like Arab bazaars, thanks once again to this very unsuccessful Tory Government.

We all recall that everything was swinging during the 1980s. The yuppies used to do well. They would tank it up and buy bottles of champagne at lunchtime and tell everyone that they were so successful. However, they did not produce anything. One of my old friends who used to be a Member of this place died a few months ago. He told me that all those yuppies, spivs and wheeler-dealers in the 1980s never made anything; in fact, they did not even make a mousetrap. However, they made all the money during the 1980s. I wonder where they have gone now because they are certainly not around at the moment. They have disappeared as industry and commerce and the general industrial base of this country have collapsed.

During the early days of the Government in 1980 and 1981 a Tory told us that the unemployed should get on their bikes. Someone else said that people should get ladders and buckets and clean windows. He said that he would clean our windows and we would clean his. We would not produce anything, but that was a solution for the unemployment problem in 1980–81. Alas, we have come full circle and we face the same problem.

We have 300 years supply of coal, we have our own natural gas, and we are one of the world's leading oil producers, but we still cannot compete with other European countries. That is absurd. There must be something wrong in our economy if that is the position in which we, a so-called industrialised nation, find ourselves.

It is obvious, as my hon. Friend the Member for Dunfermline, East (Mr. Brown) said, that we must get down to producing quality goods and exporting goods. The conspiracy of not facing up to our economic position must change. There is no doubt that that will happen only with a change of Government.

8.39 pm

Mr. Charles Wardle (Bexhill and Battle)

I listened carefully to what the hon. Member for Manchester, Blackley (Mr. Eastham) said about job losses in engineering. I hope that he accepts that the greatest threat to jobs in engineering, as to any sector of industry, is inflation.

Whenever the House debates manufacturing, strident claims fly from one party to another about who would do what for the benefit of industry. However, when the hon. Member for Dunfermline, East (Mr. Brown) spoke, he did not make it clear which he regarded as the greater evil to manufacturing industry—high interest rates or high inflation. He appeared to skirt that point.

Whether those who work at the sharp end of manufacturing industry and who have to cope with the dynamics of the market place day in and day out would set much store by what is said on these occasions is not for me to speculate on. I have no doubt that those who work in manufacturing would tell the House that there is one abiding fact of industrial life that transcends all debates about productivity, about marketing, about technology and about supply-side reforms and the rest. The single greatest contribution that any Government can make to private sector manufacturing is to contain inflation.

The ability to keep inflation down to negligible levels allows well-run companies and highly motivated work forces to make a worthwhile contribution within the virtuous circle of price stability, low interest rates, competitiveness and a strong balance of payments. I imagine that few hon. Members would dispute the fact that the root cause of the current recession was the need to cope with an economy that overheated after the G7 countries agreed to relax controls following the 1987 stock market crash. In the debate on the Gracious Speech in November 1989, I predicted that the recession would begin in late-1990.

In spite of a three-year boom for industry, with record levels of investment during those three years, there had to be a day of reckoning if inflation was not to run riot with all the disastrous consequences of that scenario. That is why my right hon. Friend the Chancellor of the Exchequer places so much emphasis on tight fiscal policy and on the need to maintain high interest rates until inflation can be seen to be falling sharply. In that regard, the exchange rate mechanism and the present sterling-deutschmark exchange rate is not a trap. It is a worthwhile discipline because the currency markets will sell sterling at the slightest hint that the Chancellor's resolve is weakening in the fight against inflation.

By complete contrast, Opposition Members, especially the right hon. and learned Member for Monklands, East (Mr. Smith) in a debate on the economy last week, appear to want a large cut in interest rates now, plus fiscal incentives for more capital investment and still more spent on the infrastructure. All that that would achieve would be a little instant relief for industry. There would then be a painful resurgence of inflation a little later with many more receiverships and bankruptcies, and still higher unemployment than is now in contemplation.

In 1974, the Labour Government made the same mistake of softening their approach when it would have been wiser to impose tough disciplines in which industry could have operated. The result was capital investment allowances for more plant and machinery than was justified by market demand and tax relief on the inflationary increase in stock values which encouraged manufacturers to build merely for the warehouse shelves. It left industry in 1979 overmanned, overstocked and vulnerable to the worldwide downturn which came in 1980.

Yet once again, Labour policies are for instant relief from the pain of recession today without any regard to the even greater setback to competitiveness and to industrial strength that would swiftly follow. If some distinguished economists and, perhaps, some of my hon. Friends have similar faith in those nostrums, I must say, with respect, that there is no painless path from an inflation-ridden economy to one that emulates the German success story. The French learned that a decade ago to their cost.

I do not dispute the uncertainty, anxiety and discomfort of the recession, which is likely to get worse in terms of company failures and of job losses before it gets better. However, things will improve most rapidly if the Chancellor sticks to his policies with a tight grip on public spending and cuts in interest rates only when inflation falls away, as it surely will this year.

There are many problems in any recession. Perhaps none of them would have occurred this time if Britain had entered the ERM with lower inflation and lower interest rates in 1985. However, there is no point in jobbing backwards. Manufacturers might be helped if an independent Bank of England were to assume control of exchange rate policy at a full arm's length from politicians of all parties. The sterling-dollar exchange rate undoubtedly still puts British industry in a seriously uncompetitive position, but that will not change overnight either.

Difficulties also exist in industry because too little attention was paid in the recent boom to the cash-flow requirements for tax, dividends and investment. As a result of that and of a manic taste in some quarters for takeovers financed by junk paper, industry is now far too highly geared for its own good. The bankers, whose soft lending policies helped many companies into their present financial mess, do themselves no credit by denying responsibility for helping the greedy and for ignoring the belt-and-braces fundamentals of lending against good asset cover and strong interest cover.

Whatever the difficulties, there is only one sure way to economic recovery, and renewed growth and competitiveness for manufacturing industry. It is to stick with the Government's present policies, no matter how painful they are in the short-term, and to show the world, especially the currency markets, that we are determined to reduce inflation once and for all. On that basis, good management and properly motivated work forces will be able to combine their skills to build future prosperity.

8.46 pm

Mr. Alex Carlile (Montgomery)

Like most hon. Members, I find myself from time to time, either face to face or by letter, responding to a request for advice from a young man or woman who asks me what sort of job he or she should go into. As I am a lawyer, young people often ask me about careers in the law, and in accountancy and related matters. The best advice that anyone who is asked that question can give at the moment is that a young person should become an insolvency practitioner. That is the one part of the legal and accountancy professions in which redundancies are not taking place, in which there are plenty of openings and in which high salaries are available. An insolvency practitioner administers. the affairs of failing companies and tries to realise assets. What he is really doing is presiding over the demise of industry, and over the collapse of local enterprise and the loss of jobs.

At lunch time today, I was in one of the great department stores of this city, in Oxford street. It was empty. I went to a number of tills to pay for various articles and I did not have to wait at any of them as one would expect to do at the busiest time of a weekday. If one goes into a car sale room in any part of the country to buy a new car, the state of the market is such that it is possible to obtain discounts even on cars that were sold at a premium a year or two ago. A proprietor of a business dealing in second-hand cars told me a short time ago that if one went into a garage where second-hand cars were for sale, especially large ones, one could buy them at huge discounts because the motor market was utterly depressed.

In my constituency of Montgomery, we have experienced two major industrial problems in recent months. The most recent announcement in my area was to the effect that the Tootal tie factory in Newtown would be closed. I assure those male hon. Members who wear five different ties a week that the chances are that on at least one day they will have worn a tie made in Newtown, under whatever brand name it was sold. More than 100 jobs were to be lost in the closure. Fortunately, the Development Board for Rural Wales introduced another company and, at any rate for the time being, 50 jobs have been saved. The Tootal factory had been there for a long time and seemed as safe as any industry in the area.

The largest manufacturing company in my constituency, the Laura Ashley group, faced considerable restructuring recently, which was rationalised only by a Japanese conglomerate taking a significant shareholding in the company. The other part of the Laura Ashley rescue plan, apart from the injection of Japanese capital, was simple—stop manufacturing clothing in the United Kingdom and make the articles abroad, though not elsewhere in the European Community. Factories have been closed not only in Wales but elsewhere in the Community, and the company is now manufacturing goods in Hungary. Soon it could be manufacturing them in Poland, or elsewhere. I know that that is excellent for the economies of east and central Europe, but it shows a malaise in British industry.

As the Secretary of State suggested, industry has reformed itself in many ways, and that is to be welcomed. Manufacturing processes have been reformed in a way that has made them more efficient, and industrial relations have been transformed, with archaic practices being expunged from British industry. I acknowledge the part that the Government have played in that.

That having been achieved, those running industry are now saying, "We have done what we were asked to do. We have swallowed the medicine over the years. Why are we now suffering yet another recession? What more are we supposed to do to meet the requirements placed on us by the Government? After all, the Government assured us that their policies were right."

Industry is not helped when it sees, as has happened in this debate, a Minister and the Front-Bench spokesman of the Labour party cooking the books as they spoke. An exchange that occurred earlier about the technology transfer budget should be revealing to the great British public. The Conservative party says that when something goes down, it has gone up, whereas the Labour party says that when something goes up, it has gone down, and they are both wrong—[Interruption.] They cook the books in such a way that their efforts are about as sophisticated as the cookery involved in a hard-boiled egg.

Both sides should be telling the truth. British industry is entitled to be told that part of Government policy has been to raise the technology transfer budget, but, for reasons which I hope will be explained by the Minister later in the debate, having raised it—presumably because they thought it needed to be raised—they then decided to cut it back by £1 million. It seems an extraordinary state of affairs that we cannot have straight speaking on such matters.

It is meretricious for the Government to say that their policy is working. If it were working, we would not have both high inflation and a slump in manufacturing output and employment. It would be more forgivable if we were watching a Government sticking either to Adam Smith or Maynard Keynes, to some principle. Instead, we see the Government sticking to sticking plaster.

Today we had an announcement about some small programmes simply because we are having a debate in the House on trade and industry. A little extra technological help is to be given to small companies. I wonder why that announcement was made today. Last week we had a debate on the economy, and on the morning of that debate an announcement was made of a reduction of 0.5 per cent. in interest rates. Why was it made on that day? On the eve of the Conservative party conference last year there was an announcement of a reduction in interest rates. I wonder why it was made on that day.

That is not policy. It is sticking plaster, and industrialists realise it. They have no confidence in a Government who use that approach and who seem bereft of clear policy. I suspect that something similar will occur in the coming few weeks. The Budget is next month, and we shall witness at least a significant cut in interest rates and a prospective cut in local taxation, not for the sake of sound, structured, well argued policy, but because an election is coming up, and it will occur probably sooner rather than later.

Massive interventionism will not work any more than sticking plaster. I hope that the Labour party will not subject us, as one might suspect from what has been said in the debate, to an economic policy which will make us recall what happened to companies such as the Rootes group in the 1960s and De Lorean subsequently.

It is not fair to blame the market place. Germany, Italy, France and all our other competitors in the European Community work in the market place, but they are not affected to anything like the same extent by the depression and malaise that are affecting British industry. We need a more ambitious approach by Government to the future of British industry.

Mr. Budgen

What does that mean?

Mr. Cathie

There is plenty of which to be proud in British industry. As has been said, we have one of the most inventive scientific work forces in the world, but unfortunately, as people see money being taken out of science and technology, they are going abroad. We recently debated the Science and Engineering Research Council. It is clear that the cuts that were discussed during that debate will lead to a new brain drain of our brightest and best young PhDs who should be here to develop British industry for the future.

Of course, the Government have a part to play in industrial policy. It is not enough to stand by and simply let things happen on a free-for-all basis. The Government's role is, in part, to do those things that industry cannot do for itself. That means providing a stable macro-economic environment, especially with regard to inflation, interest rates and the exchange rate. The Government can intervene by ensuring that competition policy—I mean both pro and anti-competition policy, as appropriate—is enforced rigorously, nationally and internationally, and especially in Europe.

The Government also have a role to play in influencing the way in which the City of London operates. I do not share the Labour party's knee-jerk criticism of bankers, stockbrokers and insurance underwriters as I think that they do a valuable job in earning foreign exchange and in ensuring that the United Kingdom is at least a major financial market. The financial market earns good and meritorious money for this country. However, I do criticise the way in which the City attempts to make its money in connection with venture capital. There is a need for a much more well-devised venture capital environment in this country. City merchant bankers spend much of their time doing nothing much more than churning fees. The takeover and merger booms that we have experienced recently are not beneficial to the efficient performance of manufacturing industry, but they are beneficial to fee-earning in the City of London. The Government should go to the City and say, "Spend a bit less of your time trying to change the structure of British industry and a bit more of your time trying to put venture capital into British industry to develop its continuing growth and success."

The Government should also tackle many other policy areas. They should remedy the flaw in the 1984 corporation tax reforms, which has resulted in corporate tax bills increasing with inflation. In our view, they should support the move to a single European currency. They should reduce the bureaucracy of Government Departments dealing with taxation. They should increase investment in the transport infrastructure.

British manufacturers are not asking the Government to do their job for them; they are not asking for hand-outs. They want a Government who recognise their economic importance and who are prepared to play their part.

9.2 pm

Mr. Nicholas Budgen (Wolverhampton, South-West)

Before becoming a Member of the House, I spent many happy days in opposition to the hon. and learned Member for Montgomery (Mr. Carlile), and I used to admire him in those days. However, I did not find his speech this evening as brisk, detailed or compelling as some of his speeches that I heard before we were elected to this House. The hon. and learned Gentleman seemed to rest his argument tonight mainly on vague generalities. However, there was something much sadder about the speech of the hon. Member for Manchester, Blackley (Mr. Eastham), who spoke most movingly about the recession in his constituency. He seemed to imply that the Government had wished for such a recession. There is, of course, an intellectual vacuity at the centre of this debate, because it is distorted and darkened by the agreement between the two Front Benches about entry into the exchange rate mechanism. The attachment of a fixed exchange rate is the crucial factor that has brought this country and our manufacturing industry to its present state. The hon. Member for Blackley rightly said that we had a great boom between 1986 and 1988, that we are now correcting that and that that correction is unpleasant. However, we must ask why we had that boom. Why was it so excessive? The answer is at least in part because we were then informal members of the exchange rate mechanism. We were shadowing the deutschmark and, as a result and for domestic reasons, our interest rates were much too low.

There were other reasons, such as an over-correction of the stock exchange fall in October 1987. But the principal reason was the shadowing of the deutschmark. Why are monetary conditions too tight now? Why is manufacturing feeling such an excessive squeeze? It is because we are constrained by being formal members of the exchange rate mechanism now and we cannot reduce our interest rates as quickly as we would wish.

The Labour party, desiring so much to appear middle class and respectable and believing that to appear European is to appear respectable, has lost all intellectual rigour and cannot explain that, having changed its position, it has made as big a mistake as the Government have made in entering a fixed exchange rate mechanism.

But there is also a great deal that is ironic in this mock debate between the two Front-Bench teams in which each complains about the level of subsidy and distortion that will occur in the future. What will happen if we stick to the exchange rate mechanism? I am pleased to see my hon. Friend the Member for Carshalton and Wallington (Mr. Forman)—such a noble exponent of the exchange rate mechanism—come into the Chamber. If we enter the next stage of economic and monetary union, it will not be until 1 January 1994 when we shall enter a system of irrevocably locked exchange rates. A great deal of instability can occur between now and 1 January 1994 because ours is such a big, important and much-traded currency to enter the mechanism and the process of waiting is inherently unstable.

Let us assume for the sake of argument that we are stuck for some time in the fixed exchange rate mechanism. What will happen? Let us consider the distortion that will spread throughout the economy. At present we have a pay policy in the private sector which is being run by illegal exhortation. The Government keep attempting to persuade private employers that they should pay less. Yet we have the irony that the Government have offered to pay their employees pay increases of between 8 and 12 per cent. per annum.

We saw the whole process of distortion in the economy given a respectability by my right hon. Friend the Member for Worthing (Mr. Higgins) who suggested in a recent debate that we should have some form of formal pay policy. But it will not stop there, because, of course, when my right hon. Friend the Prime Minister finds that we have the same rate of inflation as the other European countries, he may find that the speculators, for other reasons, still put pressure on the value of the pound as against the deutschmark.

So we shall find that the old arguments about import substitution and encouraging exporters come along. We shall be back into the old round of supporting one lot of industry or another and one lot of subsidies or another. When he opened the debate, my right hon. Friend the Secretary of State talked about the grants and subsidies that the present Government are giving to manufacturing. All that will become much worse if we stick to the fixed exchange rate mechanism.

A floating exchange rate is not merely a symbol of a free economy. It is a necessity of a free economy. If we have a fixed exchange rate, it will work its distortion throughout every element of the economy. We shall have to have subsidies and distortions everywhere. It will be damaging to British manufacturing industry and it will distort manufacturing industry. When we return to floating exchange rates, we shall find that manufacturing industry is in a weakened condition, as, indeed, it was in 1979. It will be quite unable to stand up to the competition that inevitably comes with a return to floating exchange rates. It is a great tragedy that there is no proper debate about that in the House.

In order to appear respectable, middle class and European, the Opposition adopted the policy of supporting the ERM. That was a great mistake. They should remember the humiliations of poor Mr. Wilson when he tried to defend a fixed exchange rate. Similar humiliations will come the way of this Government.

9.10 pm

Mr. Robert Litherland (Manchester, Central)

The Secretary of State for Trade and Industry said that manufacturing has been transformed. I suppose that is one way to put it. We in the north-west would say that it has been decimated. Since the industrial revolution the north-west has played a vital role in our country's economy. Manchester and its conurbation were once thriving, vibrant areas offering employment in heavy and light industrial engineering, in chemicals, wire manufacturing and textiles. Name it, and the north-west could provide it. All that has changed with the collapse of manufacturing in our area.

Firms with household names and international reputations vanished overnight. Workers were thrown on the streets and the factory gates were slammed in their faces. Firms closed for ever. Week after week in the late 1970s and the early 1980s, companies were closed. Some factories that had provided jobs for workers' fathers, grandfathers and even great-grandfathers ceased production. One firm that had been in existence for more than 200 years finally succumbed and went under. Most of those firms were stripped of all their assets and the machinery was sold to the Chinese and others. The area was deprived of its dignity and the consequences for workers' lives were disastrous. Workers who derived a living, however meagre, were deprived of the opportunity to use their skills to earn that living. They were let down and demoralised.

These issues have been debated time and again in the Chamber, and now when I consider speaking in such a debate I have difficulty in finding a major labour-intensive company in my constituency. Most such companies are now mere memories in the form of derelict, half-demolished buildings. According to the Government, all was not lost. They have had schemes to retrain and revitalise the north-west. At least, that is how the story goes. High-sounding words such as competitiveness, confidence and cohesion were bandied about, but they meant little to people who were still out of work. My constituency has the second highest unemployment rate in the country, topped only by the constituency of Liverpool, Riverside, which, if my geography serves me right, is also in the north-west.

Workers jumped with joy, full of ecstasy, when they heard that his grace the Duke of Westminster was to assist in solving their problems. Here was a lad who knew what poverty meant. Fantastic; all that we need now is a fairy godmother. We in the north-west ask ourselves which is the myth and which is the reality. Is there or has there been a resurgence of bringing prosperity to the region? Have the Government given additional resources and facilities to industry in the north-west in order to regenerate the area?

The one industry that always gives an indication and is a barometer on which to judge economic viability is the construction industry. A trade inquiry report published this month by the Building Employers Confederation warns of a deepening recession and shows a sharp fall in output. It says that the slowdown is affecting all regions, and that will send icy shivers down the spine of every construction worker and small building business in the north-west, because they know from experience that our region will be greatly affected by any downturn. The report says that the likely consequences of the recession are the first major decline in building output since…1982 the sharpest deterioration in new orders in a single trading quarter since…1980 falling tender prices and wafer thin margins rapidly rising unemployment". It estimates that 150,000 jobs will be lost and that training in the industry will inevitably suffer. The report also shows that manpower, whether skilled or unskilled, is readily available. Materials are in good supply. There are no undue worries about finding carpenters, bricklayers, plasterers, builders or other workers. In other words, the operatives, the skills and the materials are available, but the economic climate to enable all these human and material resources to be put to good use does not exist.

According to the Building Employers Confederation, the Government's commitment to maintaining the value of sterling and their reluctance to cut interest rates are leading to a bitter and deep recession. The building employers say that a cut of 1 or 2 per cent. in interest rates would be most unlikely to prevent a fall in building industry output this year. The prospect of the gloom ahead is not lessened by the CBI's suggestion that the demand for factories and warehouses will remain depressed throughout the year. And this comes from Tory Government friends—the very people who put money into the Tory coffers at election times.

Where is the revitalisation to meet the needs of the people in the north-west? When I refer to the needs of the people of the north-west, I sincerely mean their real needs. The north-west business leadership team tells us that it is committed to the long-term prosperity and well-being of the region. I do not for one moment doubt that group's good intentions, but long-term prosperity means little or nothing to a worker who has been issued with his or her redundancy notice. It is always the same story: light at the end of the tunnel, a cloud with a silver lining, jam tomorrow. Meanwhile, the cupboard remains bare for the majority of people in the north-west.

It is a sick society that has the necessary work force, skills and materials, yet is not allowed to build homes, hospitals, schools, roads and bridges to meet the needs of its people. The Government have repeatedly failed the north-west. The present recession can be placed firmly on the doorstep of No. 10 Downing street. The Prime Minister, in his former role as Chancellor of the Exchequer, was instrumental in creating the mess that we have today. At the weekend he was up in the north-west, clutching at straws, hoping to salvage seats. What a forlorn hope. For him, Iancashire is already lost. It is strange that we never see a Prime Minister or a Chancellor visiting factories that are about to close, despite the fact that they would be most welcome in such places.

The north-west has had more than its share of unemployment, more than its share of bad housing, more than its share of poor environment, more than its share of ill health and poverty. After 12 years of Conservative government, we have homeless people on the streets of Manchester and an escalation in violent crime. We have had more than our share of deprivation. The north-west is asking when it will get its share of the promised prosperity. I do not see that happening under the present Government. Only a change of Government can bring prosperity to the north-west.

9.18 pm

Mr. Graham Riddick (Colne Valley)

The speech by the hon. Member for Dunfermline, East (Mr. Brown) was somewhat instructive to Government Members. He took between 30 and 35 minutes to reach the part relating to the policies of the Labour party. He then took one, perhaps two, minutes to describe those policies. There were no costings or details, but we were given enough of the flavour of what the Labour party believes in to demonstrate that it is still stuck to the old dogmatic, interventionist policies of the past.

We have heard Opposition Members going on about the regions. A relatively encouraging headline in the Yorkshire Post recently suggested that Yorkshire industry is doing better in the current recession than it has done hitherto. The CBI's recent quarterly report shows that business confidence in Yorkshire is more buoyant than anywhere else in the nation. That is a positive approach. It suggests that industry in the north is now more soundly based than it has been in the past and that the region no longer relies on the old smoke-stack industries.

Of course I recognise that great difficulties face many firms in the north of England because of the present high interest rates. But we must realise that interest rates are high in order to beat inflation. The prospects for Britain are good. Inflation will come down, and come down rapidly, this year, and interest rates will follow. It is instructive to see how the stock market is behaving. The stock market tends to take a six-to-nine-months view of prospects, and at the moment it is booming. That is a positive reflection of future trends.

During the 1980s we had consistent economic growth for eight years. That growth was brought about because we had low inflation, low taxation, minimum Government intervention and minimum red tape and bureaucracy. I have no doubt that British business men and entrepreneurs are as innovative as any in the world and are now able and willing to invest and compete in the modern world, but clearly they need a consistent, stable economic climate. They also need free trade throughout the world. Therefore, I urge my right hon. and hon. Friends to ensure that there is a successful outcome to the GATT negotiations in Brussels.

There is no doubt that British industry is going through a difficult time, but British companies are in much better shape today to withstand the current difficulties and to prepare for the upturn. We must be careful not to talk ourselves into a state of doom and gloom. Today we have seen that the Opposition like to talk down Britain and British industry as much as possible.

In recent days I have had some evidence that things are not too bad. The future holds some positive things in store. Last week I met some executives from Vauxhall Motors. One told me that Vauxhall factories are working flat out and have massively increased car exports to the EC. This morning I went to a British textile exhibition at Olympia and I was heartened by the surprisingly robust and confident nature of the people I met there. I heard of the exporting efforts being made by many textile firms. I met one tie manufacturer who had just appointed seven agents in Italy.

Some good news has been reported recently in the Yorkshire Post. A headline says: Japanese create 400 textile jobs". The Japanese firm Toray is investing £50 million in a new factory in Mansfield. We have recently had the news that the Wakefield Shirt group of companies, best known for its Double Two brand, is taking on people. That is in the textile industry, one of the industries we are told is clown and out. There is good news. In my constituency I have seen a brand new textile factory built in recent years. No Government subsidy or regional support was required. Yet that factory, producing polypropylene fibres, is one of the most modern in Europe.

There is good news in other parts of the country as well. The good people of Ribble Valley should be aware of the good news in the north-west. Investment in manufacturing has doubled during the 1980s. Companies like Glaxo, Pilkingtons, Shell Chemicals and General Motors have all made big investments in the north-west. The number of businesses has increased by over 20 per cent. Trafford Park in Manchester has continued to revive. Companies such as Kellogg and Proctor and Gamble, my old firm, are investing in the north-west. That is all good news.

I have no doubt that the electors in Ribble Valley will recognise that it has been the sound, consistent economic policies of the Conservative Government throughout the 1980s which have resulted in that investment going into the north-west. When they go to the polls on 7 March, they will send back a Conservative Member, most probably with an increased majority, or certainly a majority as big as that achieved in the general election. In the meantime, I am confident that we will pull out of the current difficulties and will see economic growth taking off once again. That will happen only under this Conservative Government.

9.26 pm

Mrs. Irene Adams (Paisley, North)

I listened with great interest to the Secretary of State telling us how the Conservative party had transformed industry. I do not know about transforming industry, but it has certainly transformed my constituency. It was once a highly industrialised constituency. When the Government came to power in 1979, the cotton mills in Paisley employed 10,000 highly skilled women—spinners, doffers and tenters. They travelled widely, taking not only the products but their skills all around the world. They taught other people those skills.

The first recession of the Government caused that industry to fail. The hon. Member for Colne Valley (Mr. Riddick) told us about seven jobs in Italy connected with the textile industry. Some of the 10,000 women who are now unemployed in my constituency and who "have Giro, can travel," would be interested in those seven jobs.

It is not just the thread industry which has been affected. We had a large male population who were heavily involved in engineering. We built ships that sailed the world. We do not do that any more. What the Government, the friend of industry, have given us in their place are fast food chains. We now make hamburgers instead of ships. They have also given us security guards and contract cleaners at the princely wage of £1.20 an hour. That is what they are asking the skilled engineers and the skilled textile workers to do.

Mr. Ian McCartney (Makerfield)

In the last few days I came across a case in the north-west of a young disabled woman who was offered a job so long as she agreed to work the first six weeks without wages. At the end of the six weeks this young blind girl would be taken on at the princely sum of about £2 an hour for a 45-hour week, and she would have to help provide the special adaption for the equipment that she would use. That is reality. [Interruption.]

Mrs. Adams

Yes. Perhaps Conservative Members found that funny. I certainly did not.

One of the great difficulties is that, because we have lost these work forces through redundancies, we have missed a rung on the evolutionary ladder of converting old skills to fit new technologies. Because of the lack of continuity in industry, and the lack of Government foresight, the next generation has to start from scratch, learning new skills without a firm knowledge of the old.

What have the Government done? They have lost us more and more jobs. However, let us not run away with the idea that merely the cotton industry was affected, or industries which were failing. The latest victim in my constituency was Howdens at Renfrew. Howdens had been in production for 130 years, and was in the forefront of design and manufacture of energy, tunnelling and other precision products. Howdens was a name synonymous with advanced technology throughout the world. Its Renfrew plant was a centre of engineering excellence unique in Europe. The plant and the work force had been able to perform in markets for which there is sure growth—manufacturing equipment and kit for the greening of power stations.

Howden's Renfrew plant had a bright and long-term future. It was in the process of negotiating contracts worth £20 million, but difficulties occurred when the United Nations trade embargo was put in place last August, following Iraq's invasion of Kuwait. Howdens was in the middle of building a huge power station in Iraq. Those difficulties should have been short term. If the Government had not been locked in the dogma of the past and if we had a Government willing to enter into partnership with industry, we would still have 500 jobs of engineering excellence in Renfrew, and all the subsidiary employment which backs up such jobs.

One of the first speeches that I heard when I came to the House was made by the Secretary of State for Defence. He said that he did not think that sanctions could work in the Gulf. He did not think that sanctions had ever been viable. I wish that he had told that to the Howdens work force last August, when they were prepared to sacrifice their future for those sanctions.

That is only part of the story for Howdens in Renfrew. Such was the uniqueness of the work force's skills and its technology, no other companies in the whole of Britain now carry out the work that was carried out there. Contracts are pending in Britain for tunnelling equipment that will have to be placed elsewhere because Howdens is not there to carry out the work. That is the direct result of Government policy, a Government bereft of ideas, which could not bridge the gap in an emergency; a Government who failed to recognise short-term difficulty and did not know the difference between that and long-term investment in the future; and a Government too dogmatic to recognise that interest rates were too high and that we needed a Budget for investment in the future, and the capability to enter into partnership with innovative industries, such as Howdens, in a bid to encourage the research and development that could bring long-term prosperity to the company. That could bring jobs to the skilled work force, who deserve our loyalty, and to Britain's long-term security as an industrial nation.

9.32 pm

Mrs. Elizabeth Peacock (Batley and Spen)

We have heard a lot about doom and gloom from most of the speakers in the debate tonight, but industry is not all gloom and despair, especially in West Yorkshire, where it is already planning for the future. Times are difficult. Yes, interest rates need to fall, but investment in manufacturing is still taking place and business confidence in Yorshire is more buoyant, as investment levels prove.

A £15 million project, with 100 new jobs, was recently announced in Leeds. Double Two Shirts in Wakefield is investing and providing 68 new jobs. Maitland Menswear in Leeds is investing £4.5 million, creating an extra 40 jobs and guaranteeing that about 300 jobs will continue. Spring Ram plc at Birstall is making multi-million pound investments at its site, and is about to settle terms for another new factory there which will eventually create 300 new jobs, we hope by the end of the year.

All that is not altogether gloom and despair. It is something which we welcome in Yorkshire as we are a great manufacturing county, and manufacturing will continue. That does not mean that we ought not to encourage the Government to bring down interest rates as soon as possible.

We have heard about the lack of investment in training. There is great investment in training throughout the country, particularly in Yorkshire. The Confederation of British Wool Textiles has a marvellous training programme. Recently it conducted an award ceremony. Apart from investing in the training of young people, it invests in the training of those members of the work force who are aged between 25 and 35. It now offers opportunties for training and qualifications to many people who, through no fault of their own, left school at an early age with very few qualifications. It is a tremendously important scheme. Supervisors can be promoted because they have been offered training.

There is great investment in the training of engineers. T. S. Harrisons, an engineering company in my constituency, has a tremendous training scheme for young people. It takes on apprentices every year and trains them in all the different aspects of its work. Its training machines and its trainees are as important to the company as its exports. Recently it started to export to Japan. This country, particularly Yorkshire, can export to Japan. Orders are also coming to the company from Russia.

I have provided a thumbnail sketch of money that is being invested not just for today but because those who run our manufacturing companies are confident about the future of this country. Indeed, they are so confident that they are investing vast sums of money in manufacturing and in new jobs.

9.37 pm

Dr. Kim Howells (Pontypridd)

Many hon. Members have referred to the transformation of British industry during the past 10 years. There has been a transformation, including one in my constituency. The pain caused by the contraction of industries such as coal has often resulted in the creation of new industries, which we welcome. They have provided a basis for optimism in my area.

We must, however, be careful about how highly we regard the new industries. Good work has been done by the Welsh Development Agency and the Scottish Development Agency, though I understand that the SDA is being dismantled. Their good work has resulted in inward investment by the Japanese, the Germans and the Americans. It is very much to be welcomed. All too often, however, such investment can result in an assembly line economy, not in research and development centres or in the highly trained work force that this country needs if it is to compete with security. We shall soon be challenged by great companies such as Siemens in Munich and Philips in the Netherlands. I am confident that they will want to invest here, but we must ensure that their investment does not lead to the United Kingdom becoming only an assembly line economy.

The regions must be self-sufficient so that they can determine the shape of our economy. They must be able to invest in and work on new products. We must therefore take into account the points made by my hon. Friend the Member for Dunfermline, East (Mr. Brown). We must invest in infrastructure and training. That will cost money. We cannot pretend that such expenditure can be avoided. We must think about our priorities. I am not ashamed to say that if we need to invest to ensure that our industries are dynamic and flexible and have the work forces that they need to meet the challenges after 1992, we must do so. If we do not, we shall become an assembly line nation. The United Kingdom will then be vulnerable to the cyclical trends that dog our economy now.

I hope that the Minister will take that very seriously. I do not think that we are battling over that one: it is a question of how we do it. If we are battling, I am afraid that the Government are even more stupid than I thought.

Mr. Tony Lloyd (Stretford)

rose—

Mr. McCartney

On a point of order, Mr. Speaker. I apologise to my hon. Friend the Member for Stretford (Mr. Lloyd). It is a matter of equity, Mr. Speaker. Last week I and hon. Members on both sides sat through a debate for three hours and were not called. An apology was made to us.

Mr. Speaker

Order. What is the point of order? The hon. Gentleman should have this out with his Front Bench, not with the Chair.

Mr. McCartney

Hon. Members who sit throughout the debate should be given precedence in speaking, yet others who have come in and out seem to be called. I have sat through six hours over the past fortnight—

Mr. Speaker

Order. Perhaps I can put the hon. Gentleman out of his misery. I do call hon. Members with equity. The hon. Member has been called no fewer than four times so far in this Session, and on one of those occasions he spoke for over 30 minutes. That is bound to be taken into account by the occupants of the Chair.

9.40 pm

Mr. Tony Lloyd

Perhaps I can follow my hon. Friend the Member for Pontypridd (Dr. Howells) who asked if the Government really were more stupid than he had thought. The kind of complacency that we heard this afternoon from the Secretary of State for Trade and Industry is sadly typical of what we have come to expect from the Government who are so out of touch with what industry demands as to mean that the future of manufacturing is not in safe hands.

Perhaps I may quote briefly from Peter Brighton, the director-general of the Engineering Employers Federation, who said a few days ago that Britain was moving hell bent towards a peasant economy … There had better be an improvement before long, or this country will crash into the buffers. I hope that the Minister will respond directly to the Engineering Employers Federation.

I hope that he will also respond to the Financial Times which said in a recent editorial: The UK is probably in the midst of the second worst recession since the Second World War. No prizes for guessing which was the worst recession.

The only thing that I am not clear about is whether this is the second Thatcherite recession or the first Major recession. There is no running away from the fact that the Secretary of State for Trade and Industry, the present Chancellor, and the present Prime Minister in particular, were the authors of the problems that led to the recession and so were the authors of the recession.

It does not bode well when the Chancellor in his speech on the autumn statement and the Secretary of State earlier on in this debate made a great issue of the Government's desire to tackle inflation as their way of overcoming the nation's difficulty, the implication being that it is either inflation or interest rates. The reality is that we have high interest rates and high inflation. The Government have given us no choice, but rather, the worst of both worlds.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

rose—

Mr. Lloyd

I am sorry, the hon. Gentleman will have to forgive me. I am afraid that I cannot help him on this occasion because I have very little time.

When the Chancellor tells us that inflation is central to the Government's policy, let me quote from the director general of the CBI who said: The 10.9 per cent. increase in the UBR next year is yet more bad news for those concerned with the fight against inflation. It will add some £1 billion to business costs next year without any improvement in local authority services or performance. This is precisely the kind of inflationary own goal that should be avoided. The Government cannot expect to be taken seriously if it fails to practise what it preaches. Very shortly we shall enter 1992 and the whole process that stems from it. The Government are cutting down in all the areas that might assist us in that process. They are cutting the training budget, assistance to regions and assistance to manufacturing. We are facing the opening of the channel tunnel, but the Government have obstinately refused to invest in infrastructure that would allow the manufacturing sector in the north of England, Scotland and Wales to take advantage of the tunnel. Look at what the French and Germans are doing. Any idea that the Government put across, as they try to do, that somehow Britain is in the midst of a little blip like our competitor nations is not true.

Britain has a unique position in western Europe—a unique recession that can be laid at the door of the Government. We cannot produce any statistics from the past 11 years to suggest that manufacturing has been well treated by the present regime. For example, my own region has lost about 300,000 jobs in manufacturing and those jobs have not come back in services. I am glad to see that the Secretary of State is back in his place; he should listen carefully to my figures. I have told the House how many jobs we have lost in my region, but the same rules can be applied to Scotland and to most of the north. The lost jobs have simply not been compensated for in the services industry. The economy has been run for one region alone—the south-east—at the expense of the rest of the country.

Conservative Members quoted the recent CBI quarterly survey, which is entirely pessimistic in respect of many of the regions. Not many minutes ago, it was quoted by the hon. Member for Colne Valley (Mr. Riddick), who said that the CBI's survey was good news for Yorkshire. Let me tell the House what the survey said about Yorkshire. It said that, although against the national trend business optimism fell by less in January, on balance, respondents were still heavily pessimistic about the business situation as compared with a year ago.

Mr. Tony Blair (Sedgefield)

That is the good news.

Mr. Lloyd

That, as my hon. Friend says, is the good news.

Let me refer to the north-west. The hon. Member for Colne Valley referred to Ribble Valley. Let me tell the House about the prospects for manufacturing investment in the Ribble valley. According to the CBI's survey, Investment intentions point to rapid falls in planned capital expenditure on both buildings and plant and machinery. That is the so-called good news that the Secretary of State wants to persuade the country is just round the corner. Is it good news given that, between the third quarter of 1989 and the third quarter of 1990, manufacturing investment in Great Britain as a whole fell by 8 per cent., that in the autumn statement the Government predicted a further 7 per cent. fall and that the CBI is now talking about a 16 per cent. fall in manufacturing investment?

The Secretary of State had the gall—I hope that he will correct me if I am wrong—to claim that Britain's growth in manufacturing investment compared favourably with that in France or Germany. The Secretary of State does not indicate whether I misquote him or not. In no year throughout the 1980s was manufacturing investment, as a percentage of GNP, anything like that in France or Germany—either when the Prime Minister was Chancellor or when he was in any of his other roles. Manufacturing investment in Britain, both in real terms and in percentage terms, fell well below that put in by our competitors.

Mr. Lilley

What I said was that the share of value added reinvested by manufacturing is the same in this country as it is in Germany and higher than it is in America.

Mr. Lloyd

Let me simply place on record the fact that the percentage of GNP invested by the Germans this year will be massively higher than the percentage of GNP invested by the British, and that is on a much higher GNP base. That is why, under this Government, we have fallen behind the Germans and the French and why we have continued to fall behind other countries. We have even fallen behind the Italians.

What are the consequences for regions such as my own—the north-west? We still bear the scars of unemployment from the first recession that the Government caused in the region. We have not recovered. That is especially true of the inner cities. As has been said, the constituency with the highest unemployment rate in Great Britain is in Liverpool. The second highest rate of unemployment is in the Manchester, Central constituency. Our young people and our communities suffer from increased crime rates, from the drugs problem, from unemployment and from poverty. That is what the Government have bequeathed to the regions of Britain.

We have listened intently to what the Secretary of State had to say. We looked for significant and real commitment to policies that would result in an increase in research and development spending and for any suggestion that the Government do not intend to cut the training budget and that they intend to ensure that the British work force is as highly trained as any in the world. We heard no such commitment and nothing positive to suggest that the Government are serious about offering a future to manufacturing industry. For that reason, whether the Prime Minister runs in June or leaves a general election until later, the public, when faced with the reality of the decline of the British economy, will turn to the Labour party for a policy that will revive our society.

9.50 pm

The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh)

When I saw that the Opposition were to invite the hon. Member for Stretford (Mr. Lloyd) to sum up for them, I was hoping to hear something about the training levy that figured so largely in a previous Labour party document. Like so many Labour party policies, it seems to have disappeared into a black hole and there has been no mention of it.

I shall be asking later about Labour party policy, but first I shall reply to some of the hon. Gentleman's remarks about the north-west. He did not mention the fact that, during the 1980s, manufacturing GDP in the north-west increased by a staggering 76 per cent. and the north-west is now second only to the south-east in terms of manufacturing GDP and investment.

We welcome this opportunity to discuss all economic matters in their widest sense. How right that is, because manufacturing industry cannot and should not be seen in isolation. We have set out to make fundamental reforms that benefit all sectors of the economy. As my hon. Friend the Member for Batley and Spen (Mrs. Peacock) said, our reforms have, over the past decade, released new, previously untapped energies in the nation. That is what supply-side economics are all about.

For the benefit of Labour Members, I shall list some of the reforms: the tax regime facing companies and their customers; trade union legislation resulting in a sea change in attitudes; competition; the return of swathes of industry to private hands; reducing burdens of red tape; stripping out distorting controls and subsidies. All that has given us eight years in which average growth has exceeded the 3 per cent. previously thought to be attainable only by our competitors. None of our major European competitors has been able to match our manufacturers' record in productivity and profitability.

Dr. Kim Howells

Will the Minister give way?

Mr. Leigh

I shall give way in a moment but I have only 10 minutes in which to speak.

The Opposition have never mentioned that success. That is to be expected, because our policies lie square behind it. Starved of bad news for eight successive years of economic growth, they greet the current downturn with ill-conceived glee and all the self-righteous canting denunciation that only the reformed sinner can muster. They pretend to care about manufacturing industry, but they see it simply as knocking copy for the next Supply day debate.

By all means, let Labour Members attack us, but let them stop talking down British industry. Let British industry get on with the job.

Mr. Allen McKay

Will the Minister give way?

Mr. Leigh

I shall give way in a minute—sit down.

Mr. Speaker

Order. I think that I say that—the hon. Member for Barnsley, West and Penistone (Mr. McKay) must sit down.

Mr. Leigh

I acknowledge that the present difficulties are serious and that the policies are painful. It is impossible to be in my job and not recognise that industry is suffering from high interest rates. But, in turn, the Opposition should acknowledge that the downturn has a strong cyclical element. They should acknowledge, too, that the greatest threat to industry is inflation. I think that those were the very words used by my hon. Friend the Member for Bexhill and Battle (Mr. Wardle).

We have heard nothing tonight from the Opposition. They have not revealed how they aim to cure inflation without curbing demand. Let us recognise, too, that as inflation comes down, recovery will be under way within the framework of the policies that we have created and through which so much has already been achieved.

If the Opposition will not take my word for it, let them consider an area in the Department of Trade and Industry for which I am responsible—inward investment. This country is the No. 1 choice for inward investors world wide. Some 40 per cent. of total inward investment in the EEC comes through this country. France is next after this country, but it accounted for only 14.4 per cent. Two thirds of all American direct investment comes to this country. That is a British success story and a success story of this Government.

What are Labour's policies and plans for British industry? Because the Opposition cannot abide the transformation of British industry over a decade, their view of British industry is necessarily like that of an old-fashioned camera—narrow, unfocused and thumb-onlens. To the extent that their vision is focused, it is focused on short-term difficulties rather than on long-term achievements. To the extent that their policies are evident, they involve the facile call for interest rate cuts that greet every turn of the economic cycle.

If we had listened to the right hon. and learned Member for Monklands., East (Mr. Smith) every time he called for interest rate cuts, inflation would now be roaring out of control. As always, the Opposition's immediate policies comprise the quick fix and the opportunist which are ideal for newspaper headlines today, but good for nothing except fish and chip wrapping paper tomorrow.

The hon. Member for Dunfermline, East (Mr. Brown) sees short termism everywhere except where it is most apparent—under his own nose. His answer for short termism in industry is short termism by Government—interest rate cuts and cash handouts.

I want to ask the hon. Member for Dunfermline, East four questions and I will give way to him if he wants to intervene. I have asked these questions in the four Trade and Industry debates over the past month, but he has refused to intervene. He ducked the questions. With total investment in the British economy now running at £100 billion a year, would a Labour Government be prepared to waste money coaxing investment over and above what the market provides and deems necessary? Do the Opposition deny that they will have to commit upwards of £10 billion a year? I will give way to the hon. Member for Dunfermline, East if he can explain his policies for the future of British industry. I have asked that vital question on many occasions, but he refuses to answer it.

Dr. Kim Howells

Will the Minister give way?

Mr. Leigh

I will not give way to the monkey, but I will give way to the organ grinder.

Secondly, what funding will be available to the national investment bank, to British technology enterprise and to the regional development agencies? I will give way to the hon. Member for Dunfermline, East if he will answer those simple questions.

My third question relates to the old National Enterprise Board to which we decided to give a mercy killing last week after a long period of hibernation. It was not referred to by the hon. Member for Dunfermline, East. It could borrow up to £750 million. Did it fail because it could borrow too much or too little? Should we do more or less? How much will British technology enterprise be able to borrow? I will give way to the hon. Member for Dunfermline, East if he will answer that simple question.

Finally, how does all that square with Beckett's law? The hon. Member for Derby, South (Mrs. Beckett) has said: What we are promising is an increase for pensioners and … child benefit. Everything else that is regarded as a desirable aim is also listed, quite clearly and specifically, as something that we hope to do as resources allow."—[Official Report, 13 February 1990; Vol. 167, c. 179.] There are my four questions and there have been four silences. We have heard no answers because if the Opposition were to answer, they would quite simply give the game away. We know that the presentation is different and the slogans have been put away. In their place are vague aspirations and empty promises. However, the reality is the same. It is the same mish-mash of state corporatism.

The Labour party has nothing to offer but more controls, more subsidies and more quangos. As the Minister responsible for consumer affairs, I would take a dim view of a shopkeeper who would not price what he displays and would not display what he really wanted to sell.

The Government will stand firm. We will not resort to quick fixes or to the opportunism of Opposition Members. We and the British people know that Labour's policies are misconceived, misguided, mistitled and missing. Let them falter; we will not fail.

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

The House divided: Ayes 221, Noes 334.

Division No. 70]	[10 pm
AYES
Abbott, Ms Diane	Dixon, Don
Adams, Mrs. Irene (Paisley, N.)	Dobson, Frank
Allen, Graham	Doran, Frank
Anderson, Donald	Duffy, A. E. P.
Archer, Rt Hon Peter	Dunnachie, Jimmy
Armstrong, Hilary	Dunwoody, Hon Mrs Gwyneth
Ashdown, Rt Hon Paddy	Eadie, Alexander
Ashley, Rt Hon Jack	Eastham, Ken
Ashton, Joe	Evans, John (St Helens N)
Banks, Tony (Newham NW)	Ewing, Harry (Falkirk E)
Barnes, Harry (Derbyshire NE)	Ewing, Mrs Margaret (Moray)
Barron, Kevin	Fatchett, Derek
Battle, John	Faulds, Andrew
Beckett, Margaret	Fearn, Ronald
Beith, A. J.	Field, Frank (Birkenhead)
Bell, Stuart	Fisher, Mark
Bellotti, David	Flynn, Paul
Benn, Rt Hon Tony	Foot, Rt Hon Michael
Bennett, A. F. (D'nt'n & R'dish)	Foster, Derek
Benton, Joseph	Foulkes, George
Bermingham, Gerald	Fraser, John
Bidwell, Sydney	Fyfe, Maria
Blair, Tony	Galbraith, Sam
Blunkett, David	Garrett, John (Norwich South)
Boateng, Paul	Garrett, Ted (Wallsend)
Boyes, Roland	George, Bruce
Bradley, Keith	Gilbert, Rt Hon Dr John
Bray, Dr Jeremy	Golding, Mrs Llin
Brown, Gordon (D'mline E)	Gordon, Mildred
Brown, Nicholas (Newcastle E)	Graham, Thomas
Brown, Ron (Edinburgh Leith)	Grant, Bernie (Tottenham)
Bruce, Malcolm (Gordon)	Griffiths, Nigel (Edinburgh S)
Buckley, George J.	Griffiths, Win (Bridgend)
Caborn, Richard	Grocott, Bruce
Callaghan, Jim	Hardy, Peter
Campbell, Menzies (Fife NE)	Harman, Ms Harriet
Campbell, Ron (Blyth Valley)	Hattersley, Rt Hon Roy
Campbell-Savours, D. N.	Haynes, Frank
Canavan, Dennis	Heal, Mrs Sylvia
Carlile, Alex (Mont'g)	Healey, Rt Hon Denis
Cartwright, John	Hinchliffe, David
Clark, Dr David (S Shields)	Hoey, Ms Kate (Vauxhall)
Clarke, Tom (Monklands W)	Hogg, N. (C'nauld & Kilsyth)
Clay, Bob	Home Robertson, John
Clelland, David	Hood, Jimmy
Clwyd, Mrs Ann	Howarth, George (Knowsley N)
Cohen, Harry	Howell, Rt Hon D. (S'heath)
Cook, Robin (Livingston)	Howells, Geraint
Corbett, Robin	Howells, Dr. Kim (Pontypridd)
Corbyn, Jeremy	Hoyle, Doug
Cousins, Jim	Hughes, John (Coventry NE)
Cox, Tom	Hughes, Robert (Aberdeen N)
Crowther, Stan	Hughes, Roy (Newport E)
Cryer, Bob	Hughes, Simon (Southwark)
Cummings, John	Illsley, Eric
Cunliffe, Lawrence	Ingram, Adam
Dalyell, Tarn	Janner, Greville
Darling, Alistair	Johnston, Sir Russell
Davies, Rt Hon Denzil (Llanelli)	Jones, Barry (Alyn & Deeside)
Davies, Ron (Caerphilly)	Jones, Martyn (Clwyd S W)
Davis, Terry (B'ham Hodge H'l)	Kennedy, Charles
Dewar, Donald	Kinnock, Rt Hon Neil

Kirkwood, Archy	Quin, Ms Joyce
Lambie, David	Radice, Giles
Lamond, James	Randall, Stuart
Leadbitter, Ted	Rees, Rt Hon Merlyn
Leighton, Ron	Reid, Dr John
Lestor, Joan (Eccles)	Richardson, Jo
Lewis, Terry	Robertson, George
Litherland, Robert	Rogers, Allan
Livingstone, Ken	Rooker, Jeff
Livsey, Richard	Rooney, Terence
Lloyd, Tony (Stretford)	Ross, Ernie (Dundee W)
Lofthouse, Geoffrey	Rowlands, Ted
Loyden, Eddie	Ruddock, Joan
McAllion, John	Salmond, Alex
McCartney, Ian	Sedgemore, Brian
Macdonald, Calum A.	Sheerman, Barry
McFall, John	Sheldon, Rt Hon Robert
McKelvey, William	Shore, Rt Hon Peter
McLeish, Henry	Short, Clare
McMaster, Gordon	Skinner, Dennis
McNamara, Kevin	Smith, Andrew (Oxford E)
McWilliam, John	Smith, C. (Isl'ton & F'bury)
Madden, Max	Smith, Rt Hon J. (Monk'ds E)
Mahon, Mrs Alice	Smith, J. P. (Vale of Glam)
Marek, Dr John	Snape, Peter
Marshall, David (Shettleston)	Soley, Clive
Marshall, Jim (Leicester S)	Spearing, Nigel
Martin, Michael J. (Springburn)	Steel, Rt Hon Sir David
Martlew, Eric	Steinberg, Gerry
Meacher, Michael	Strang, Gavin
Meale, Alan	Taylor, Mrs Ann (Dewsbury)
Michael, Alun	Taylor, Matthew (Truro)
Michie, Bill (Sheffield Heeley)	Thompson, Jack (Wansbeck)
Michie, Mrs Ray (Arg'l & Bute)	Turner, Dennis
Mitchell, Austin (G't Grimsby)	Vaz, Keith
Moonie, Dr Lewis	Walley, Joan
Morgan, Rhodri	Wareing, Robert N.
Morris, Rt Hon J. (Aberavon)	Watson, Mike (Glasgow, C)
Mullin, Chris	Welsh, Andrew (Angus E)
Murphy, Paul	Williams, Rt Hon Alan
Nellist, Dave	Williams, Alan W. (Carm'then)
Oakes, Rt Hon Gordon	Wilson, Brian
O'Brien, William	Winnick, David
O'Hara, Edward	Wise, Mrs Audrey
O'Neill, Martin	Worthington, Tony
Owen, Rt Hon Dr David	Wray, Jimmy
Parry, Robert
Patchett, Terry	Tellers for the Ayes:
Pendry, Tom	Mr. Allen McKay and Mr. Thomas McAvoy.
Powell, Ray (Ogmore)
Primarolo, Dawn

NOES
Adley, Robert	Blackburn, Dr John G.
Aitken, Jonathan	Blaker, Rt Hon Sir Peter
Alexander, Richard	Body, Sir Richard
Alison, Rt Hon Michael	Bonsor, Sir Nicholas
Allason, Rupert	Boscawen, Hon Robert
Amery, Rt Hon Julian	Boswell, Tim
Amess, David	Bottomley, Peter
Amos, Alan	Bottomley, Mrs Virginia
Arbuthnot, James	Bowden, A (Brighton K'pto'n)
Arnold, Jacques (Gravesham)	Bowden, Gerald (Dulwich)
Arnold, Sir Thomas	Bowis, John
Ashby, David	Boyson, Rt Hon Dr Sir Rhodes
Aspinwall, Jack	Braine, Rt Hon Sir Bernard
Atkins, Robert	Brandon-Bravo, Martin
Atkinson, David	Brazier, Julian
Baker, Rt Hon K. (Mole Valley)	Bright, Graham
Baker, Nicholas (Dorset N)	Brooke, Rt Hon Peter
Baldry, Tony	Brown, Michael (Brigg & Cl't's)
Banks, Robert (Harrogate)	Browne, John (Winchester)
Batiste, Spencer	Bruce, Ian (Dorset South)
Beaumont-Dark, Anthony	Buck, Sir Antony
Bellingham, Henry	Budgen, Nicholas
Bendall, Vivian	Burns, Simon
Bennett, Nicholas (Pembroke)	Butler, Chris
Benyon, W.	Butterfill, John
Bevan, David Gilroy	Carlisle, John, (Luton N)
Biffen, Rt Hon John	Carlisle, Kenneth (Lincoln)

Carrington, Matthew	Hawkins, Christopher
Cash, William	Hayes, Jerry
Channon, Rt Hon Paul	Hayhoe, Rt Hon Sir Barney
Chapman, Sydney	Hayward, Robert
Chope, Christopher	Heath, Rt Hon Edward
Churchill, Mr	Heathcoat-Amory, David
Clark, Rt Hon Alan (Plymouth)	Heseltine, Rt Hon Michael
Clark, Dr Michael (Rochford)	Hicks, Robert (Cornwall SE)
Clark, Rt Hon Sir William	Hill, James
Clarke, Rt Hon K. (Rushcliffe)	Hind, Kenneth
Colvin, Michael	Hogg, Hon Douglas (Gr'th'm)
Conway, Derek	Holt, Richard
Coombs, Anthony (Wyre F'rest)	Howarth, Alan (Strat'd-on-A)
Coombs, Simon (Swindon)	Howarth, G. (Cannock & B'wd)
Cope, Rt Hon John	Howe, Rt Hon Sir Geoffrey
Cormack, Patrick	Howell, Rt Hon David (G'dford)
Couchman, James	Howell, Ralph (North Norfolk)
Cran, James	Hughes, Robert G. (Harrow W)
Critchley, Julian	Hunt, David (Wirral W)
Currie, Mrs Edwina	Hunt, Sir John (Ravensbourne)
Curry, David	Hunter, Andrew
Davies, Q. (Stamf'd & Spald'g)	Irvine, Michael
Davis, David (Boothferry)	Irving, Sir Charles
Day, Stephen	Jack, Michael
Devlin, Tim	Janman, Tim
Dickens, Geoffrey	Jessel, Toby
Dicks, Terry	Johnson Smith, Sir Geoffrey
Dorrell, Stephen	Jones, Gwilym (Cardiff N)
Douglas-Hamilton, Lord James	Jopling, Rt Hon Michael
Dover, Den	Kellett-Bowman, Dame Elaine
Dunn, Bob	Key, Robert
Durant, Sir Anthony	Kilfedder, James
Dykes, Hugh	King, Roger (B'ham N'thfield)
Emery, Sir Peter	King, Rt Hon Tom (Bridgwater)
Evans, David (Welwyn Hatf'd)	Kirkhope, Timothy
Evennett, David	Knapman, Roger
Fairbairn, Sir Nicholas	Knight, Greg (Derby North)
Fallon, Michael	Knight, Dame Jill (Edgbaston)
Favell, Tony	Knowles, Michael
Fenner, Dame Peggy	Knox, David
Field, Barry (Isle of Wight)	Lamont, Rt Hon Norman
Finsberg, Sir Geoffrey	Lang, Rt Hon Ian
Fishburn, John Dudley	Latham, Michael
Fookes, Dame Janet	Lawrence, Ivan
Forman, Nigel	Lee, John (Pendle)
Forsyth, Michael (Stirling)	Leigh, Edward (Gainsbor'gh)
Forth, Eric	Lennox-Boyd, Hon Mark
Fowler, Rt Hon Sir Norman	Lester, Jim (Broxtowe)
Fox, Sir Marcus	Lilley, Peter
Franks, Cecil	Lloyd, Sir Ian (Havant)
Freeman, Roger	Lloyd, Peter (Fareham)
French, Douglas	Lord, Michael
Fry, Peter	Luce, Rt Hon Sir Richard
Gale, Roger	Lyell, Rt Hon Sir Nicholas
Gardiner, Sir George	Macfarlane, Sir Neil
Garel-Jones, Tristan	MacKay, Andrew (E Berkshire)
Gill, Christopher	McLoughlin, Patrick
Gilmour, Rt Hon Sir Ian	McNair-Wilson, Sir Michael
Glyn, Dr Sir Alan	McNair-Wilson, Sir Patrick
Goodhart, Sir Philip	Madel, David
Goodlad, Alastair	Major, Rt Hon John
Gorman, Mrs Teresa	Malins, Humfrey
Gorst, John	Mans, Keith
Grant, Sir Anthony (CambsSW)	Maples, John
Greenway, Harry (Ealing N)	Marland, Paul
Greenway, John (Ryedale)	Marlow, Tony
Gregory, Conal	Marshall, John (Hendon S)
Griffiths, Peter (Portsmouth N)	Marshall, Sir Michael (Arundel)
Grist, Ian	Martin, David (Portsmouth S)
Ground, Patrick	Mates, Michael
Grylls, Michael	Maude, Hon Francis
Hague, William	Mawhinney, Dr Brian
Hamilton, Hon Archie (Epsom)	Maxwell-Hyslop, Robin
Hamilton, Neil (Tatton)	Mayhew, Rt Hon Sir Patrick
Hampson, Dr Keith	Mellor, Rt Hon David
Hannam, John	Meyer, Sir Anthony
Hargreaves, A. (B'ham H'll Gr')	Miscampbell, Norman
Hargreaves, Ken (Hyndburn)	Mitchell, Andrew (Gedling)
Harris, David	Mitchell, Sir David
Haselhurst, Alan	Montgomery, Sir Fergus

Moore, Rt Hon John	Shaw, Sir Michael (Scarb')
Morris, M (N'hampton S)	Shelton, Sir William
Morrison, Sir Charles	Shephard, Mrs G. (Norfolk SW)
Morrison, Rt Hon Sir Peter	Shepherd, Colin (Hereford)
Moss, Malcolm	Shepherd, Richard (Aldridge)
Moynihan, Hon Colin	Shersby, Michael
Mudd, David	Sims, Roger
Neale, Sir Gerrard	Skeet, Sir Trevor
Needham, Richard	Smith, Sir Dudley (Warwick)
Nelson, Anthony	Smith, Tim (Beaconsfield)
Neubert, Sir Michael	Soames, Hon Nicholas
Nicholls, Patrick	Speed, Keith
Nicholson, David (Taunton)	Speller, Tony
Nicholson, Emma (Devon West)	Spicer, Sir Jim (Dorset W)
Norris, Steve	Squire, Robin
Onslow, Rt Hon Cranley	Stanbrook, Ivor
Oppenheim, Phillip	Stanley, Rt Hon Sir John
Page, Richard	Steen, Anthony
Paice, James	Stern, Michael
Parkinson, Rt Hon Cecil	Stevens, Lewis
Patnick, Irvine	Stewart, Allan (Eastwood)
Patten, Rt Hon Chris (Bath)	Stewart, Andy (Sherwood)
Patten, Rt Hon John	Stewart, Rt Hon Ian (Herts N)
Pattie, Rt Hon Sir Geoffrey	Stokes, Sir John
Pawsey, James	Sumberg, David
Peacock, Mrs Elizabeth	Summerson, Hugo
Porter, Barry (Wirral S)	Tapsell, Sir Peter
Porter, David (Waveney)	Taylor, Ian (Esher)
Portillo, Michael	Taylor, Teddy (S'end E)
Powell, William (Corby)	Tebbit, Rt Hon Norman
Price, Sir David	Temple-Morris, Peter
Raison, Rt Hon Sir Timothy	Thompson, D. (Calder Valley)
Rathbone, Tim	Thompson, Patrick (Norwich N)
Redwood, John	Thorne, Neil
Renton, Rt Hon Tim	Thornton, Malcolm
Rhodes James, Robert	Thurnham, Peter
Riddick, Graham	Townend, John (Bridlington)
Ridley, Rt Hon Nicholas	Townsend, Cyril D. (B'heath)
Ridsdale, Sir Julian	Tracey, Richard
Rifkind, Rt Hon Malcolm	Tredinnick, David
Roberts, Sir Wyn (Conwy)	Trotter, Neville
Roe, Mrs Marion	Twinn, Dr Ian
Rossi, Sir Hugh	Vaughan, Sir Gerard
Rost, Peter	Viggers, Peter
Rowe, Andrew	Wakeham, Rt Hon John
Rumbold, Rt Hon Mrs Angela	Waldegrave, Rt Hon William
Ryder, Rt Hon Richard	Walden, George
Sainsbury, Hon Tim	Walker, Bill (T'side North)
Sayeed, Jonathan	Waller, Gary
Scott, Rt Hon Nicholas	Walters, Sir Dennis
Shaw, David (Dover)	Ward, John
Shaw, Sir Giles (Pudsey)	Wardle, Charles (Bexhill)

Warren, Kenneth	Winterton, Nicholas
Watts, John	Wolfson, Mark
Wells, Bowen	Wood, Timothy
Wheeler, Sir John	Yeo, Tim
Whitney, Ray	Young, Sir George (Acton)
Widdecombe, Ann	Younger, Rt Hon George
Wiggin, Jerry
Wilkinson, John	Tellers for the Noes:
Wilshire, David	Mr. John M. Taylor and Mr. Tom Sackville.
Winterton, Mrs Ann

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.

Mr. Speaker

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

Resolved, That this House congratulates Her Majesty's Government on the policies which have transformed the performance of manufacturing industry across the country over the past decade, which remain flexible and responsive to the needs of manufacturing, which have made manufacturing better able to withstand the present downturn, and which have enhanced its prospects for the 1990s; calls on Her Majesty's Government to remain steadfast in the pursuit of these policies and in its determination to defeat inflation which imposes a serious and damaging burden on manufacturing industry; and believes that any return to the discredited policies of subsidy, intervention, state control, public ownership and bolstering of union power would undermine manufacturing industry's achievements of the past decade.