INDUSTRIAL SITUATION

HC Deb 13 February 1979 vol 962 cc985-1095

4.43 p.m.

Sir Keith Joseph (Leeds, North-East)

I beg to move, That this House deplores the Government's disastrous industrial policies which have stifled enterprise, destroyed the hope of new and worthwhile jobs, and left the nation poor and divided. The motion criticises the Government, and criticises the Government sharply, but it is not our case that the entire cause of our economic decline flows from the Government. After all, we have had economic decline now for nearly a century, and there are problems which flow, perhaps, from an anti-industry snobbery in this country, for which, at least in the earlier stages, we cannot blame the Labour Party or Labour Governments.

No one pretends that the problems facing industry or Governments in this country at this time are easy to solve, particularly at the start of the aftermath of the Persian disaster. But it is our case—that is why we have tabled a very sharp motion—that much of the fault that lies behind our decline has been the fault of the Labour movement, and that the recent sharp acceleration in our industrial decline has been almost entirely the fault of the Labour movement.

I do not, of course, propose to suggest that all is bad in our industry. There are many excellent firms, there is much excellent management, and there are many trade union leaders, officials and shop stewards who work admirably with management in the interests of their members. But the general position is, alas, not like that.

The last five years have revealed a very steep increase in our industrial decline. Production was the same in 1978 as it was in 1973, and yet pay has doubled. Let us look at productivity growth, from which all hopes of rising prosperity and improved standards of living must flow. In recent years, while the Labour Gov- ernment have been in office, from 1974 to 1978, according to the last figures that I have, there has been an increase in productivity, output per man per year, of no more than 1 per cent. per annum. The Secretary of State should not laugh at that point. I know that he was talking to his right hon. Friend, but the productivity growth of 1 per cent. per annum is a disastrous judgment on Labour Party policies.

Indeed, the real net income of a married man, with two children under 11, on average adult male earnings, has actually fallen from June 1973 to June 1978. The period during which the Labour Government have been in office has seen a fall in the real buying power of the net income of a married man with two children under 11, on average adult male earnings.

Real profits have fallen very sharply—catastrophically in real terms.

It is not open to Ministers to blame entirely the oil price rise which occurred just before they came to office, because all our competitors suffered from the same oil price rise. The Government have benefited from the arrival on our shores of the bonus of North Sea oil during their period in office. In our neighbouring countries and in competitor countries the standard of living, productivity and output have all risen sharply during the five years when, under a Labour Government, they have languished here.

Industrial confidence is low, there are rising worries on liquidity and cash flow, stemming from the tendency of inflation to rise, from disruption, from the cost of strikes, and from all the problems of the involuntary holding of stock.

There are two factors that the Government can pray in aid. They can say that all this may be true, and they cannot deny any of it, but that during one year of their period in office the British share in the world trade in manufactured goods actually went up a little. Well, we are delighted that it did. The long-standing annual decline in our share of world trade in manufactured goods desisted for one year under the Labour Government, and we rejoice that it did. We suspect that it is only because during that year the devaluation of sterling came to the aid of our hard-working manufacturing traders.

The Government can also claim that, despite all the discouragement, investment in real terms has held up surprisingly well. It has not been a great success, but it has at least held up. That would be even more of a comfort if it were not far too often true that the investment, when installed, was continuously overmanned by restrictive labour practices. But, inasmuch as investment that is intended to serve the consumer at home and abroad has been installed, we rejoice with the Government.

It is not surprising that under a Labour Government the results have been as bad as the figures and trends show. However sincere Labour Ministers may be in wishing to preside over an expanding industrial base, they do not understand the climate needed for high levels of employment and a rising standard of living.

To begin with, they give a positive virtue to State spending. They do not believe that the taxpayers' money should be spent only when necessary and for a good cause. They judge their virility and quality by the amount of taxpayers' money that they spend. They spend far more than the money that they raise from the taxpayer. Ever since this Government came to office we have had grossly excessive State spending. It has far exceeded what the Government have been willing to raise from the taxpayer. They have therefore indulged in excessive printing, borrowing—[HON. MEMBERS: "Oh".] I see that there is awareness that there are lessons to be learnt from what has happened in the past. We have learnt that lesson, but I am not sure that Labour Members have. The pressure from the Benches behind the Government is to repeat the performance of the past and accelerate State spending, borrowing and printing.

Not only has excessive State spending led to vast increases in borrowing, but the burden of direct taxation on the taxpayer is almost uniquely heavy. Moreover, in grasping at least the bare essential of the need for monetary discipline, the Government have committed the folly of expanding State spending while contracting the money supply. That focuses the entire shock of the contraction of the money in the economy on the private sector. While State spending and the public sector increase, the private sector, whence our world trade flows, is and has been strangled. In jargon this process is called "crowding out". It is conceived that, because the Government borrow a great deal of money and raise the cost of interest, the private sector finds that its own desires to expand, invest and initiate is aborted by the cost of money.

But it is not as simple as that. There is crowding out, but there is also the threat of price control to jeopardise plans made by the private sector. There is the lavish use of resources by the public sector without the discipline of a profit and loss account that can bid away scarce management and labour skills at prices that the private sector cannot afford. In the telecommunication and microprocessor world we have constant complaints that the Post Office is paying people at levels that the private sector cannot afford. That poaching of labour by the Post Office was in periods of pay control.

The combination of excessive Government spending, borrowing, high interest rates, price control and the other burdens, plus inflation, has not only crowded out projects conceived by the private sector as profitable to serve the consumer at home and abroad; it has prevented the private sector from even conceiving many projects. As the private sector saw it, its only task was to survive in the hostile economic climate.

Those are some of the reasons why it is not surprising that the Government have presided over this period of industrial stagnation. Additionally, there is the level of direct taxation, capital transfer tax and the burden of capital gains tax. In our constituencies we have all heard of businesses whose most talented staff and management want to go abroad. Once abroad they cannot be enticed home, because the net take-home pay in this country is so much lower. More and more people are either going abroad or departing from the taxed economy to the moonlit cash economy. There is also the endless cataract of legislation, regulation and the constant pressure of increased nationalisation, subsidisation and politicisation of business.

We do not criticise those engaged in nationalised industries. As people they are just the same as anyone else. [SEVERAL HON. MEMBERS: "Oh."] I wish hon. Members on the Government Benches would always treat those who work in the private sector the same as everybody else. We do not criticise those who work in the public trading sector, but we say that the immunity from bankruptcy that nationalisation and subsidisation bring creates an unhealthy climate for management and wage earners. It teaches people to ignore consumer interests and to adopt a take-it-or-leave-it attitude to consumers at home and abroad. They believe that their jobs are secure and that they will not suffer. But that is no longer true. Jobs in the public sector are not all that secure.

The cumulative effect of these factors is to discourage the enterprise and effort on which industry depends. Companies believe that expansion and the risks involved are not worth while. The Secretary of State may say that he does not recognise the picture that I am painting. He can point to Sir Freddie Laker, who, against all discouragement and by his initiative and risk-taking enterprise, is providing a service to air passengers across the world. We honour Sir Freddie Laker. Mercifully, there are hundreds of mini Sir Freddie Lakers who, despite the discouraging climate, are innovating and taking risks.

But we need scores of thousands of these people. If the climate were more encouraging, we should have them. They exist in this country, but too many of them go abroad or into the cash economy. There is ample entrepreneurial talent in the country which would be encouraged if the climate were right.

Mr. Norman Atkinson (Tottenham)

In general terms, when speaking on the entrepreneurial aspect, is it not true that those who make money seldom make anything else? The right hon. Gentleman's analysis is totally wrong. About 50 per cent. of our manufacturing industry is multinational, and the multinationals say that the performance of their companies in this country compares with their equivalents overseas. The remaining 50 per cent. of private enterprise depends on Government procurement for 38 per cent. of its activity. The right hon. Gentleman says that there is far too much subsidisation, but cutting subsidies will cut down the work and demolish further the efforts of that sector.

Sir K. Joseph

One cannot invest, employ people or expand employment on a loss. Only profit enables one to do that. The subsidy of which the hon. Gentleman is so fond comes directly or indirectly from the profits of the profitable private enterprise sector.

Not only management and entrepreneurs are discouraged; so are wage earners. As my hon. Friend the Member for Norfolk, North (Mr. Howell) is constantly and effectively pointing out, the "why work" syndrome spans the whole of society. Earnings are heavily taxed and benefits are untaxed. The gap between net earnings and net benefits is too small. It is a miracle that so many people work on relatively low earnings when under this Government the tax on earnings is so high. Yet we have the paradox of high unemployment but shortage of skills. I suspect that plenty of skilled people in the country have deserted their skills because pay control and high taxation have so greatly compressed pay differentials that they have departed to more lucrative activities.

On top of that cumulative discouragement there is the growing power of the unions. It is such that we now have employers who are afraid to take on labour and afraid to dismiss it. This combination is in itself adding to the discouragement of job creation.

In the last couple of months I have met individuals who once employed several hundred wage earners manufacturing goods but who, because of the combined effects of all these discouragements, and especially the slog of persuading labour in their factories to be co-operative, have given up manufacturing. They have closed down their units and have kept on a dozen staff to import the goods that they once made. They have turned themselves into warehousing and distrfibutive business men. That is a direct result of the climate created by the Government and trade unions.

For a long time our bane in this country has been the anti-enterprise climate, low productivity and lack of adaptability. Our argument is that the Labour Government and the trade union movement between them have made those weaknesses worse during the last five years.

The Labour Party and the trade union movement are close allies. They do not seem to recognise that the source of prosperity, jobs and, indirectly, of social services, defence and everything that we need is serving the customer. They do not recognise that the way to serve the customer, at home and abroad, is by constant adaptation. It is the first time that I have used the phrase, but I shall use it again: we are now witnessing the chickens coming home to roost—the chickens that result from Labour and trade union indifference to the importance of serving the customers by adaptation. [Interruption.] The Labour Party must recognise that Korea and Singapore—

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

On a point of order, Mr. Deputy Speaker. My right hon. Friend is making an extremely interesting speech. Will you ask Labour Members to cease making noises, because it is extremely discourteous to my right hon. Friend?

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

I have no doubt that hon. Members will have heard that appeal and that they will respond to it accordingly.

Sir K. Joseph

The Koreans are only the vanguard of the developing world which will compete with us at home and abroad. They represent our market for the future. If we do not recognise that adaptability is the essence of industrial success, we shall continue to decline.

Many people express fears about the effect on employment of the microprocessor. But we in Britain have experienced 200 years of innovating and labour-saving inventions. Today we have six or eight times more jobs than we had at the beginning of the Industrial Revolution. If we are adaptable, these inventions are methods by which we can increase our standards of living.

The Labour movement and the trade union alliance are intent upon saving existing jobs and preserving low-paid, vulnerable jobs for a short time instead of facilitating new jobs. By their policies and attitudes they have paralysed the adaptation which is the heart of industrial success.

According to the leak in The Daily Telegraph yesterday, the concordat that the Government are intending to produce with a flourish tomorrow includes the word "adaptability" a number of times. It is an advance that the trade unions and the Labour Party have recognised that adaptability is the heart of industrial success. But, alas, all their policies and attitudes are in conflict with their words.

The over-spending, the over-taxing, the over-borrowing, the over-regulating and the over-manning inhibit adaptability and thus inhibit new jobs and competitiveness. However much Labour Members may mock, I repeat that we are witnessing the chickens coming home to roost from Labour and trade union misunderstanding of where prosperity comes from.

Economic policy should facilitate change. It is the job of social policy to cushion the impact of change. For many years I have had the privilege of being a member of a group in the House which has published several pamphlets. One of the earliest, which was published before I became a member, was called "Change is our Ally". I believe that change still is our ally.

The constant slow process of adaptation is vital to keep us competitive and to avoid the disruptive shocks that occur when there is an attempt by trade unions or a Government to resist change. Deferring change only makes its impact worse when it comes.

In the United States 50 per cent. of all industrial jobs vanishes every eight years. Prosperity and a rising standard of living—which happens in that country, despite all the problems—come from incessant movement from lower paid, lower value added jobs to higher paid, higher value added jobs.

Labour adopts precisely the wrong policies by subsidies and rescues. They discourage adaptation, they discourage firms and labour forces from putting their own houses in order, they make us less competitive, less well paid and less fully employed. Subsidies for the uncompetitive achieve the opposite of what I believe the Labour Party sincerely wants—full employment and a rising standard of living.

Mr. Eric Moonman (Basildon)

Does the right hon. Gentleman concede that there is an obvious gap in his argument? He is giving weight to the problems of Government involvement and interference, but he is not dealing with the competence and skills of management. The right hon. Gentleman should pay attention to that important aspect.

Sir K. Joseph

I ventured to say last week that management has tried to do the right thing and, alas, all too often has not succeeded. I said that some trade union leaders and shop stewards all too often have tried to do the wrong thing by obstructing efficiency and productivity and all too often, alas, have succeeded. There is no symmetrical balance between management and the work force.

I wish to quote from a poem, in the context of the Labour Party applying policies which do not achieve the results which it seeks: Yet each man kills the thing he loves, By each let this be heard, Some do it with a bitter look, Some with a flattering word, The coward does it with a kiss, The brave man with a sword‡ In this case the kiss is a subsidy. We do not know whether the Labour Party is cowardly and provides subsidies because it cannot summon up the moral courage to tell a firm to put its own house in order. We do not know whether it is cowardly or ignorant. We do not know whether the Labour Party has yet understood how much damage to the prosperity process is done by its subsidies.

Even Labour is now being forced to de-man in the nationalised industries. It is happening in British Steel and British Leyland, and it will happen even in shipbuilding. I hope that the Minister will explain what is happening about the corporate plan for British Shipbuilders. A leakage occurred and we were told that British Shipbuilders was proposing to de-man to the tune of 12,000 people. The Government are hesitating about whether to publish the corporate plan. Union members can see it, but the House of Commons cannot. I hope that the Government will say that the corporate plan is to be published.

Here again, the Government are being forced belatedly to accept reality and de-manning is to occur. The chickens are coming home to roost.

Mr. Arthur Palmer (Bristol, North-East)

I understand how much the right hon. Gentleman is opposed to subsidising industry. Will he explain why the last Conservative Administration, of which he was a member, did so much subsidisation of industry?

Sir K. Joseph

We have learnt the lessons from the past. There may be cases where what are known in Germany as "digressive" subsidies are justified. But the wholesale, indiscriminate subsidy policy of this Government is totally wrong and damaging.

In a world in which we have widespread overmanning and the need and fact of demanning, it is absurd that the Labour Government. by their vicious taxation of successful business men, should block the creation of new firms that could absorb some of the unemployed and some who are demanned. Many businesses could and would expand and take on new labour, including some that are now being demanned, if the view were not taken "It is not worth while because of excessive taxation."

It is an illusion to think that little NEDCs, sector working parties, the National Enterprise Board, nationalisation and planning agreements or any other panaceas can make up for the loss of vitality and adaptability caused by over-taxing, over-regulation and uncomprehending trade unions in hundreds of thousands of workplaces where motivation matters so crucially.

Socialists do not seem to grasp that the business of government is to create a framework of competition, taxes and safety nets so that people do in their own and their families' interests what is in the national interest.

Let us judge by results. If we take the past 15 years—I am not choosing any especially favourable month—from shortly before the 1964 election to the last measured period in 1978, 11 years of which saw Labour Governments, and consider average male adult earnings in October 1963 and October 1978, we find that over the 15 years in 1963 money—constant money—the average male adult net income for a married man with two children under 11 years was £15.73 in October 1963 and £18.53 in October 1978. It is necessary to deflate average adult male industrial earnings for a married man with two children from about £80 to £18.53 to take account of inflation and changes in taxation and so on.

In the 15 years from 1963 to 1978 there has been an increase in real buying power of £2.80, meaning about 19p per year. The total growth of the average real buying power of the average male adult inrustrial worker has been no more over the past 15 years, 11 of which have been under Labour Governments, than 19p a year. I was shocked by the figures. I do not know whether the House is equally shocked. It may be that it is familiar with the figures. Meanwhile, our neighbours have witnessed an enormous leap in the standard of living of all their peoples. Again, the chickens are coming home to roost.

Apparently the Labour Government want to go on with more of the same. They want more nationalisation, more power for the National Enterprise Board and planning agreements. Even the right hon. Gentleman the Secretary of State for Industry says that the Labour Party stands for the extension of public ownership. The Chancellor of the Exchequer says "I will offer you proper Socialism when we get a decent majority." It is still the same poison. The Labour programme for 1976 contained a rampant expansion of the public sector. It was described by the Prime Minister as The total sum of all our hopes. The headlines nowadays are dominated by present miseries. They refer to workers fighting the whole country, including every other worker, for larger shares of a static national product. They refer to workers hurting everybody else, including other workers and their families. They tell us about workers hurting other workers as patients, customers and parents of schoolchildren. However, the present miseries that dominate the headlines are not the real problem. They are merely an extra on top of our real problem. Our real problem is low output per head and low adaptability resulting in low real profit and low real pay. Our real problem is high misunderstanding. These are the root causes of our economic decline. These problems will not be cured overnight even by a Conservative Government. I shall explain what will be necessary to cure them, or to try to do so.

Hostility to rising productivity and to co-operation to achieve higher rising productivity is the greatest obstacle to all our aims. Where does hostility to rising productivity and co-operation on the shop floor come from? Why is it much worse in Britain than in other countries? The Labour movement has been propagating anti-business mythology for decades. It has taught that employers are the class enemy. That is taught even now, even when employers are in many instances nationalised. It has taught that what is good for the employer is bad for the wage earner. It has taught that Socialism is good and free enterprise is bad, that nationalisation solves all problems and that employers steal the wealth that is made by the workers.

All that mythology may have been understandable once, but Socialist and trade union philosophers tend still to ignore customers, enterprise and productivity. They have taught workers to resist efficiency, to obstruct management, to insist on overmanning, to resent profit and to ignore customers. I say again that the chickens are coming home to roost.

Most wage earners and their wives no longer believe all that rubbish. However, something of the misunderstanding and hostility lingers. I believe and fear that many activists still believe it all. These beliefs and assumptions make the task of management in many industries nearly impossible. Prosperity for all comes from new invention, good management, a co-operative work force and rising productivity. Rising productivity can come from nowhere else. However, the sources of rising prosperity are obstructed all too frequently.

All too often workers find themselves resisting their own prospect of improvement and fighting an enemy who is on their side. All too often union and Labour Party spokesmen pander to or even believe the rubbish that has been taught. As a result, many wage earners are prisoners of a set of false assumptions that have been taught over decades by the Labour movement. The chickens are coming home to roost.

Wage earners, pensioners, the sick and disabled and the low paid are beginning to pay the real price of the Labour movement's long years of anti-business propaganda and its frightening ignorance of the economic and commercial processes that alone raise the standard of living and reduce poverty.

Many Labour Members on the Benches below the Gangway are false prophets. Many of the Labour Members on the Benches above the Gangway are allies of false prophets. Adversary politics make some sense when there is a shared set of assumptions and values. Adversary politics are necessary when there is not a shared set of assumptions and values. There is nothing to be said for adversary economics. It is adversary economics, economics that deny the real source of a rising standard of living and more jobs, that we get from the Labour movement.

There is nothing like that abroad. There is no lethal alliance between a Labour Party, a Labour Government and a trade union movement that is dominated by Socialist belief and half-beliefs to be found abroad. That is the millstone that is dragging us down. It is no excuse that some of the beliefs are sincerely held. The attitude that I have described infects people's behaviour towards not only the economy but education and law and order.

It is not enough to get the law right. It is not enough to reduce State spending as a proportion of national income. It is not enough to reduce direct taxation, to prune regulations, to slow down legislation and to open up the gap between net benefits and net earnings. All that is indispensable but not enough.

We shall not prosper as a country until the Labour movement grows up and faces the truth as its social democratic colleagues have done in so many countries abroad. That should be done not merely occasionally, as the Prime Minister bravely and rightly did at Blackpool at the 1976 Labour Party conference, but consistently and systematically. It should be brought to the knowledge of constituents whom Labour Members influence.

There is a century of error and illusion to reverse, however sincere and well meant it may be. Britain desperately needs to give up adversary economics, to share and spread understanding of the economic process and to share common ground on how prosperity and jobs are increased. The Conservative Party has made mistakes but it has tried to learn from them. We wish that the Secretary of State and his colleagues would learn, too. They seem to have learnt so little. I ask my right hon. and hon. Friends to support the motion.

5.17 p.m.

The Secretary of State for Industry (Mr. Eric G. Varley)

I beg to move to leave out from "House" to the end of the Question and to add instead thereof: welcomes the general objectives of Her Majesty's Government's industrial strategy and in particular the fostering of growth industries such as micro-electronics, the measures to ease the difficulties of industries like steel, textiles and ship-building which face cyclical and structural problems, and the promotion of industrial ventures on a national and regional basis through the National Enterprise Board and its regional boards, the Scottish Development Agency, the Welsh Development Agency and the Northern Ireland Development Agency.". The motion that was moved by the right hon. Member for Leeds, North-East (Sir K. Joseph) is out of date and aimed at the wrong target. At the beginning of his speech, he was fair. He said that the relative decline in our industrial performance had not taken place recently. That is perfectly true. The measurable decline in our relative industrial performance can be traced precisely over the past 30 years and unquantifiably over the past 100 years. But the right hon. Gentleman then went on disingenuously to suggest that our problems are the result of the Labour Party and the trade unions over the past five years. No one would believe that the right hon. Gentleman was a leading member of a Government which introduced statutory incomes policy, statutory price control and statutory dividend control and that his was the party that introduced the 1972 Industry Act, which provided for the Government to take equity in and make loans to private industry.

I know that the hon. Member for Oswestry (Mr. Biffen), who will wind up for the Opposition, did not actually vote against, but I do not think that he gave full-hearted consent to that measure when it was before the House. No one would believe that it was the party of the right hon. Member for Leeds, North-East that falsified the finances of the nationalised industries. The right hon. Gentleman now tells us that he has learnt all his lessons, that he is now repentant and that everything will come right if only we give him and his right hon. Friends the chance again.

I will not go into the theory of his hon. Friend, the Member for Norfolk, North (Mr. Howell), who always bellyaches about social security benefits and payments. The right hon. Member for Leeds, North-East never used that argument particularly in relation to strikers. I remember well the speeches that he made at the 1972 and 1973 Conservative Party conferences. Let me give one example. The right hon. Gentleman was addressing the 1973 Conservative Party conference about the question of withdrawing social security benefits. [HON. MEMBERS: "He never mentioned it."] No, he never mentioned it. But his hon. Friend the Member for Norfolk, North always mentions and refers to it. What he said is extremely illuminating. He said: We do not start with a clean slate. We have a system. Withdrawing a bone from a dog's mouth has its difficulty, particularly when the dog has a wife and children. Ministers —that is, Conservative Ministers— are still reviewing what the right action is or whether the right action is no action. I think that the right hon. Gentleman was right in 1972 and 1973. He should have a word with some of his hon. Friends whom he now sees fit to praise in the House of Commons.

During this Parliament we have heard the right hon. Gentleman steadily dissociating himself from the policies of the Cabinet of which he was a member. If I understand him correctly, he has now come to the point of condemning those policies outright. The motion that he has moved today is the most accurate description not of this Government's industrial policies but of the policies pursued by the Tory Government of 1970–74. It is true that they were disastrous. It is true that they stifled private enterprise.

The right hon. Member for Sidcup (Mr. Heath) often used to lament—I can hear his cries now—in wounded bafflement how his Government had failed to stimulate investment. That Government destroyed the hope of new and worthwhile jobs. No new industries rose up during that period. The right hon. Member for Leeds, North-East gives the impression that it was an entrepreneurial Government supporting industry, but no new industries rose up during those three years and eight months. No innovatory measures were taken.

At the end of the period of office of the Conservative Government we had slid down the international table of industrial competitiveness, of productivity and of world trade. When they bolted for cover exactly three years and eight months ago, it was against the background of a nation—[Interruption.] When they bolted from office exactly five years ago—I am sorry, after three years and eight months in office—they left a nation that was much more divided than ever before and ever since.

In that period of office, during which the right hon. Gentleman and the right hon. Lady who now leads the Opposition sat in the Cabinet, the only resolute industrial policy that they carried out was to nationalise Rolls-Royce in a single day. That is the only resolute Industrial policy that I can identify during the whole period. To measure against that, we had year-on-year inflation at 13 per cent and rising, and the money supply out of control. Bank notes were being printed by the bucketful. The hon. Member for Oswestry knows that. I was interested to hear the hon. Member on the radio this morning bleating about how money supply under this Government, which has reasonable money control, was getting out of control.

Goodness knows what the hon. Gentleman was saying privately to his right hon. Friends at that time. Five years ago, we could have moved the motion which the right hon. Gentleman has just moved with every justifiable reason and certainly with more reason than he could conceivably muster.

Mr. Nigel Forman (Carshalton)

Before the right hon. Gentleman chokes on his own propaganda about the period from 1970 to 1974, will he recognise what was made clear in the Government's own publication, namely, the recent issue of Social Trends, that while our national productivity fell on a steady decline from 1950 to 1978, the latest year for which we have figures, the only period during which it consistently did as well as that of our main competitors in Western Europe was during the period 1970–73?

Mr. Varley

The hon. Gentleman should know that the reasons given for that achievement were the high levels of investment that took place in the last period of the Labour Government's term of office from 1964 to 1970. That investment fed through into the period that he mentioned.

The Opposition, during their period of office, could never have moved the kind of amendment that I have moved today. During the five years that we have been in office, we have started—that is all I claim—a whole series of policies aimed at achieving what the Conservatives so signally failed to attempt, namely, to reverse the relative decline in Britain's international competitive position and to strengthen and rebuild the economy both of the United Kingdom as a whole and of its constituent countries and regions.

Every measure that we have taken has been bitterly opposed by the Tory Party. At a time of international recession unparalleled for almost half a century, we have taken measures to protect the most vulnerable industries. The Tories have always voted against them. They are measures that affect shipbuilding in England, Scotland and Northern Ireland; textiles in England, Wales, Scotland and Northern Ireland; and steel in England, Scotland and Wales. Every time, on everything that we have done, they have niggled and knocked. They have obstructed and opposed.

Mr. Michael Grylls (Surrey, North-West)

I wish to help the Secretary of State. I think that he must have made a mistake when he said that no new industries started between 1970 and 1974. He cannot have meant that. Surely he realises that new small and medium-sized firms are starting up all the time. He mentioned microprocessing and word processors, but I know firms in those industries that started in the early 1970s. What is the right hon. Gentleman talking about?

Mr. Varley

Of course new companies started up. I shall refer to microprocessors and microelectronics later. I recall that there was a great property boom between 1970 and 1974. Money that ought to have gone into manufacturing industry went into property.

When we have brought measures before the House, the Conservatives have protested that they want to assist jobs and want innovative practices, policies, agencies and instruments, but they have almost always voted against them. They have opposed every measure that we have taken to help the shipbuilding industry. They opposed nationalisation, and if it had not been for nationalisation we should have hardly any shipbuilding industry left by now. The Conservatives opposed the measure that we took to help the industry win orders when there were few shipbuilding orders to be had.

The Conservatives have voted against providing the money that the steel industry needs, even though they know that the primary cause of the industry's difficulties is the world recession in steel which has affected producers all over the world. One has only to see what is happening in the European steel industry. We are tackling the difficulties and the House knows that substantial progress has been made.

We have provided assistance to the textile industry under a number of selective assistance schemes brought forward under the Conservatives' own legislation. All our schemes, that are now being condemned by the right hon. Member for Leeds, North-East, who suggests that they represent unlimited subsidies, have been brought forward under the legislation that he supported as a member of the last Conservative Government. Each time that we have come to the House to ask for money for schemes that create and safeguard jobs, the Tories have opposed them.

It is not just in textiles that we have set up schemes, opposed by the Tories, to stimulate investment. We have made available nearly £50 million in the footwear, clothing and wool textile schemes, which have brought forward investment at a time of serious difficulties in those industries. We have made available £105 million in the drop forging, ferrous and non-ferrous foundries schemes. That has done a great deal for those industries. Industrialists who know about these matters appreciate what we have done. For example, Mr. Kilpatrick, the chairman of the foundries sector working party, is a man of great distinction in the Sheffield steel industry and he has told us that without that assistance our foundry industry would not be competitive in a few years' time. We have helped to provide new equipment in an industry which urgently needed modernisation.

We have made available another £100 million under the electronic components, instrument and automation and microelectronics scheme. As the House will know, the technology of microelectronics is vital to our industrial future, and the Government are determined that we shall catch up with the world leaders.

We have provided £65 million to modernise the machine tools, printing machinery and textile machinery industries and £23 million to the paper and board industry.

At the same time as providing assistance to help some of our most important industries to modernise, we have made available assistance under the accelerated projects scheme and the selective investment scheme. The accelerated projects scheme, which closed in mid-1976, provided £85 million to companies to enable them to bring forward their investment plans.

The successor to the accelerated projects scheme is the selective investment scheme. We have made available a total of £150 million to encourage companies to undertake commercially viable investments which they otherwise would not have undertaken. The scheme has made a positive contribution to strengthening our industrial base.

I know that the energy conservation scheme is welcomed by the Opposition's energy spokesman. Altogether, under these schemes, we have offered assistance of almost £400 million, which has triggered off investment by private manufacturing industry of more than £2,500 million—the sort of investment that the right hon. Member for Sidcup despaired of achieving. That has safeguarded and created many thousands of jobs.

The growth of investment in manufacturing industry in 1977—as the right hon. Member for Leeds, North-East acknowledged, though he ran over it very quickly—was higher in real terms than for three years and, on the basis of estimates confirmed by performance in the first nine months of 1978, the growth of investment last year is estimated to be higher than at any time for seven years. Yet the Opposition motion has the brass neck to say that we have stifled enterprise.

Mr. Robert Adley (Christchurch and Lymington)

Is the right hon. Gentle- man aware that his speech is falling sadly below the level of the speech of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph)? We had hoped that the Secretary of State would at least turn his mind to some of the problems besetting us.

Is the right hon. Gentleman aware that most of the workers at Vosper Thornycroft are sure that they were thoroughly misled by the Minister of State in the extravagant claims that he made about nationalisation? Would the Secretary of State like to come with me to Southampton, on a date convenient to him, to talk to some of the workers—not the union leaders—whom he probably never meets, so that they can tell him what they think of nationalisation?

Mr. Varley

I would not care to go anywhere with the hon. Gentleman. If I need to go to Vosper Thornycroft, I shall go and I shall inform the hon. Gentleman if it is in his constituency. My right hon. Friend the Minister of State is going to Vosper Thornycroft and no doubt the hon. Gentleman will ensure that he makes whatever representations he wishes.

If the shipbuilding industry had not been nationalised, it would have collapsed by now. I would be coming to the Dispatch Box month after month asking whether the House wanted unco-ordinated rescues. When we announced the decision about the ship repair yard at Falmouth, Tory after Tory asked us to save that yard, which is losing about £3½ million a year.

Why does the right hon. Member for Leeds, North-East not have a word with his hon. Friend the Member for Falmouth and Camborne (Mr. Mudd), who, I bet, wants to speak in the debate and ask the Government to save the Falmouth ship repair yard? The Conservatives should sort these matters out and the right hon. Member for Leeds, North-East should not misrepresent our policies as he does.

Last month we debated the Second Reading of the Industry Bill, which increases the funding of the three development agencies. We are trying to stimulate enterprise in the public and the private sectors. That is why we established the Scottish Development Agency, the Welsh Development Agency and the Northern Ireland Development Agency, together with the National Enterprise Board, which operates throughout the United Kingdom. The limit in Northern Ireland has been increased separately by an order moved by my right hon. Friend a few weeks ago.

During our debate on the Industry Bill there were weasel words from the Opposition spokesmen, who tried to pretend that they meant no harm to the NEB. Their commitment to abolish it is still in their documents, such as "The Right Approach to the Economy", and it depends which official spokesman one follows whether they intend that the NEB should stimulate enterprise, be abolished completely or be a repository for what they describe as lame ducks. They are not at all clear about it.

The right hon. Member for Leeds, North-East pretended that the Conservatives meant no harm to the NEB. It seems that they have learnt to love the Scottish and Welsh Development Agencies, though they voted against them when they were introduced. They have crabbed and criticised, and when the crunch comes they vote against them all—just as they voted against the Second Reading of the Industry Bill. Yet these agencies are accepted by objective opinion as indispensable instruments for industrial advance and innovation.

In Northern Ireland 2,000 workers depend on the Northern Ireland Development Agency. In Wales 3,000 new jobs have been created and many more jobs safeguarded by the Welsh Development Agency and by the investment that has taken place in firms in Wales. In the Principality last year more than 100 Government factories were let to private industry. That was a record.

In Scotland there are 13,000 jobs directly dependent on the Scottish Development Agency and throughout the whole of the United Kingdom 300,000 jobs exist within National Enterprise Board companies. It is these agencies and the Government's other industrial instruments which are playing their part in fostering the industries of the future.

The right hon. Member for Leeds, North-East mention INMOS. It is true that the NEB has launched this—Britain's publicly-owned venture in standard silicon chips—

Sir Keith Joseph

I did not mention it.

Mr. Varley

The right hon. Member should have mentioned it. I am going to mention it. Actually, the right hon. Gentleman sent me a letter in which he said: You must be well aware that I am sceptical as to whether it is really wise to try to leapfrog into the 64K RAM chip. Many informed people do not consider it prudent to attempt, at this stage, to catch up the Japanese and Americans in volume production of general purpose computer chips without multinational backing. Very enterprising, What a commentary. Here is a leading member of the Conservative Party—the party that wants to take over the reins of Government—suggesting that we leave silicon chips to the Japanese and the Americans. Again, of course, there is public money backing the GEC-Fairchild silicon chips venture, which will be established on Merseyside—

Mr. Norman Lamont (Kingston upon Thames)

Perhaps the reason why my right hon. Friend thought it prudent not to go into the 64K chip was that these are already being manufactured in this country at the rate of 600,000 a month.

Mr. Varley

The right hon. Gentleman wrote to me saying that he was very upset that the NEB was going into this new venture. He said that it was very doubtful whether we should be in this. The implication was that we should leave it to the Japanese and the Americans.

Mr. Doug Hoyle (Nelson and Colne)

My right hon. Friend knows that the silicon chips we are producing are specialised chips. The NEB has gone into the mass production type of silicon chip. Without the NEB's intervention, Weinstock himself would not have gone into that field. That is the innovation of the NEB, and full tribute should be paid to it.

Mr. Varley

The only tribute that the NEB is likely to get for its innovative processes is from the Government side of the House and perhaps from one or two exceptions on the Opposition Benches. Do the Opposition really believe that we should not back ventures of this kind? I agree that it is taxpayers' money, but it is not unusual for taxpayers' money to be used by Conservative Governments. For example, does the right hon. Gentleman think that we should not use taxpayers' money for the GEC-Fairchild venture, which will bring jobs to Merseyside? Of course the Opposition believe we should back this, but they are not prepared to say so and they niggle and knock at every opportunity.

I turn to British Aerospace. Here again this industry has been attacked, derided and obstructed by the Conservatives. British Aerospace has saved Scottish Aviation and given a new lease of life to Jetstream. British Aerospace has made it possible for this country to launch the 146, with all that that means for Hatfield and Filton. British Aerospace has made it possible for Britain to re-enter the international big league in civil aircraft manufacture by rejoining Airbus Industrie, with all that that means for jobs in North Wales. Then there is the SD 3–30, the civil aircraft launched by Short Brothers and Harland in Northern Ireland. This record is not just confined to the public sector.

The right hon. Member for Leeds, North-East acknowledged that last year overall investment had not been too bad, but he said that generally the picture was depressing. What did he have to say about chemicals, for example? Last year, investment in chemicals showed a real increase of 19 per cent. over the previous year. That was done under the Labour Government. Pretty hard-nosed business men at that time decided that they wanted to invest.

We have had successes as well in new mixed economy companies in which private and public enterprise are joined. An example of this is International Computers Ltd., which is now growing into a world leader with profits of almost £40 million last year. That was an increase of 24 per cent. on the previous year. The company's exports total almost £100 million and the turnover is more than £500 million—more than half of that earned overseas. This record shows what can be done in partnership between private investors and the NEB. The NEB is now the largest single shareholder in ICL.

Several Hon. Members

rose—

Mr. Varley

No, I will not give way. The debate is already truncated, and many hon. Members want to speak. I have gone on too long already. I shall not give way again.

These are success stories that I have just outlined—success stories under a Labour Government. They are success stories which the Tory Opposition try to pretend never happened in the crude and untruthful caricature which they draw of British industry today.

Of course we have troubles, difficulties and industrial problems. These difficulties are not least in the local government system, which the Conservatives created The right hon. Member for Worcester (Mr. Walker) had a great deal to do with that. We have difficulties and troubles in the National Health Service, the structure of which is the responsibility of the right hon. Member for Leeds, North-East. He is the guilty and culpable progenitor of that structure. Talk about Satan casting out sin. Here, today, the right hon. Gentleman, the arch-creator of unwieldy bureaucracy, attacks us for stifling enterprise—and that after what he did to the National Health Service. The mind boggles at the havoc that he would create if he were ever let loose on British industry.

The Conservatives have no policies that have not been tried before and failed. They are now offering this magic cure of taxation cuts. That was tried by Lord Barber, and it led to the dramatic about-turn and the Industry Act of 1972. Napoleon's retreat from Moscow left fewer bloodstained footprints in the snow than Heath's retreat from Selsdon.

The British people want constructive policies, painstaking and undramatic, but policies with the prospect of getting results. It is because we are responding to those aspirations that I feel justified in calling upon the House to vote for our amendment tonight.

5.49 p.m.

Mr. David Mudd (Falmouth and Camborne)

I must congratulate the Secretary of State on a masterly performance. Indeed, as I listened to him unleashing his soul of many of the things that he had to say, I found myself believing absolutely that he believed in what he was saying—other than in the moments when I caught his impish smile and realised that it was another superior performance on his part.

What is important is not what the right hon. Gentleman had to say but what he studiously avoided saying. I refer specifically to a challenge thrown down by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), who suggested that jobs in the public sector were not all that secure under a Labour Government. Certainly there was no response to that. My right hon. Friend raised the question of the public announcement of the corporate strategy of British Shipbuilders, and again there was no response.

The Secretary of State raised the matter of the ship repair industry. That was very significant, first, because it was not in the amendment, and, secondly, because it was certainly not in the text of his prepared brief. I suspect that he would not have adverted to this issue had it not been for the question put by my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) and the fact that I caught the eye of the Secretary of State across the Table earlier in the debate.

I should like, briefly, to return to some of the issues that arose during a rather heated and excited exchange on a private notice question last Thursday reported at columns 557 to 560 of the Official Report. From that it may well have seemed that many of my colleagues were upset that the hon. Member for Truro (Mr. Penhaligon) dared to raise a matter affecting my constituency. I have no objection whatsoever to any Member of Parliament helpfully raising any matter in the interests of my constituents. I was certainly in no way put out of joint or upset by the hon. Member for Truro raising this matter. However, let me qualify that by saying that had the hon. Gentleman asked my permission, or consulted me on this matter, I should have told him that at the very moment he was raising this private notice question I had in my pocket a letter from British Shipbuilders which, among other things, said this in relation to the future of Falmouth docks: We do not expect to make an announcement until the end of February or the beginning of March. I am sure therefore that you will appreciate the importance of treating this letter in the utmost confidence. Premature release of this information would be extremely damaging to the Corporation and to the prospects of the workforce of finding alternative employment. That is why I resent the action taken by the hon. Member for Truro in raising this matter.

I shall refer to two other points that I raised during that particular session on the private notice question. I sought to ask the Minister of State if he would confirm that the cessation of ship repair facilities at Falmouth was with Government approval. I knew it to be so, he knew it to be so, but I could not get him to show the courage to admit it. I hope that tonight the Government will admit that the closure of the ship repair facility could not go ahead without Government approval. Equally, I hope that the Government will admit that if Government approval is withdrawn or rescinded, similarly the closure must be withdrawn or rescinded.

The second thing that I asked the right hon. Gentleman to clarify on Thursday afternoon was again something that he and I knew to be a fact, namely, that Falmouth docks was on the original ship repair list for nationalisation but was deleted when that section of the Bill was withdrawn, and that British Shipbuilders then set out to buy Falmouth docks into the State network.

These were perfectly reasonable questions, and there was no reason whatsoever for the right hon. Gentleman not to give positive replies. Perhaps he was fearful about how I would be developing my point of attack, because his subsequent reply suggested that at the time British Shipbuilders bought Falmouth docks they were already known to be losing a great deal of money and, indeed, had a record of sustained and substantial losses.

What an amazing thing it is that a Labour Government, who set up a nationalised corporation in the interests of good public spending and social employment, then go out trotting merrily to buy what they know is a white elephant. The Government cannot have it both ways. Either they did their research on the yard and knew they were buying a bad deal with public money, or they failed to do their statistical homework.

When British Shipbuilders actually bought the yard voluntarily in 1977, was it not aware of the prospect that, perhaps with reshaping and restructuring, it would be possible for the Falmouth ship repair activities to return to profitability within the foreseeable future? If that is so, and if the losses of the pre-nationalisation decade were as bad as had been suggested, we do not have a criticism of the running of Falmouth docks under private enterprise but, indeed, a vindication of a system in which private enterprise employers will run a yard at a loss to provide social employment for those who have little alternative employment prospects. Therefore, once again the Government cannot have it both ways.

If we accept that the former owners were running the yard to provide social employment in an area of little employment activity, surely we are entitled to ask whether a Socialist Government have the same social obligation in exactly the same area when unemployment has already increased.

I think that the Secretary of State has anticipated that I am going to say this: cannot the Government, at this stage, step in and attempt to influence British Shipbuilders to change its mind? I do not do that because I want to see an open-ended commitment of good money being thrown after bad. I think that it is accepted that the actual cost of closing Falmouth docks—one thinks of the loss of facilities and the redundancy payments, which would be very substantial on a work force of 1,100 men, many of whom have been there all their working lives—would be about £51½ million or £6 million over the first 12-month period. Yet on British Shipbuilders' estimates it would cost only £5 million to keep the place open and give it another 12 months to see how it works out. Therefore, I hope very much that, even at this late stage, we can have a close appraisal of the costings and the actual decision to end this facility.

I must criticise the seeming unbelievable speed with which Falmouth docks are apparently being axed. Are there perhaps two reasons here, the first being that because of the crisis in the British ship repair industry it is regarded as logical and fair that Falmouth's work load should be reallocated to those shipyards remaining in operation? If that is a fact, it is an honourable position and one would not criticise it provided that somebody had the courage to stand up and say that it is so. That is all we ask. The second point—and this is more fundamental—is that of course we know that the Government are keeping their corporate strategy for the shipbuilding and ship repairing industries under wraps.

In Falmouth, which has a record of good industrial relations and is not a militant yard, the feeling must exist that the closure is being brought about there literally to test the wind to see how far British Shipbuilders can go in accelerating redundancies and closures in other parts of Britain. How else can we explain a situation where a yard—which according to the Government's claim had a massive record of sustained losses—is bought by British Shipbuilders in August of one year and the next September it is apparently telling the shipyard negotiating committee of trade unions that it is probably going to close it anyway? Miraculously, within 15 months, British Shipbuilders decides that it has wasted its money and it is time to pull out.

I shall remind the Minister of State of something that he said on 7 December 1976 when replying to the Points that I made on security of employment at Falmouth docks. He said: The industrial case for nationalising ship repairing is that the badly-needed improvements in investment, productivity and industrial relations are unlikely to come about otherwise."—[Official Report, 7 December 1976; Vol. 922, c. 317.] What an amazing forward projection for the right hon. Gentleman, who normally sees with great clarity the ultimate projection and realisation of all his beliefs.

What investment actually took place in Falmouth docks under British Shipbuilders during the time it was in its keeping? We have the classic situation of a crane that miraculously caught fire in the early part of September. That crane is still not back in action. It is a crane that is needed for the productivity of the yard, yet it is still out of action. Apparently the spare parts are not available to repair it. One wonders whether it is the will that is missing rather than the spare parts. Also, one of our dry docks has been out of action because the dock gates have not been repaired. What investment has gone into Falmouth docks to give them the opportunity to provide the productivity and to move towards the profitability that British Shipbuilders wants?

When we talk about industrial relations, we are very proud of the fact that at Falmouth there has not been a strike of any sort for the last three years. Indeed, the only industrial problems have been unofficial action against the Government's own policy. Therefore, if indeed there has been a downturn in industrial relations, it has been that aspect of industrial relations directly attributable to the Government themselves.

Therefore, I ask the Minister of State to say just a few words, when he winds up the debate, on two specific topics. In view of the reported interest of a private enterprise operator in taking on Falmouth docks, will the Department of Industry at least be prepared to meet him? I ask for no greater commitment than that the Department is prepared to meet him and at least to look through his figures.

The second thing I ask is that since there is a private enterprise interest—indeed, a private enterprise interest in bailing out the State is quite a novelty these days—and since there is an admission on the part of British Shipbuilders that certainly 15 months ago it thought that Falmouth could move into a level of profitability, will the Department get together with British Shipbuilders and its experts to see whether even now there is a possibility of reaching a productivity deal?

The Minister of State, Department of Industry (Mr. Alan Williams)

As the Minister responsible for regional aspects of this situation, I can assure the hon. Member that I am always willing to see anyone who brings forward a project that might save jobs in assisted areas.

Mr. Mudd

I am very grateful indeed to the right hon. Gentleman, whom, I should say in fairness, I have always found more than willing to discuss anything that would be of help to the people of Cornwall. I appreciate his offer on this occasion.

I conclude on two further references to words already on record. On the first, I say why I think the present Government have a specific responsibility to do something to find a solution on Falmouth even now. I quote from the October 1974 general election manifesto of the Labour Party in Falmouth. I shall not actually embarrass right hon. Members on the Government Front Bench by suggesting which of their colleagues were heard to speak in support of the campaign in the constituency. However, the words upon which I draw are these rather beautiful and memorable ones: Cornwall needs more employment and existing jobs must be safeguarded. This is one of the reasons for including the ship repairing activities of Falmouth in the strictly defined extensions of public ownership. That promise apparently was worth 18,000 votes. I doubt whether today it is worth the scrap paper on which it has been rejected.

The second set of words, with which I conclude my remarks, comes from the Official Report of our proceedings on 7 December 1976: Personally I do not care who owns Falmouth Docks at the end of the day. The only thing that matters to me and to the people who work there is that there should be 1,500 reasonably secure jobs and a sustained and maintained programme of investment, and that its strategic importance to NATO and European shipping should not be undermined, diminished or lost to world shipping, the people of Britain or those who work there."—[Official Report, 7 December 1976; Vol. 922, c. 293–4.] With all due modesty, those were my words. Today I care not a fig who owns the yard. What I care about are 1,100 people who are now within 89 days of industrial devastation and desolation.

6.3 p.m.

Mr. Douglas Jay (Battersea, North)

It is rather fascinating that the first speech which we have from the Tory Back Benches today is an appeal to the Government to save a ship repair yard in Falmouth. The speech of the hon. Member for Falmouth and Camborne (Mr. Mudd) seems to have so embarrassed the right hon. Member for Leeds, North-East (Sir K. Joseph) that he had to leave the Chamber before his hon. Friend had finished speaking.

I did not disagree with everything said by the right hon. Member for Leeds, North-East today. However, having listened to him, I shudder to think what would be the effect of his industrial policy on the shipbuilding industry, the National Enterprise Board, British Leyland, Rolls-Royce and large parts of the motor, steel and aircraft industries in Britain. Apparently we are to have subsidies and public investment withdrawn from them and, incidentally, from the Scottish Development Agency and the Welsh Development Agency as well. I think that the House will very soon understand what that would mean.

I was also rather surprised that the right hon. Gentleman said so little this afternoon about pay policy. I should have thought that it needs only a very casual look at British industry today to see that pay policy is one of the dominant issues, if not the dominant issue, at the present time. I note that the CBI pamphlet issued today says almost exactly the same thing. Therefore, I shall try to remedy the omission of the right hon. Gentleman to say anything on that subject.

We in the Western world are now allowing a monetary illusion or monetary disorder—although it is a different one from that of the 1930s—to obstruct the production of real wealth and employment. Since I believe that there is a great deal of genuine misunderstanding about this, I shall accept the right hon. Gentleman's invitation to abandon what he called adversary economics this afternoon.I am not in favour of adversary economics. At his invitation, I shall indulge for a very few minutes in what I regard as a little serious economics, rather than politics.

What we are up against in the 1970s is this hard economic fact. Since the total value of all goods and services sold in any community must be equal to the total of the money that is spent on them, it follows that if the total money demand rises faster than the supply of real goods and services available, prices generally must rise. That is simply arithmetic, and I think that no one will disagree with it.

Secondly, since full employment, which is what I care about in this issue, can be maintained only if the total money demand covers all costs, including some reasonable profits, it also follows that if money costs rise faster than output, either demand must be correspondingly increased—in which case prices will rise—or, if it is not so increased, unemployment must result—or a little of both of them put together.

That is how "stagflation" comes upon us. It began here in 1974 and 1975 and in most of the Western world in the 1970s. One mistake of the right hon. Member for Leeds, North-East today was that he never noted that a great many of the Western industrial economies today are in this respect suffering from exactly the same difficulties as we are. Even in the United States prices are rising at the same rate today and the rate of unemployment is about the same.

It is true that the oil cartel in 1974–75 intensified the process, but if one looks at the figures one sees that it had started several years earlier. It is an extremely difficult situation to get out of once one has slipped into it.

I come to the heart of the problem from the point of view of policy. The process imposes this inescapable dilemma on those, whoever they are, of whatever party, who are trying to manage the economy. If costs are rising faster than output, the authorities must either increase demand equally fast, in which case price inflation follows—and in the wake of price inflation, because the value of money is depreciating, we have higher interest rates and falling investment or if money demand is not increased at roughly the same rate, each pay increase simply increases unemployment.

This is a new phenomenon, but it is the prevailing one and I think that many people have not realised that this is what is going on. It continued here in 1976 and 1977. I believe that it was only the successful income restraint which we had in 1977 and 1978 which at least began to reduce unemployment last year.

The right hon. Member for Leeds, North-East respects professors. If he and other hon. Members are not convinced by my very summary analysis, I advise them to read Professor Meade's lecture that was published in The Listener on 14 December. That lecture is an incomparably clear explanation of the economics of this process.

In the 1930s, money demand was allowed to fall below the level of costs and profits. There are still people who believe that is happening today. In the 1940s, the 1950s and the 1960s, unemployment was largely cured because sufficient demand was created without generating excessive rises in labour and other costs. The right hon. Gentleman, incidentally, left out of his gloomy survey a reminder that there have been 25 years of full employment and considerable growth in those years.

I believe that what upset that success in the 1970s was the uprush of money costs throughout the Western world, caused mainly by the greater efficiency, power and knowledge of organised groups of wage and salary earners in almost all the developed economies. As a result, industry in the 1970s has suffered not from demand inflation but from cost inflation. If it were demand inflation, profits would be booming, whereas on any evidence they are now at pitifully low levels.

The error of the crude monetarists—I do not know whether I include the hon. Member for Oswestry (Mr. Biffen) in that group; certainly I should not describe his speeches as crude—is to mistake cost inflation for demand inflation and then propose demand disinflation as a cure. That route is disastrous. The combination of inflated costs and deflated demand leads to recession, prolonged unemployment and low growth. Any advocate of that policy should reflect seriously on the consequences.

Having slipped into stagflation, there are therefore three possible courses open to us. The first is to stoke up money demand—still recommended by some people who do not fully realise the consequences—without restraining costs and thereby to follow the precedent of the South American countries. That would probably lead to a 50 per cent. a year rise in prices after three or four years. That is economically possible. The main reason why I reject it is that I believe the British public would not stand for it.

The second course is the remedy of the crude monetarists, which I might describe as free collective cost inflation, combined with no increase in demand. If this were pursued, British industry would probably be paralysed within 10 years and the nation drastically weakened as a result.

The third alternative is to cure the source of the whole disease—cost inflation due to excessive rises in money incomes. By "excessive", I mean a greater rate than any possible increase in production. In plain English, that means an incomes policy and the restraint of free collective bargaining, which Professor Meade rather aptly calls "uncontrolled monopoly bargaining". My conclusion is that only through an incomes policy can we return to full employment and growth without at the same time accelerating price inflation.

Mr. Hal Miller (Bromsgrove and Red-ditch)

I am following the arguments of the right hon. Gentleman closely. Perhaps he will move on in a later part of his speech to consider why output cannot be increased as one way out of the difficulty that he has posed.

Mr. Jay

Of course, output should be increased to the limit of our physical capacity. I am trying to analyse how that can be done without generating uncontrollable price inflation. I reach the reluctant conclusion that we have to return to an incomes policy. I hate incomes policies, and we have all learnt that they are exceedingly difficult to manage. But it is not impossible to overcome the difficulties. It was done with growing success by the National Board for Prices and Incomes in the late 1960s. Incidentally, it was also shown to be possible in the earlier Cripps years. The prime mistake made by both parties was to abolish too hastily the successful institutions and policies of some years ago.

For those reasons, I applaud the Government's efforts to return to an effective incomes policy in agreement with the unions. I am even more encouraged to find that the recently published pamphlet "A Better Way", which has been signed by a group of well-known trade unionists, comes to much the same conclusions as Professor Meade, whose lecture I have already quoted.

A practical incomes policy must be permanent and must contain two elements. First—here I come to the question asked by the hon. Member for Bromsgrove and Redditch (Mr. Miller)—there has to be an estimate of the physical growth of the output possible in any given year and consequently the rise in money incomes that can be absorbed without inflation restarting. That is a national task for Government and Parliament, to be agreed if possible with employees' and employers' representatives. The second element, which I strongly urge upon the Government, is to establish an authority outside the Government to make final independent rulings on pay claims from all sections of the community that cannot be settled by ordinary bilateral bargaining.

The last month and, indeed, the last year have proved that neither the Government nor Parliament are suitable authorities for settling pay claims. The House might as well try to take over the business of the courts as to handle disputed pay claims. Any attempt to reach political decisions on these issues turns one pay settlement after another into a political battle, and that is damaging to the nation.

The trade union group which signed the pamphlet "A Better Way" proposes a new independent agency to advise on the application of the policy to pay prices, profits and dividends. Professor Meade argues for something similar.

The name does not matter very much, but the essentials are these. First, let us have no backing in the criminal law for any future policy of this kind. We all know that, whatever else is done, people cannot be sent to prison for going on strike against a pay award.

Secondly, I believe that the job of such an authority should be to take all relevant factors into account—economic needs and policy first of all—but, in addition, low pay, comparability, differentials and relativities. Such an authority should assume that its main job is not social justice. I believe that should largely be left to the Budget, to taxes and to social services. The prime job of the authority should be to get us back to full employment and growth. After investigation, such an authority should make a judgment and preferably give no reasons for it. For myself, I should not object to using the civil law in the last resort or, if practical, the powers of taxation to back the ruling of such an independent authority if it were set up by Parliament.

It can be argued that such a system, like many others, does not guarantee success. I agree that it cannot guarantee success. If powerful groups are determined to strike not merely against their employers but against national policy, against Parliament and against the most impartial authority that we can get, nothing can stop them; and it will be a poor look-out for this country. But a system such as those described might, in the light of our experience, be able to work. Therefore, it is worth trying. A non-statutory national board for prices and incomes, or whatever we may call it, is about the only course which we have not yet fully tried. I urge the Govern- ment, in agreement with both sides of industry, to press on resolutely towards these objectives and, if possible, to bring us back to sanity in pay settlement.

6.20 p.m.

Mr. Michael McNair-Wilson (Newbury)

As we are all aware, the debate is taking place against a background of widespread industrial disputes which, in the past two or three months, have embraced most of the public services, the car industry, the tanker drivers and, more recently, the lorry drivers.

It is clear from those disputes that the Government may decide what they believe can be afforded by way of wage settlements but that working people organised within unions will not necessarily accept that economic judgment and that, no matter how strong the ministerial warnings or exhortations, they are prepared to ignore those warnings to a point where they get the wages that they believe they should have according to the economic situation in which they find themselves.

Whether it was ever reasonable for the Government to expect working people to settle for 5 per cent. when the going rate of inflation, by their own admission, was 8 per cent. is anybody's guess. I should have thought that it was psychologically inept. It is certainly true that this Government's experiences from the autumn of 1978 to the winter of 1979 and the experiences of the Conservative Administration from the autumn of 1973 to the winter of 1974 are remarkably similar.

If nothing else, the present situation underlines the fact that Labour Governments are no more successful than Conservative Governments in persuading the trade unions to accept their economic judgment. Therefore, the concept that Labour gets on with the unions and the Conservatives do not is now invalid.

I start with that introduction because I think that all hon. Members are now aware that some new initiative is required for managing the wages of the nation. If I do not follow exactly the argument presented by the right hon. Member for Battersea, North (Mr. Jay), I share some of his views and hope to enlarge on that measure of agreement in the course of my speech.

I think that any suggestion that State intervention in industry has helped either in wage bargaining or in creating renewed prosperity in our industry is wholly mistaken. I was interested to hear the Secretary of State claim some success from the Aircraft and Shipbuilding Industries Act. He said that some of those shipbuilding companies that have been nationalised would otherwise have gone bust. I think that is true. But, from what he said, and from the corporate plan which has been leaked, it appears that that may be the case anyway. It is sad that some of the successful companies—for example, Austin & Pickers-gill Ltd.—are now less successful under State control.

To hear the Secretary of State talk about British Aerospace and the HS146. as though that were the airliner that the world wanted, was plain humbug. I ask whoever is to wind up the debate to tell me which airline has placed a single order for that aircraft. Will he also reflect that the present success of British Aerospace is due to the fact that its order book is made up as to 60 per cent. defence contracts and only 40 per cent. civil aviation contracts? To say, as did the Secretary of State, that British Aerospace has rejoined the Airbus consortium, as though that were a great success when the previous Labour Government took us out of that consortium, is to stand the argument upon its head.

I suggest that if we want increased and renewed prosperity from British industry, we are more likely to achieve that longed-for goal by taking Government intervention out of industry and placing emphasis on encouraging the private sector to be as profitable and expansionist as possible.

I still hold to the view—I hope that we all do—that "Britain can make it", whatever "it" may be. But, alas, today, as we all know, we have to add seven words to that slogan—" Britain can make it if the trade unions will let it". I want to make that the substance of my remarks.

Last Friday I had the good fortune to attend a luncheon in Reading given by a group of industrialists who have their works or head offices within Berkshire. They covered a wide spectrum of industries—electronics, petroleum, construction, the car industry and packaging. Within that group of industrialists one heard the expression of a broad spectrum of British industry about the current industrial situation.

What those industrialists told us was not encouraging. They related their remarks almost exclusively to the lorry drivers' strike. They told us that any suggestion that, because the strike was over, its damage was finished was far from the truth. Indeed, in their view there would be long-term effects on our exports for many years to come. But, even in the short run, they said that it would be two to three months before industry could get back into its stride. They talked about the need to rebuild the stocks without which industry could not have survived.

I come back to the question of lost orders. They said that many of our export orders that they were hoping to meet had been won in fierce competition with other nations and that once those orders were lost they would not come back again. They said that there was now a lack of confidence in Europe and elsewhere in the ability of British companies ever to meet delivery dates or to achieve what any reasonable trading organisation should expect.

Mr. Robin Corbett (Hemel Hempstead)

Rubbish.

Mr. McNair-Wilson

The hon. Gentleman says "Rubbish", but he will know as well as I do that not many months ago the Secretary of State for Industry told us that many of the foreign cars which are now on our roads were the result of English people having gone to buy British cars, not having been able to get them, and therefore buying foreign cars instead.

Mr. Corbett

Will the hon. Gentleman come to Hemel Hempstead, and to Hertfordshire in general, where I shall introduce him to the Hertfordshire chamber of commerce and the Dacorum Industrial Association, involving firms large and small, British and multinational, whose managements would deny every word put forward by the hon. Gentleman about the unreliability of British goods? Those concerns in Hertfordshire have bulging order books, and one firm in my constituency sells 93 per cent. of its goods abroad.

Mr. McNair-Wilson

I am glad to hear that that is the position in Hertfordshire. I only wish that had been the experience of the industrialists to whom I spoke at the lunch to which I referred. They took no pleasure in describing the position. It is not for the hon. Gentleman to suggest that they chose to tell me a tissue of untruths. I do not believe that was the case.

I wish to complete the main points of the comments of those industrialists. For example, they wondered whether the unions which had settled for around 5 per cent. would now consider that, as everybody else was getting away with 10, 16 or 22 per cent., they should come back for a second bite of the cherry. I feel that that may happen. If it does, what will happen to costs in industry?

Lastly, the industrialists touched on the attitude of the trade unions throughout the lorry drivers' strike. Those industrialists, who represent some of the largest companies in this country, cannot see why, when they are not at issue with a union, their company should be brought to a standstill by that strange creation known as secondary picketing. They wonder why their employees should be put out of a job and why they should have to lose export orders which have been won so dearly. They wonder why they should not be allowed to draw their stocks from the docks and send their goods abroad to meet delivery dates. They also wonder why the Government since 1974 should have created legislation which has placed the emphasis on providing more safeguards for trade unions and their members, and why they have done so little to examine the overall position of industry in order to give a fair balance of protection.

Let me try to sum up this point. Why should a company which discharges an employee be expected, under the Employment Protection Act, to compensate that employee when that same company, if prevented from going about its business, although it has no dispute with a trade union, receives no compensation for the damage to its profitability, its future and the future of its employees? Why should not we consider some kind of indemnity under which such a company can sue a trade union for loss of business and make that trade union explain why it believes that secondary picketing was justified?

My second point relates to the social contract. We heard the Prime Minister in the House this afternoon expounding on the virtues of the social contract, as if the trade unions were a downtrodden organisation which desperately needed Government assistance and help. But anybody who remembers the period of February 1974 will appreciate that the trade unions are far from downtrodden. If the social contract involves simply the Labour Government and the trade unions, that will not do. But if we are serious about putting British industry on its feet and making it expansionist and prosperous, if we are serious about national unity and getting a measure of agreement, surely the time has come for a new social contract—I almost referred to the concordat about which we shall be hearing tomorrow—to be drawn up by Government, trade unions and industry and indeed by Parliament.

That sentiment is well set out in the CBI leaflet "Pay: the choice ahead". That document says on page 14, under the heading "A national economic forum": An important feature of the CBI's recent statements on pay, and one that has aroused considerable interest, is the proposed national economic forum with links into Parliament. Unlike most of her successful competitors Britain has no focal point around which expectations, and so bargaining, can be influenced. We must meet this need. So say all of us. I believe that such a national approach could regenerate British industry as it has not been regenerated despite all the claims and hopes of the Labour Government.

The feeling around the luncheon table at Reading among the industrialists was that the balance involving trade unions, management and industry was now unfair. It was felt that those who seek to run businesses are discriminated against in favour of those who work on the shop floor, although both are involved in creating the same prosperity and wealth. When those industrialists said that they did not expect the economy to expand this year, that they would be taking a cautious view of their future investment prospects, that they would be wondering about cutbacks and possible factory closures, I believe that what they were really saying was that they did not believe that the Labour Government understood the problems of industry or are interested in helping the private sector to overcome its difficulties.

When we know that industrial output has risen by only 1 per cent. in five years, and when we appreciate that output in manufacturing industry has dropped by 3.7 per cent. since the third quarter of 1973, it is evident that the words of those industrialists are borne out. Unless we recognise that industry is the wealth-maker upon which all else depends—our social services and our ability to give money to help companies that need assistance—we shall miss the whole advantage of making that sector successful.

However, there is another point to he considered. Does anybody seriously doubt that if industry had expanded in the last five years in line with the industries of so many other Western European countries, we would have had real wealth with which to pay real wages, and with which to create a greater real prosperity in our nation? It is the failure to achieve that real prosperity which is at the root of our inflationary problems. Until we tackle it, I see little or no hope for our nation.

6.37 p.m.

Mr. Roy Hughes (Newport)

I shall not take up the theme of the speech of the hon. Member for Newbury (Mr. McNair-Wilson), but I was fascinated to hear the remarks of the right hon. Member for Leeds, North-East (Sir K. Joseph). This afternoon one could hardly recognise the man who reorganised our National Health Service and created so much additional bureaucracy, and consequently brought about a vast increase in public expenditure.

The right hon. Gentleman spoke of safe jobs in our public industries. He appeared to be living in cloud-cuckooland. Has nobody told him what happened on the railways, in which thousands of jobs have been lost? The same argument applies to the coal mines, the steel industry and many other public sectors of industry. Many people who have been made redundant have been sucked into other sections of public service. To some extent this can be attributed to the lack of entrepreneurial skills in the private sector of British industry. The money that should have been invested in British manufacturing industry was instead invested in property speculation—and a great deal of it in South Africa and other countries.

The right hon. Member for Leeds, North-East was also a member of the Government who reorganised local government. Thousands upon thousands of people were recruited into local government as a result—more than had existed previously. The principal trade union involved in local government is now insisting that not one job shall be lost. But who did it in the first place? The right hon. Gentleman and his colleagues. In that sense I agree with him when he said that the chickens are coming home to roost.

There is much that can be commended in the Government's amendment, which is essentially constructive in character. Nevertheless, I would be the first to point out that we must not lose sight of the fact that nearly 1.5 million people are still permanently out of work and that unemployment has become something of a social problem because it affects so many young people. Here again, I commend the Government for introducing some imaginative schemes to take our young people quite literally off the streets.

We in Wales rely to some extent on the steel industry. The Government have helped in this regard. At present, there is the case of the Shotton works. Of course, had the Conservative Party won the 1974 election, there would no longer be a Shotton works. That is a fact. In fact, one of the Conservative Members for Flint actually voted for the ending of steel-making there. Nevertheless, this great works is still under threat, and it is my belief that it should be saved.

Sir Anthony Meyer (Flint, West)

I am sorry to have missed the early part of the hon. Gentleman's speech, but I came into the Chamber as soon as I saw his name in lights. He is apparently referring to me. Perhaps he will explain why he voted against the plan for expanding production at Port Talbot.

Mr. Hughes

We are not talking about Port Talbot at the present time. But only in the past week or two the Government have authorised a £90 million investment programme for Port. Talbot. I certainly support that. Another steelworks investment that I want to bring to the Government's attention relates to the Orb works. Here I am referring to my own constituency. A decision is pending on a major investment there. The Minister will be aware that the old Electrical Steels business is at present in jeopardy as a result of the delay in reaching a decision. I hope that we shall have one soon.

It is my belief that changes in the Government's economic policy are called for. For instance, for a long time I have felt that there was a need to curb imports, particularly of manufactured goods. One noticed the private initiative that has been taken by the British Steel Corporation, which has urged all its employees to buy British cars. Ideals such as that need Government encouragement, and much more besides. At present, of course, the proceeds of North Sea oil are paying for the import of manufactured goods, but that state of affairs cannot go on indefinitely.

In recent weeks there have been many forecasts about disruption to British industry as a result of strikes. I have found nauseating the continuous harping by the Conservative Party on the effects of strikes. It seems to me that the Conservative Party has not been in the least bit interested in settling these disputes; it has merely been interested in stirring up the situation for narrow, party advantage.

Mr. Nicholas Winterton (Macclesfield)

Just like your party did in 1974.

Mr. Hughes

What the Government, all political parties and both sides of industry should now be doing is concentrating on finding ways to end these disputes and to avoid similar disputes in the future. To my mind, that will not be achieved by coercion but rather by leadership and, above all, by agreement.

I deplore the present disruption as much as anyone, particularly as it affects the hospital services and also the bereaved.

During the mass lobby a fortnight ago, I met a contingent from Newport. Those people could not be described as militant in any sense of the term. They had no political affiliations whatever. They told me that they would be as well off on the dole. I thought that was a pretty shocking indictment. They also criticised family income supplement, which was introduced by the last Conservative Government. The described it as nothing more than a recipe for low pay. They said that they were picking up their wages at one door, going round the corner and picking up family income supplement. Again, that is a system that merely creates bureaucracy.

There was one example of a charge hand in local government. He told me—I have no reason to dispute his figures—that for a 40-hour week his take-home pay was £38. He did not protest that his main concern was that he was paying too much tax. But all those lads in the mass lobby were unanimous in saying "Give us a living wage". Anyone with a modicum of common sense would endorse that sentiment.

For nearly 20 years we have had endless arguments about the merits and demerits of incomes policy, but surely any system of wage settlement should it least start from the basic premise that people in employment should be guaranteed a living wage. I believe that that could be the basis for a settlement at the present time in relation to both the local authorities and the National Health Service.

There is another aspect of this issue which should not be underestimated. That is the effect of Common Market membership in relation to some of the present disputes. We are all aware of the direct relationship between the Common Market and the road haulage dispute, and the crippling effects that that had on British industry. A decision by the Brussels bureaucracy to regulate the hours of work proved to be a positive incentive to the road haulage unions to get their drivers to fight for an increase in their admittedly low basic wage.

Perhaps there is an even more direct connection with the present claims of the low-paid workers. The cost of the food basket takes the major percentage of the wages of our low-paid workers. For example, we know that shoppers in the EEC now pay three times as much for meat as is paid by consumers in North America. Butter in this country costs almost four times the world market price. A week or so ago we received a report from the department of applied economics, in Cambridge, which estimated that the cost of membership of the Common Market is equivalent to £20 for every man, woman and child in Britain today. Are not these figures what inflation is about? Is not that the reason why the low paid are as agitated as they are at present? Is it not perfectly understandable that the Labour Party manifesto for the Common Market elections says specifically that the job of our representatives will be to act as representatives of the dissatisfaction with the EEC membership that exists in Britain today?

It is my belief that the basic problem in British industry is not wages but productivity. As my right hon. Friend the Member for Battersea, North (Mr. Jay) pointed out—I have great respect for his point of view—as we have had an incomes policy, off and on, for nearly 20 years our problem would be solved if wages were the answer. As was said in the sanctions debate before the Christmas Recess, if wages were the answer, Delhi would be rich and Dallas would be poor. In fact, the reverse is the case. If prices were held, wage settlements, in turn, could be kept at a reasonable level.

Above all, we need investment—not in property, or overseas investment, but at home in our manufacturing industry. We need a new attitude from management in British industry, which has never seemed to be able to adjust from the hire-and-fire days, which, I am glad to say, have gone for ever.

The problems faced by British industry are not easy to solve, but at least in our attempts to solve them we should start at the right place.

6.53 p.m.

Mr. Richard Wainwright (Colne Valley)

Earlier this evening the right hon. Member for Battersea, North (Mr. Jay) seemed to lift our debate to the plane on which our industrial affairs should be debated. In spite of the rather unfortunate wording of the Conservative Opposition's motion tonight, I take heart from the fact that the hon. Member for Oswestry (Mr. Biffen) is to wind up the debate. He may follow the right hon. Member for Battersea, North in the remarkable economic exposition which he gave us. He especially pointed out that in pursuit of our essential national objective, of getting inflation under control, we must not adopt policies which paralyse our industries.

We hold this useful debate in a situation where our industries must prepare for a most furious competitive assault from fairly recently industrialised countries such as Taiwan and Korea, which will give an entirely new meaning to competition and which will make some of our present international competitors look tender gentlemen when the new assault takes place.

Faced with that imminent challenge, the House should ask itself whether it is wise to adopt monetarist policies—whether they be concealed monetarism from the right hon. Member for Leeds, East (Mr. Healey), the Chancellor, or blatant monetarism from the right hon. Member for Leeds, North-East (Sir K. Joseph). I shall come in a moment to the Leeds coalition, which is one of the most sinister features of our present politics. It is unwise to adopt policies of that kind which will make it impossible for our industries, even with the best will in the world and with immense dedication from management and shop floor, to begin to compete with our new competitors.

I thought it most significant that from his advantageous position in opening this debate the right hon. Member for Leeds, North-East scarcely mentioned the main crippling factor on British industry today, which is the soaring bank rate. He did not like to mention this at any length because it could be part of his own prescription.

It is an unfortunate feature of our present politics that we have this Leeds coalition. Who converted whom it is not my purpose to inquire. Certainly the country is now suffering from a barely concealed monetarism operated by the Chancellor of the Exchequer, with the dismal alternative, if the present opinion polls are converted into votes, of overt monetarism from the right hon. Member for Leeds, North-East. It is important that the House of Commons should expose this Leeds coalition and point out—as did the right hon. Member for Battersea, North so eloquently in his defence of a firm incomes policy—that there is another way that does not involve the paralysis of British industry.

Mr. Hal Miller

I took notes of my right hon. Friend's speech. He made the point that whereas production and productivity were static, wages and profits had fallen and interest rates and the costs of holding stocks had gone up. He made specific reference to the burden of interest.

Mr. Wainwright

Yes. I never accused the right hon. Gentleman of wholly omitting that factor. However, the hon. Gentleman is bound to agree that his Front Bench colleague did not dwell on this matter or give it anything like the prominence that I would do or that my constituents engaged in industry are doing at present.

To me it is the key factor at the moment on the industrial scene that up-and-coming people are faced with high interest. I am not speaking of the vast corporations which have their own liquid resources stashed away and which do not need to bear in mind always the current interest cost. I am speaking of the up-and-coming people who are dependent upon their banks or other lenders and who are now faced with this appalling interest rate which makes the development of a new and risky business rather a foolish enterprise on which to embark at present. That is my concern. I am surprised that until the right hon. Member for Battersea, North entered the debate the matter had not figured in our proceedings.

I was glad that the right hon. Member for Battersea, North welcomed the recent booklet "A Better Way" produced by a distinguished group of trade unionists. The Liberal Party has also conveyed to Mr. Tom Jackson and his colleagues our appreciation of that document, without going along with every dot and comma in it.

It is our view that a monetarist solution, although it might for a short time accomplish the statistical trick of reducing the apparent rate of inflation, would be fatal to social peace and to the competitive prospects of British industry. That is why we continue to espouse the adoption of a firm incomes policy, preferably administered through the tax system.

Mr. Nicholas Winterton

Before the hon. Gentleman changes the direction of his argument, will he explain how he sees the very high level of public service borrowing requirement affecting the interest rates? Will he give my right hon. Friend credit for his argument, bearing in mind that the public service borrowing requirement under a Tory Government would be considerably less than under the present Socialist Administration?

Mr. Wainwright

I am not prepared to venture a comment on the latter as my expectations of incoming Tory Governments have always been confounded by what they do. I have never been able to credit that people could break their promises quite as quickly as members of the Conservative Party do when they take office.

As to the borrowing requirement—a point that the hon. Gentleman also introduced—this is a circular argument. The borrowing requirement may well be soaring at the moment as a result of runaway wage claims. That is another reason why—

Mr. Nicholas Winterton

It is not. That is the point.

Mr. Wainwright

But it is, in my view.

Mr. Winterton

That is the con.

Mr. Wainwright

That is why I espouse so strongly the policy of a firm incomes control at all levels, administered preferably through the tax system.

Another handicap that we have in a debate of this sort—and, alas, the handicap has been vividly illustrated so far in the debate—is the lack of generally acceptable measuring rods by which the performance of industry can be reliably assessed not only by Members of this House but by workers and by management.

I believe that statements of added value, with an analysis of how the added value has been distributed—what share labour has had, what share management has had, and above all what share is being devoted to re-equipment and modernisation of the company's assets—would be the best measuring rod. I greatly regret that the Companies Bill now going through the House does not contain a clause making the publication of added value statements of that kind mandatory, at any rate on public companies.

The measuring rod also needs to be capable of international comparison. If that were more truly available, and if we had added value statements for every industry and for every large company and were able to make international comparisons, we should certainly find that our major competitors at the present time are ploughing back far more than we do, on the whole, into re-equipment and the improvement not so much of worn out as of obsolescent equipment.

I still believe that obsolesence is not a factor which figures largely enough in the eyes of boards of directors. The reason is not stupidity but the fact that the resources to deal with obsolesence are quite beyond their command. They are not allowed to make enough profit to provide adequately for obsolesence. On such profit as they manage to make there are monopoly claims, especially from organised labour at the present time, which take away what ought to be added to the seed corn.

Furthermore, we have a state of affairs—I am afraid that it is getting worse rather than better—in which people who take even a calculated commercial risk are really mugs. It cannot possibly be to the advantage of a nation which exists only upon its manufacturing industries to put such appalling handicaps upon risks. No adequate amount of commercial risk-taking can be based on an industrial economy fed largely from pension funds, because pension funds by definition, are not in the business of risk. Nor can risks be adequately financed from Government sources, because the Government's motto is to try to avoid making mistakes rather than to have the triumphant successes which come from a policy of vigorously espousing risk-taking. Nor can risks be adequately espoused by an economy that is ridden with trade associations in which a cosy atmosphere is generated of live and let live and of refusing to pay much attention to beastly nuisances who suddenly come into the industry and make life awkward for the established characters.

In looking at my own constituency, which may or may not be a fair example, I have come to the regrettable conclusion that the main people in my part of the world who seem to understand the meaning of risk and are prepared to back it with adequate capital are American investors. In my area, wisely using local Yorkshire management, Americans have invested, thank goodness, very considerable sums of risk capital, and as a result, on balance, have greatly added to the wealth of the district. But it seems tragic that we should have to look to the United States of America to finance our riskier projects.

Furthermore, it is really asking too much to expect people in business to take serious commercial risks when they are already working in such a very risky political environment, when they are exposed to gyrations of the interest rate, such as we have had over the last 10 years, with frequent changes, sometimes of mammoth size, and when they are exposed to erratic changes in tax provisions, possibly having a direct effect on their product, if it is one of the vehicles of indirect taxation, and when they are exposed to all the frenetic results of adversary politics in this place. It seems a little hard, on top of all those risks, to ask them to enter the field of commercial risk as well. But until we recover a scenario in which it is reasonable for people to take substantial commercial risks, we shall not develop our industrial potential.

I very much regret that the motion before us this evening was so framed by the Conservative Opposition that it has enabled the Government to field their benevolent and kindly team from the Department of Industry, who ought not, I feel, to be the targets of our main criticism. I would rather that the motion had been framed in such a way that we had answering tonight for themselves and their dreadful deeds, Ministers such as the Chancellor of the Exchequer and the Secretary of State for Employment—wherever he may be these days—and others whose activities over recent years have amounted to sheer sabotage of what the Department of Industry has been trying to do. The Department of Industry, in a benign way, if not always in a very skilful way, has been trying to remedy the pillaging of industry by successive Governments, including those supported at one time by hon. Members who are now in opposition, in order to meet taxation requirements.

There has been the stealthy increase of company taxes under successive Conservative Administrations, on the good old corrupt principle that companies have no votes so it does not matter how much is taken from them. There has been the penalising of companies in a variety of ways. The Department of Industry has made reasonable attempts, with its various grants, to try to make up for the capital which has been stolen from industry over the years, but all the time that Department has been fighting a losing battle, for no sooner does it take one step forward than the Chancellor of the Exchequer, with his new monetarism, pushes industry five steps backwards. As a result, no matter how many schemes the Department of Industry may bring forward, British industry still lingers very much in the doldrums.

Finally, I must protest that the same thing is happening in regard to small and new businesses. The House has been generous in welcoming the achievements of the Chancellor of the Duchy of Lancaster and of the Department of Industry over the last two years in bringing forward specific and useful measures for reducing the discouragements on small businesses. But of what use are those measures if they are to be spited by an erratic economic policy which multiples enormously the burden on the small business man?

Mr. Forman

Is the hon. Gentleman aware that the Department of Industry takes so seriously the problems of small businesses that, on the recent sacking of the junior Minister responsible for that sphere, he was not replaced?

Mr. Wainwright

Without being unkind to my fellow Yorkshireman the hon. Member for Keighley (Mr. Cryer), may I say that small businesses do not greatly mourn his departure. His surviving junior colleague has broad shoulders and will, I hope, pay careful attention to my concluding words. Above all, small and new businesses should be protected from the rampages of a neo-monetarist Labour Chancellor. Positive measures of discrimination in favour of small and new businesses should be brought forward by the Government in their dying weeks.

7.10 p.m.

Mr. Arthur Palmer (Bristol, North-East)

It is a pleasure to follow the hon. Member for Colne Valley (Mr. Wainwright), who always speaks charmingly and at times interestingly on behalf of the Liberal Party. He dealt largely with the financial situation in relation to industry. But I want later on to make a point of more direct application to productivity in industry.

The right hon. Member for Leeds, North-East (Sir K. Joseph) made a flamboyant speech, but what did it actually come to? He reached the remarkable and original conclusion that improved productivity in industry is the solution to our present discontents. When I first sat in the House, as the Member for Wimbledon, in the 1945–50 Parliament, this was the great theme of Sir Stafford Cripps. So it is no good bringing this up as if it were some new discovery.

I understand the right hon. Gentleman's difficulties. He has to repudiate his past. He was once on the Left of the Conservative Party and has moved over to the extreme Right. It has been a painful transition, and we sympathise. At least he has the decency to look guilty about it. He is free to rewrite his own political creed, but he should not attempt to rewrite the industrial history of the country.

Many of us were deceived about the prosperity of British industry immediately after the last war. The devastation left temporary markets wide open to British goods and services. Selling goods was no great trouble, and at times it was almost difficult not to sell goods. At that time the United Kingdom did profitable business without much attention to capital re-equipment or reform of outmoded labour practices. In the enlightened part of the trade union movement we are well aware of that. But over the past decade or more that easy international market has disappeared. British industry has returned to the relatively declining position of the 1920s and 1930s. That was a time when considerable sections of the Tory Party campaigned for tariffs, quotas and protection in general for British industry. It was said then that British industry could not stand the chill winds of international competition and needed to be well wrapped up.

In Management Today this month, there is an interesting article on the history of this period. It points out that when, in the late 1930s, rearmament began in this country, Britain had to buy most machine tools for that programme from abroad and, ironically, from Germany. The machine tool industry was in the doldrums, as it is today.

It is no good believing that the present situation is due to a particular Government. It has deeper roots in the industrial past. Some industrial historians say that this wasting disease of British industry goes back even further than the 1930s, to the turn of the century. The British steel industry was doing badly, by international standards, before 1914. I am glad that the hon. Member for Oswestry (Mr. Biffen) nods. But this wasting disease has unfortunately now spreads as times become more difficult for our trade abroad, We know the history of it in textiles, shipbuilding, motor cycles and motor cars. Motor cars will soon be made in the jungles of Malaysia, where they are now successfully making radio sets, television sets, domestic typewriters, electrical appliances, and so on. There have been increased imports from abroad of these consumer goods and a loss of overseas markets almost to extinction.

The present Government have tried hard to combat the difficulties by looking at the situation as a whole. The losses have been offset to some extent by providing specialist services overseas, particularly engineering consultancy, and by North Sea oil and gas. That was a useful innovation not only for the gas and oil produced but for the run-off to secondary industries and the resultant new techniques developed. Even in more old-fashioned export lines, such as electric lamps, we still do well. So it is not all bad. The nuclear industry is good. Whatever the moral implications, aerodynamics and weapon production flourish. But the net balance is nothing like as good as it should be. There must be an underlying explanation.

Even trying to be charitable, it must be said that the Opposition motion tonight is irrelevant to the needs of the situation. Of course the country is losing ground in satisfying people's aspirations. That is the reason for the strikes and serious dislocations of industry. People want higher standards of living and are determined not to be held back if it can be avoided. But it is not right to state, as the Opposition motion states, that the United Kingdom is a poor country. That is an absurdity, and I resent it. I should have thought that the Tory Party, with its considerable history of national pride, would be reluctant to use such a phrase even against its national political opponents.

The United Kingdom is not a poor country by the standards of three-quarters or more of the world's population. It is an extremely well-to-do country by those standards. We need not be divided on the question of industrial performance and productivity—in spite of what the right hon. Member for Leeds, North-East forced himself to say—more than our parliamentary system dictates. I do not know anybody—certainly not in the Socialist movement, whether Fabian or Marxist—who is against improved productivity. With improved productivity there is more to share. We might argue about how to do the sharing, but the efficient production of wealth is the common key to all Western political theories and principles.

I do not believe that this involves ownership. The right hon. Member for Leeds, North-East made great play of that. He told us how our Continental neighbours seem to escape the fundamental questions of ownership. But do they? I do not think that they do. It is hard to imagine that France, with one of the strongest Communist parties this side of the Iron Curtain, and Italy, with a Communist party that might take over one day, escape that question.

In France the debate about who owns industry occurs only rarely, because they are long past that stage. Many enterprises combine the principles of private and public ownership. The right hon. Gentleman is extraordinarily old-fashioned. He has never really understood industry here or abroad.

The British gas, electricity and coal industries technically and productively are equal to the best anywhere in the world. Parts of the railway system are falling apart. That is obvious, but that is because we cannot make up our minds whether we want a railway system at all. If modernised and electrified, it would have a brave tale to tell.

If we are to make party points, I must ask which Government scrapped the exciting Hovertrain development. It was the Conservative Government. That is an issue that needs to be re-examined. In defence of the present Government, it can be said that they actually have an industrial strategy, linked to the National Enterprise Board, which is more than can be said of any other post-war Administration, including that of my right hon. Friend the Member for Huyton (Sir H. Wilson). There was no particular industrial strategy during his time in office; his Government marked time. Our problem has been to explain this new strategy to our Labour supporters in the country and in the trade union movement. We might all be at fault in that.

I have said that there must be a deep, underlying reason for Britain's low, relative decline in the league table of the industrial nations. I believe that it is the failure of British industry, and of British engineering, to penetrate and permeate the culture of the nation.

The common idea is that industrial productivity is for self-taught, practical men, and that if the abstractly educated people concern themselves with industry it will be as bankers, accountants, lawyers and managers and, not as professional engineers. That is why we always are rediscovering technology, as if it were some modern miracle. We confuse it with science, but it is not the same. On the whole, science is extremely well done in Britain.

We had a Ministry of Technology for a time. Recently, the Conservative education philosophers proposed that there should be a Ministry of Engineering. What an extraordinary idea. Technology and engineering should be understood and respected as a matter of course at every level of Government. We do not need a special Ministry. I see that the hon. Member for Oswestry nods his head. I am glad that he agrees with me. The suggestion is absurd for he is a great realist.

In the schools, the universities, the trade unions and in industry itself, both public and private engineering and technology should be highly respected. That industrial principle is well understood elsewhere, particularly in Sweden, Germany, France and Japan.

I have the privilege of being Chairman of the Select Committee on Science and Technology. I commend the Select Committee's recently published report, which deals with innovation, research and development in Japanese industry. That report deserves a full debate in the House. We could do much worse with our time.

There is no doubt in my mind that the principal reason for the high rate of growth in the Japanese economy, which has helped it to avoid many of the social difficulties which have attended the belated restructuring of British industry, is the status accorded by Japanese society to the trained and qualified engineer, as distinct from the business school-trained manager so much accepted here. I have great hopes of the Finniston inquiry into the engineering profession, which I urged upon the Minister. I hope that it will be a thoroughgoing inquiry and that it will not mind hurting many vested interests, including some in the engineering institutions. When is the Finniston inquiry expected to produce a report? Perhaps we could be told when my right hon. Friend replies to the debate.

7.28 p.m.

Mr. F. A. Burden (Gillingham)

I do not propose to take up the speech of the hon. Member for Bristol, North-East (Mr. Palmer) except to say that we might not be a poor country now but there is no doubt that we are heading that way. We have been saved from considerable difficulties by North Sea oil. The Government have had to borrow $8.55 billion from overseas since 1974. That indicates that we are not as prosperous as we were.

We must accept that North Sea oil is expendable. When it disappears, the only way in which the standard of living of our people will be maintained will be by our ability to compete in the world's markets. In the long run, a nation, like a family, can only live on what it earns. If we want to maintain our standard of living and protect people's jobs and give a boost to our deprived regions, we must get industry to produce more and export more. I do not think that anybody will quarrel with that. That passage appeared in the Labour Party manifesto of October 1974.

It continued: This is going to demand some radical changes. The Tories and their Aims of Industry friends say we ought to leave things as they are. But things as they are consist of lower investment than other countries. If we leave things as they are we shall go on, as we have done for years, slipping behind other nations. The industrial sector of our economy is suffering from grave and chronic debilitation and that sort of illness cannot be cured with a couple of aspirin tablets. Having remembered what was stated in the Labour Party manifesto at the last general election, I do not think that anyone can say that the country has prospered. Surely no one can say that industrial power has recovered and that we have regained our competitiveness in the world's markets.

The Labour Party manifesto, which everybody should study, refers to industrial relations. It states: This objective— that is, the Government's objective— involves strong trade union organisation and widening the scope of collective bargaining. Where is collective bargaining under the present Government? It has disappeared entirely. Rigid lines on pay have been laid down that everyone knew could not be maintained. Practically every Labour Member below the Gangway who has spoken in the debate while I have been in the Chamber has made it clear that it was never a runner.

The manifesto continues: In addition, however, it will mean the provision of new rights for workers through changes in company law. It is right to make one more quote from the manifesto that is especially relevant to the present situation. It is a passage that should be brought to the attention of Labour Members and the country as a whole. It states: It is part of the very purpose of the Labour Party's existence to protect and extend the processes of democracy at all levels … we want to give a much bigger say to citizens in all their various capacities—as tenants, shoppers, patients"—

Mr. Nicholas Winterton

There is no response.

Mr. Burden

Have they had greater powers and greater opportunities under the Government? The quotation continues: to voters". I have no doubt that voters would welcome an early opportunity to express their views.

Mr. Corbett

Hear, hear.

Mr. Burden

I doubt very much whether the hon. Gentleman will be with us in the next Parliament. I know that what I am saying and the quotations that I am making are getting under the skin of Labour Members.

I continue to quote the Labour Party manifesto. It states: Labour believes that respect for the law must be firmly based on the rights of the citizen and on his or her obligations to the whole community That applies to everybody, to strikers, to the unions, to everybody. The passage continues: We share the view of those who are alarmed at the growth of violence in our society … Labour believes that the law-abiding citizens are entitled to full protection. Those quotes from the 1974 Labour Party manifesto indicate clearly how industrial relations have declined since it was published. I do not think that Labour Members can maintain that the ordinary citizen is still able to go about his or her business without interference. I do not expect any Labour Member will deny that there has been violence on the picket lines.

Mr. Bob Cryer (Keighley)

No. That is not right.

Mr. Burden

The hon. Gentleman says "No." We have heard reports, and statements have been made in the House. It has been reported by Ministers that some strikers have carried offensive weapons.

Mr. Cryer

The hon. Gentleman has mentioned violence on picket lines, which we all regret. However, not one Conservative Member has so far expressed regret at the only incident of known violence, namely, the death of a picket at Aberdeen. The only other proven incident of violence was when pickets were shot at.

Mr. Burden

Everybody regrets that, wherever it may happen. That is utterly wrong. That shows the state of industrial relations and picketing. That cannot bode anything but ill for the future of Britain if it is allowed to continue.

We must go back quite some way to realise absolutely the colossal failure of the Government. On 29 April 1971, when unemployment under the Conservative Government was 815,000, the right hon. Member for Bristol, South-East (Mr. Benn), the present Secretary of State of Energy, said: It is very hard to assess the full cost of unemployment, and … there is nothing more wasteful than maintaining such a large body of men and women paid to do nothing in an economy … At the present rate, 16 million working days a month are lost by unemployment, which totally dwarfs figures lost in industrial disputes. If the unemployment figures at that time were so deplorable, what are they now? They have doubled. If 16 million working days were lost each month in 1971 as a result of men and women being unemployed, the present figure must be nearer 30 million a month. It will be nearly double the 1971 figure.

When the right hon. Gentleman spoke in a debate on the economy in 1971, the whole issue of British industry came before the House. The right hon. Gentleman quoted with evident glee an EEC report of the previous December. The quotation read: A major recession … only could result from miscalculation or a deliberate act of Government. Which is it now? Is it a miscalculation or is it an act of Government? The right hon. Gentleman continued: The charge against them"— that is, the Conservative Government? is not that they do not care: it is a much more serious charge. It is that unemployment is now seen by the Cabinet as a main instrument of policy. Is it today? Unemployment has doubled since 1971. What is the answer? I presume that it is an act of God.

On the same day, we read in Hansard: Prices in the last 12 months have risen … by 8.8 per cent. In price terms that amounts to a hydrogen bomb explosion."—[Official Report, 29 April 1971; Vol. 816, c. 724–28.] That, too, was said by the present Secretary of State. He surely has much to think about now. We have been suffering hydrogen bomb explosions of price increases ever since in British industry. Since the Government took office, 12 items of everyday consumption have increased in price by 132 per cent. It is not to be wondered at that many lower-paid workers are falling behind. It is not surprising that their standard of living has declined. It would have declined still further. The going rate of inflation is now 8.8 per cent. and the Government were prepared to allow an increase of only 5 per cent. to low-paid workers.

Not unnaturally, the Leader of the House is not completely innocent in this matter. On 18 February 1971 he told the House: It is perfectly true that it is possible to solve the problem of inflation by the combined policy of wage resistance, unemployment and declining investment …. It was done in the 1920s. Is that how it is being done today—by wage resistance, unemployment and declining investment? That is the situation under this Government.

On the same day, the Leader of the House said: So the real question facing this country and the House—nobody knows exactly when the date will come—is: What will they"— that is, the Conservative Government— do when the figures for unemployment move up to the million level?" [Official Report, 18 February 1971; Vol. 811, c. 2245–47.] It is now 1½ million. What do Labour Members think about that? This is happening under the Labour Government. Perhaps it is not to be wondered at that this country has got into its present situation.

Although the Prime Minister comes to the Dispatch Box with a bland air, with the Uncle Jim attitude "Trust me and all will be right", I have looked up an attack that he made on Nye Bevan in 1955. He said: The Labour Party never would have reached the peaks and heights of power unless we had been prepared to subordinate our individualism to our Socialism. In other words, the Prime Minister even today is out for an all-Socialist economy. No doubt that is one of the reasons why he plays along with hon. Gentlemen below the Gangway, who certainly agree with that.

Is that the way to get this country out of its problems? One of the difficulties today is that there is not a continuity of production which encourages countries overseas to buy high-cost capital goods from Britain. What has happened in the past few weeks will increase that discouragement. Anyone engaged in industry knows that equipping factories today is a costly long-term policy. The old equipment has to be phased out, and unless new equipment is delivered on time the actual cost increases because of the waiting time for installing the new machinery. The ability to compete is also diminished if companies are not equipped with the most modern machinery.

This country depends for its future upon its ability to produce costly, high technology capital equipment. It will be able to exploit that market to the full only if our would-be customers abroad can be assured that delivery dates will be kept, that the quality will remain consistent and that the price will not be increased before delivery.

One of the first steps that must be taken is to ensure that we have peace in industry. Make no mistake. The unions must play an important part. It is idle for right hon. and hon. Gentlemen on the Government Benches to say no action should be taken against the unions. I do not believe that major figures in the unions are content or happy with the present situation. I do not believe that the majority of trade unionists are hell-bent on bringing about the destruction of this country. Fewer Communists will stand for Parliament, but they will be infiltrating into the unions, controlling the unions and so disrupting the industry of this country. Hon. Gentlemen may laugh. On 1 May last year, the right hon. Member for Huyton (Sir H. Wilson) warned at a May Day rally in Chatham about Trotskyists who were infiltrating into the unions. He said that there had not been a Communist able to get into the House.

Communists will not bother trying to get into the House if they can destroy our industry by promoting wildcat strikes that will cripple our exports and our industries. I hope that sensible members of the unions will realise the Trojan horse that is operating within the unions and what it is doing to this country. Most right hon. and hon. Gentlemen on the Government side want to see what we all want to see—a prosperous Britain. Unless we have a prosperous Britain and a country able to compete in world markets in price, quality and expertise, there will be no more money to pour into the public services. There will be no more money for anyone.

This country, particularly when North Sea oil has been phased out, will depend for its future on the ability of its people to promote industry in such a way that its products compete anywhere in the world.

7.48 p.m.

Mr. Julius Silverman (Birmingham, Erdington)

I shall not follow the remarks of the hon. Member for Gillingham (Mr. Burden) in his historical analysis and the number of quotations which he has painfully gathered. He introduced some useful and interesting debating points, which do not take us any further. His plea for industrial peace will be echoed by hon. Members on the Labour Benches and, indeed, throughout the Chamber. I take up one point that he made. He mentioned the need to increase our exports. I agree with the desirability of increasing exports. On the whole, we have not done badly. We are exporting substantially over £20,000 million a year of manufactured goods. The place where we want to look for improvement is not so much the export market but the home market.

Mr. Burden

Those were not my words. They are the words in the manifesto of the Labour Party at the last election. The manifesto said that we must export more.

Mr. Silverman

I do not care who said it. The point that I am making is just as valid.

One of the main difficulties that we have to meet is the penetration of our home market by manufactured goods, now running at the rate of about £20,000 million a year. If we could reduce that amount by one-third, the effect on our economy would be enormous. if we could persuade the British citizen to buy British goods instead of foreign goods, we could begin to solve the whole of our economic problems. It is extraordinary that that aspect is rarely discussed in the House. It stands out like a sore thumb in our economy. The Government and both sides of industry must get together to find out why that is happening and what can be done about it.

It is said that bad industrial relations play a part in the problem, and the motor car industry is often mentioned in that connection. However, the problem of penetration of foreign manufactured goods affects not only the motor car industry but a number of other industries in which there are few industrial disputes.

If Germany is in a better position than we are in the midst of the general economic recession, it is largely because of its higher rate of investment and exports. It is able, to a large extent, to export its unemployment to countries such as Great Britain. That is the major problem that we have to solve, and I believe that we can solve it in this country without having to establish expensive organisations overseas.

I do not know whether the cause lies in lack of investment, industrial relations, design or the lack of initiative of our manufacturers. Some people decry British goods, but they cannot be that bad when we are exporting about £23,000 million worth every year. We must get together to solve that problem. It could be a major factor in our industrial revival.

The right hon. Member for Leeds, North-East (Sir K. Joseph) mentioned the need for change and there was an argument about who was responsible for the introduction of silicone chips in our industry. I am in favour of change provided that its effects are foressen, calculated and dealt with. I do not know what effect the introduction of silicone chips will have on unemployment in the banking system, in offices and in industry in general. That must be calculated and dealt with.

I approach the prospect of change with a certain amount of caution. Let me take the example of tyre manufacturing. A number of years ago, the radial tyre—now the radial, steel-framed tyre—was introduced into this country. It resulted in a benefit to the consumer, because he could get two and a half times more mileage from the radial tyre than from the old style of tyre. That is one of the major factors affecting the tyre industry throughout Europe. It is estimated that there is about 30 per cent. excess capacity in the European industry. All the countries of Europe face the same problem.

The Dunlop-Pirelli concern is one of the major sufferers, and we have already heard that it is proposed to close the Dunlop factory at Speke. I have a special interest, because Fort Dunlop is in my constituency. The proposals for that factory are not as drastic as those for Speke, but it is planned to create 550 redundancies covering all grades, especially engineering and supervisory grades.

There is obviously great concern about that proposal in Birmingham, which is not flourishing with the wide variety of industries that it used to have many years ago but is already suffering from considerable unemployment. I have been told of people at Fort Dunlop, especially workers in their fifties, who do not know when they will get another job. They have been at the factory all their lives. It is a sad day when that sort of thing happens, whether in my constituency or in Liverpool.

It was always assumed that technological change would bring about the creation of new industries and new jobs to replace those that were lost. It used to seem to be so, but it is not so today. There is no doubt that, throughout Europe, technological change is one of the major factors in our present recession. It has not created sufficient purchasing power to enable people to buy the goods that it has created and it has disposed of a large number of jobs. I am not against change, but we must decide, perhaps with our trading partners, what steps can be taken to deal with that new and dangerous situation, which would exist no matter what Government we had in power. We have sadly failed to do that so far.

We must increase our investment in order to produce our goods at a competitive price, or our situation will be even worse. However, we do that only in order to obtain a larger share of a shrinking market. That is what Germany and France are doing. They are using their investment and technology and exporting the proceeds, in the shape of increased unemployment, to other countries. That is a problem which must be borne in mind.

Let us by all means have change, but let it be change in which the results are calculated, allowed for and absorbed. I am not saying how they can be absorbed. Perhaps it could be done by reducing the working week, though that could be achieved only through agreement with our trading partners. Perhaps we could do it by increasing our service jobs, which must largely be public service jobs. That would be in complete conflict with the Tory declarations that public expenditure must be reduced. If that were done, there would be fewer jobs in the public sector and, therefore, in service industries.

That problem is one of the most important facing this country, and it overrides the short-term problems of industrial disputes. I do not believe that it will be solved by private enterprise, and certainly not by private enterprise alone. There must be some planning or partnership between private enterprise and the Government in order to solve the greatest problem of this historical epoch. That is my word on the present problems afflicting this nation and the world today.

Mr. Deputy Speaker (Mr. Oscar Murton)

Excluding Front-Bench spokesmen. the average time taken by hon. Members so far is 16 minutes. I think that hon. Members would like to help one another, and there are still many more wishing to speak. Perhaps they could cut their speeches down to 10 minutes.

8.1 p.m.

Mr.Nicholas Winterton (Macclesfield)

I am very pleased to speak following the hon. Member for Birmingham, Erdington (Mr. Silverman), for two reasons. First, I worked for a company in his constituency for a number of years. Secondly, he and I share a common objective in that we wish to provide fair competition for two important industries in this country.

The first is the car industry, which dominates the hon. Member's constituency and is allied to the tyre industry, which is epitomised by Dunlop. The second is the one in my area, the textile industry, which causes much concern. The hon. Member and I share a common ground about the developments taking place on the industrial scene.

I felt that the hon. Member for Bristol, North-East (Mr. Palmer), who made a deep, wide-ranging and interesting speech, was unfair to the Opposition motion. He said that it was irrelevant. It is not irrelevant at all. In defence of my assertion I call in aid the speech of my hon. Friend the Member for Newbury (Mr. McNair-Wilson), who indicated the comments being made to him by those in business, industry and commerce in Berkshire, and particularly the area around Newbury. Those remarks clearly reflect the content of the Opposition motion. Therefore, the hon. Member for Bristol, North-East was unfair to the Opposition and unfair to my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph).

It was interesting to hear the hon. Member for Colne Valley (Mr. Wainwright) talking about the position of the Opposition. He said that there had been a coalition of views between the two right hon. Members from Leeds—the Chancellor of the Exchequer and my right hon.

Friend the Member for Leeds, North-East. But the views expressed by these two right hon. Gentlemen are very different. While the present Government are following a basically monetarist policy, they have all too high a level of public sector borrowing requirement, which has driven up the minimum lending rate in this country. This is creating great difficulty for small businesses. High interest rates are damaging to small businesses, because they are very easily affected by cash flow problems.

All too few Labour Members, particularly those below the Gangway, have ever had the responsibility of having to meet a wages bill at the end of the week. It has a very sobering effect and it does tend to concentrate the mind. Being an employer is no joy ride; it is a heavy responsibility.

For that reason I was concerned and disappointed that during the tanker drivers' and, later, the lorry drivers' disputes the Government did not declare a state of emergency, not so that the troops could be brought in but so that the Government would have the power, if they chose, to exempt employers from the more damaging and pernicious provisions of the Employment Protection Act. They would have had power to exempt them from certain lay-off payments. Many companies could go out of business now because of cash flow problems generated during the lorry drivers' dispute. That point has not been raised often enough in this House. The fact is that a wide range of powers are available to the Government during a state of emergency. The Minister of State should look into this matter before he replies to the debate.

There is great skill in this country and great experience, ability and determination. This is a great country, and there is investment. But the Government must get off the backs of small businesses and reduce bureaucracy and restriction rather than increase them. They must also restore the balance of industrial relations.

We have heard about the problems for ordinary men and women in the street, caused by the serious industrial disruptions which this country has continued to experience since Christmas. It is a pity that we cannot have a Prime Minister who will act in the best interests of all the people, like Stanley Baldwin did in 1926. I quote from the "Oxford Strike Daily Bulletin" of Sunday 9 May 1926. Baldwin said, in an article headed "More Protection for Loyal Workers": Every man who does his duty by his country and remains at work or returns to work during the present crisis will receive protection from loss of Trade Union benefit, superannuation benefit and pensions. His Majesty's Government will take whatever steps may be necessary or otherwise for this purpose. There was a Prime Minister—a man who was prepared to stand up for the individual and the loyal workers of this country as well as for the best interests of the people.

I refer to a particular problem being encountered not in my constituency but in the South-West, namely, industrial action by local authority manual workers which is affecting the use of construction machinery on hire from private enterprise companies. This is a significant and dangerous development. I got to know of this problem because for many years I worked in the construction industry, and I still liaise with the Contractors' Plant Association.

Mr. Carus, the managing director of Plant Engineering Services Ltd., in Ivybridge, Devon, rang the director of the CPA and indicated that plant that had been hired to local authorities from his company had been placed off hire by those local authorities on the instructions of the various trade unions in dispute with the authorities because they were refusing to work on direct labour sites with non-operated plant, and some operated plant, hired from private contractors. This, as I have said, is a dangerous development. Surely the unions involved should not be able to dictate to local authorities what action those authorities need to take in order to carry out the work for the benefit of the ratepayers and the people of the areas they serve.

Some say that only NUPE members were involved, but representatives from the General and Municipal Workers' Union, the Transport and General Workers' Union and UCATT attended a meeting on Wednesday 24 January in Exeter. As a result, the unions decided to step up industrial action by manual workers employed by local authorities, which would include a ban on using plant that was hired from the private sector.

Need I remind the House that the private sector is a taxpayer, that the private sector is a ratepayer, and that it is often the private sector that enables the Government to have funds to spend on desirable projects in the public sector? Yet here we have trade unionists discriminating against the private sector. I hope that the Minister will take this matter on board and give me a reply in his winding-up speech.

I believe that this is a very dangerous development. It started in Devon, Plymouth and Exeter, and the district councils that exist within the Devon county, but I understand today, from the director of the Contractors' Plant Association, that this action has spread to Bristol and the county of Avon. At the moment it is restricted to the South-West, but I hope that even the hon. Member for Basildon (Mr. Moonman) will indicate that this is a very unfortunate and sinister development.

The hon. Member for Erdington made what I thought was an interesting speech. It was all the more interesting because he highlighted to the House that he did not want to stand in the way of change. That is a very significant comment to make. It is all too easy to say that we do not want this or that to happen because it will affect industry within our constituency. The hon. Member's attitude was very responsible, and again I hope that it will be taken up by the Front Bench.

I want to relate my remarks now to the textile industry. There have been significant breakthroughs in our relationship with the People's Republic of China. I understand that the Secretary of State is to lead a trade delegation to that country. We are to sell it steel plants and I hope to sell it the Harrier jump-jet. I welcome these developments. But China will want money to pay for these high technology purchases from us. It seems to me almost inevitable that the area where it will wish to see a great increase in trade with us and with the European Economic Community will be in textiles. Our textile industry is gravely concerned about the way in which the Government will handle the situation.

I understand that the Secretary of State for Trade will visit the Manchester area on Thursday or Friday of this week to meet textile trade unions and employers to discuss the Government's attitude to the Multi-Fibre Arrangement, to the Tokyo round, and to such countries as the People's Republic of China and Korea.

What action will the EEC take over Korea's determination to treble her textile output over the next six years? What action will the Government take over the negotiations in the Tokyo round with the United States over the way in which it has refused to lower its tariff significantly to allow, for instance, our wool textile industry to export to that country? There is a great deal to think about in this whole area.

The textile industry is a significant one. If it reaches a stage where it is no longer viable, I believe that not only will this country be held over a barrel by those from whom we shall ultimately receive imports; there will also be massive unemployment. One and a half million people are out of work already, and I do not believe that the Government will seek to add to this grotesque figure.

What is the Government's policy on real reciprocity in textile trading? What is their attitude to real reciprocity with those countries which wish to buy from us? Is it not right that we should perhaps adjust our trading to allow us to trade with those countries that want to buy from us, so that, in turn, we can buy from them? As a result, is it not inevitable that some other countries will lose out? If we are to have a Government who act in the best interests of this country, the problem that will face them in the textile industry—repeated, perhaps, elsewhere in the course of the next year or two—are significant. I ask for a sympathetic reply from the Government.

8.14 p.m.

Mr. Eric Moonman (Basildon)

The tenor and the mood of this debate were set by the right hon. Member for Leeds, North-East(Sir K. Joseph). On an Opposition Supply day it does not help, however agitated the Opposition may appear to be, to try to relate the whole of the circumstances of our various industries to the happenings of the past three weeks.

One of the shortcomings of this debate is that it undermines the whole question of what the Government have tried to do in very difficult circumstances, what industry has often failed to do, and what, perhaps, management might be encouraged to achieve.

In the few minutes available to me I should like to speak briefly about the two or three factors which I believe have gone some way towards creating the dilemma and the difficulties that our industry is facing. First, it is right to point out that we must not take excessive account of industry's record during only the last four weeks, because it has been a rather ambiguous record in terms of achievement during the last 15 years or so. The United Kingdom share of world exports in manufactured food is down from 17 per cent. in 1960 to 9 per cent. today. The share of the United Kingdom home market for manufactures held by domestic producers is down from 87 per cent. to 57 per cent. over the same period. Since 1960, exports have risen by between 4 per cent. and 8 per cent. per year, but imports have grown consistently by between 8 per cent. and 12 per cent. a year.

I put those figures on record only to show that although individual industries are becoming more effective and there are a number of very positive case studies, the fact is that the present state of uncertainty in British industry is not something that has happened because of any specific actions by the Labour Government. However, the record rather suggests that there is need for close examination of the last 15 years. Therefore, it seems appropriate to look at just three of the elements that might well have contributed to industry's shortcomings.

The first element is Government intervention. The sort of phrase that we have heard from Opposition Members in this debate, as in other places, is that the degree of Government intervention in recent years has stifled industrial initiative, and the argument goes on and on. This is extremely doubtful. In the first place, Government-industry relationships have not been brought dramatically closer in the last few years. It has been a historical process. It is no abstract political theory which brings Government and industry into some form of closer relationship. Often it is the size and scope of research and development which demand that industries turn to the Government for assistance. We have certainly had very tangible evidence today, when an attempt is being made to try to salvage a particular part of an industry at Falmouth. Also, it is the pressure from the transnational company and the supranational scope of modern industry which causes British industry to ask for help. These are some of the conditions and factors which cause Government and industry to become that much closer.

In Britain this Government-industry relationship is one of a mutually suspicious partnership, but it is a partnership which has, nevertheless, worked well in the interests of the nation as a whole. However, I certainly reject the idea that this is something that suggests a conspiracy. Therefore, it is a historical development which has arisen through two world wars in this century. It has come about also because of the competition arising from the transnational powers.

I argue that if this relationship is to develop its full potential for fruitfulness, both parties must be prepared to engage in some sort of self-criticism and reform. There is no time to pursue the point now. Nevertheless, it must be done by both industry and the Government constantly assessing what is possible.

I come to the second point worthy of consideration in any debate on industry. I challenged the right hon. Member for Leeds, North-East, if he wished to place his strategy on record, to make at least some reference to the role and the effectiveness, or lack of effectiveness, of management. It is a fairly fundamental question. This is not to suggest that all those who are in management positions are failures. On the contrary, those of us who have been involved in the all-party parliamentary management committee know full well that there are individual success stories which are worth copying by the greater scope of industry.

However, the fact is that much of our management is a reflection of training, of attitudes towards industry, and of the way in which the business schools have tackled this problem in the past. Indeed, a comparison need not be made with the United States. It can be made with the rest of Europe.

The European manager is a different animal from his British counterpart. One of the chief differences is that he has actually chosen to work in industry and has oriented his career and education towards it. In Britain a career in industry is considered less desirable than a career in one of the professions, in higher education or, indeed, in the Civil Service, and is, therefore, likely to be sought mainly by those whose lack of educational achievement has barred them from other fields. The result is that whereas between 80 per cent. and 90 per cent. of senior management in France, Germany and Sweden are graduates, the figure for Britain is less than 50 per cent. Even fewer British graduates have studied subjects of any relevance to industry.

The typical Swedish entrant into manufacturing industry is an engineering graduate who begins his job in production. The French or German graduate is more likely to have graduated in one of the technological institutions that enjoy a higher status than universities and so attract good-quality students. This first-hand knowledge of production is an essential part of the Swedish style of management, as pointed out by Alastair Mant's study of Swedish, Japanese and British management. In other words, the authority of management in Sweden and Japan—a country referred to a number of times in the debate—is due not to any miracle of Japanese industry or entrepreneurial skills; it rests on the status of the way in which the individual has achieved his own understanding of the industry. It rests on the equality of the company's products and the manager's knowledge and experience of manufacturing, which enables him to provide leadership in the technicalities of doing the job on every level.

I believe that to be an important consideration when trying to look at the competence and effectiveness of an industry. The right hon. Member for Leeds, North-East dealt only with two aspects—the entrepreneurial aspect and trade union failure. I felt that to be an enormous gap in his knowledge and the analysis that might be provided about what is right in British industry.

The Government have problems in getting their message across to the public, but Conservative Members have far greater problems in getting across to British management what they would offer. They need only to reproduce the extraordinary speech by the right hon. Member for Leeds, North-East to show no understanding of what the manager has to face and carry out in the course of his work.

Some criticism has been made of Government strategy. It is nonsense to suggest that many of these problems have emerged since 1974. It is also nonsense, as anyone who has a reasonable understanding of industry knows, to suggest that the poor economic record and the problems that I described at the beginning of my speech go back at least several decades, to the fundamental cause of the poor performance of our manufacturing industry. The heart of the problem is the failure of private industry to invest in new plant and machinery to increase productivity, wages and employment. Thus, there is a vicious circle of low productivity, low wages, increasing import penetration and a rundown in employment.

The Government have much to do in the course of the completion of their strategy. One would like to see a greater extension of planning agreements and much more meaningful information reverting back to Government about what industry intends to do. One would like to see the beginnings of worker participation, which would be a challenge to worker representatives and an even greater challenge to worker management.

All these things only add to the way in which a strategy has to develop. What is fundamentally important is that, first, one has to recognise the fundamental job of management and, secondly, that a Government, of whichever party, have to show an understanding of the way in which this can be completed.

8.22 p.m.

Mr. Russell Fairgrieve (Aberdeenshire, West)

I am sure that in the interests of brevity hon. Members would not expect me to follow the interesting argument of the hon. Member for Basildon (Mr. Moonman). There are other hon. Members waiting to speak, and I shall make my points briefly.

It is sad to think that, for the last 15 years—11 of which have been under a Labour Government—this country has fallen from having about the highest standard of living in Western Europe to having about the lowest. Today, as one surveys the mounting chaos around us. one wonders whether our country is trying to commit suicide or whether the wreckers in our midst are trying to murder it.

We must get some common sense into our industrial scene, with political slogans, stupid theories and governmental bungling out of it before the damage being done is irreparable.

I should like to suggest some constructive ideas that could put us back on the road being travelled by our industrial competitors, to the great benefit of all who work in these countries; and let us remember also that those same countries now pay higher wages, give better benefits and have lower unemployment than we do. To do that means considering changes in the three areas that make up our individual scene. These are governmental services, nationalised industries and the private sector.

As regards governmental services, there is no hope of paying large wage increases from money that just does not now exist. Most of these activities are grossly overmanned, and with correct staffing substantial pay increases could be given to those remaining. I shall suggest where the excess manpower could be absorbed shortly.

As regards the nationalised industries, radical rethinking is required here. There are many activities currently being carried out by the State that would be better done by private industry and the rewards could be higher for those so employed. The main trouble about the nationalised industries was that, when competition was removed, nothing was put in its place. The only alternative to strict competition is strict discipline, and the nationalised industries have neither. What must remain nationalised must be split up into areas or divisions and the standard commercial disciplines of inter-firm comparison between such sectors introduced ruthlessly plus competition, internal or external, wherever it can be found.

Let me turn finally to the private sector, where the only hope for our country lies. It is through its performance that our standard of living comes and our taxes are paid.

Somehow, some way, painfully or hopefully otherwise, we must get back to responsible free industrial collective bargaining here. Workpeople are not fools and, unlike the governmental or nationalised sectors, men in a competitive climate will rarely put themselves out of a job and their firms out of business by insisting on being paid higher wages for low productivity.

And again here so many of the present generation of trade union leaders and shop stewards have given a positive disservice to those they are meant to represent. How often in British industry, as has happened in America, does a union leader storm into his managing director's office waving the latest report of his company's trading accounts in his hand and shouting "What's all this about? Less than 10 per cent. profit on sales and under 25 per cent. return on capital employed. How can you invest in new machinery and pay the lads more on these results? Get cracking, mate!"

Finally, if in these firms controls, bureaucracy, Government, taxation, spite, envy and greed were removed off the backs of management there would be a blossoming and an expansion that could take Britain back to the top of the league and absorb the extra people I referred to earlier, whose lives are currently those of frustrated overmanning, low wages and Marxist-motivated leadership, and give them instead a real incentive and a real wage in an industrial, not a political, climate.

8.27 p.m.

Mr. Bob Cryer (Keighley)

I shall be brief, as others of my hon. Friends want to speak.

The Tory attack was typical. The Opposition talk about depending on competition. In fact, their argument means thousands more people on the dole. The promise by the right hon. Member for Leeds, North-East (Sir K. Joseph) to remove all subsidies means that large chunks of private enterprise will grind to a halt.

The Opposition take the view that the Government should not intervene. That means abandoning regional policy. It would be interesting to know whether the Opposition would abandon regional policy and the support which has been given to it in the past. In 1976–77 regional support amounted to about £720 million. Do they intend to stop it, halve it or curtail it, and in what kind of fashion?

When the Opposition expose their bleeding heart on behalf of capitalism, as usual they fail to mention the lavish concessions on corporation tax which the Government are giving to encourage investment. According to Government expenditure plans—Cmnd. 7439—in the current year, together with stock appreciation relief, they amount to about £4.3 billion per annum. Those are enormous concessions and inducements.

The Tories voted against the rescue plans under sections 7 and 8 of the Industry Act 1972—their regional policy legislation. They voted against the rescue of British Leyland, which represents 250.000 jobs directly and another 250,000 jobs indirectly. They also voted against the Chrysler UK rescue.

Tory action in this House would condemn to the dole queue people employed in West Yorkshire Foundries, which is a British Leyland subsidiary. It would also reduce opportunities for skilled workers at firms such as Keighley Grinders, which sells grinding machinery to British Leyland and to Chrysler. The basic reality of Tory policy is designed to lengthen dole queues.

We on the Labour Benches believe that some support for industry is necessary and important. We also believe that there should be a greater degree of scrutiny to see where expenditure goes. The National Enterprise Board has made an enormous contribution to industry, and particularly to the machine tool industry—an aspect of industry that is well represented in my constituency. Any machine expert knows that the rescue of Alfred Herbert is important for the whole industry. The NEB has given great assistance and has encouraged new technological developments, such as Sinclair Radionics.

It is interesting to hear Tories mentioning the loss of jobs under the Labour Government, with the implication that under Tory policy there would be a burgeoning of jobs. Some interesting information is contained in column 271 of Hansard of 4 July 1978. Employment in the private sector in 1970—this information is set out in the Treasury analysis of public expenditure in table 1.10—was 18,254,000. By 1974, after four years of Tory government, that figure had fallen to 18,148,000. Therefore, the number of people in manufacturing industry under Tory free enterprise dropped, which proves that Tory philosophy does not work.

The right hon. Member for Leeds, North-East mentioned the removal of subsidies, such as the temporary employment subsidy—a subsidy which is of great value in textile constituencies. The only curtailment on temporary employment subsidy has come from the EEC, which is another aspect of industrial policy with which we must grapple. The Departments of Industry and Trade have renegotiated the Multi-Fibre Arrangement. That arrangement is not working entirely satisfactorily, but that is no fault of the Labour Government. The fault lies in our entanglement with the EEC and the complexities set up by the Commission in Brussels by not enforcing the agreement as originally envisaged. It also flows from the fact that the Commission has reneged on the original commitment. The MFA still gives us the greatest quota coverage that we have ever had. But it is still imperfect, and its imperfections are to be laid at the door of the EEC rather than at the door of the Labour Government.

We need to bring to the attention of the EEC the subsidised textiles from the Prato area of Italy, and we need to keep a close eye on the processing arrangements which have just been entered into under which goods can be shifted from textile areas and processed outside the EEC and then brought back in again. Furthermore, we need to examine the working of the MFA, and we should follow that example by obtaining greater quota coverage rather than less.

If the British motor car industry, on which thousands of jobs depend, is to survive reasonably in future, there will have to be a quota coverage in respect of cars. Such coverage will have to apply to a wide range of manufactured and semi-manufactured products, because we cannot tolerate free enterprise competition. I am referring to world trade. We need to reinvest and to have some kind of regulation of our trade while that reinvestment is taking place.

The plain fact is that we are not facing fair competition. The competition that we are up against does not operate any em- ployment protection legislation or health and safety at work provisions, but it operates on very much lower working standards, with very much higher standards of exploitation. If we are to have any kind of planning internally, I believe that it must be matched by external planning. Therefore, unless we extend quota coverage to manufactured and semi-manufactured goods, other sections of industry will follow the path of the British motor cycle industry. Except for the fine example set by the Meriden co-operative, that industry has virtually disappeared and is now dominated by the Japanese industry.

The Tories condemn public expenditure in industry, but they queue up at the back door of the Department of Industry for handouts to firms in their constituencies. Some of them even write to the Department of Industry asking the NEB—a body which they wish to kill—to intervene to save jobs. The fact is that jobs cannot be preserved without Government intervention and support.

The Conservatives say that they support, and are in favour of, private enterprise competition. I should like the House to debate the early-day motion in the name of my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker), which states: That this House notes that the Chairman of the Conservative Party is also Chairman of Pirelli Limited, a firm found to have participated in an illegal price fixing ring; and calls upon the Chairman of the Conservative Party to keep his mouth firmly shut on the issues of law and order, morality and public expenditure in the forthcoming General Election. I hope that he does. I hope that we find an opportunity to debate that issue, because when Conservatives talk about public expenditure it is quite clear that one of their leading exponents is organising a price-fixing ring. That is one of the alternatives to competition, and we know that it exists within the framework of the big monopoly corporations which Conservatives support.

Although the Department of Industry and the Government have preserved many thousands of jobs, we cannot stop simply on that basis. We must ensure that we get planning agreements with the big monopoly corporations—those corporations that have enormous powers over working men and women. I am thinking of corporations such as Thorne in Bradford, which made a profit of £57 million in 1957 and put 2,300 people on the dole. But in the same year it imported 90,000 colour television sets.

Dunlop is a similar sort of organisation. It put 2,500 people on the dole in Speke, an area of high unemployment. I also think of corporations such as Plessey, which put 1,000 people on the streets in Merseyside. [HON. MEMBERS: "What about defence cuts?"] We on these Benches argue that there should be a planned conversion from wartime purposes to peacetime purposes. We do not say that it should be done overnight. We say that we should plan the economy. In order to do so, we need planning agreements with the big corporations.

We must develop industrial democracy. It is significant that when the CBI talks in consternation about strikers and trade union action, it always deeply opposes any involvement by working people in decision making—either in planning agreements or in the development of industrial democracy.

We must also resurrect the Labour Party policy of an official trustee. We need people to be able to hold assets while decisions are made in order to preserve that working capacity. Unfortunately I do not have time to go into them, but there are examples to support this Labour Party policy.

The Department of Industry needs to become a more positive interventionist Department, instead of essentially a reactionary Department. I do not mean that in a pejorative sense, although that could also be true. I simply mean that it tends to react to critical situations. In fact, the Department of Industry needs more powers to prevent those critical situations occurring. A public trustee is one means of preventing decisions against the national interest being made and preventing decisions by individual companies that are against the interests of ordinary working people. The Department has certainly provided a number of useful stimuli to private enterprise, which the Conservative Opposition never recognise or accept. The assistance is on a massive scale. At least £12 million every day goes out to private enterprise and gives it support.

Labour Members must also retain their own ideals and recognise that public ownership is an important part of the economy. We must also recognise that the co-operative efforts we have made—for example, Meriden and KME—should be supported, and that organisations such as the Co-operative Development Agency should be given funds to develop co-operatives on the ground. With that sort of effort we can develop an important industrial policy that will preserve and develop more jobs.

8.39 p.m.

Mr. Nigel Forman (Carshalton)

One advantage of following the hon. Member for Keighley (Mr. Cryer) is that it makes it somewhat easier for me to persuade the floating voters in my constituency to vote Conservative. I shall go to great lengths tomorrow to make sure that they can read the hon. Gentleman's remarks, as well as my own speech, in order that they should be in no doubt about the relative merits of Conservative policies and the policies of Labour Members below the Gangway. The Opposition accept no homilies on unemployment from a Labour Member of Parliament who, until recently, was a member of this Government, under whom unemployment has doubled in the past five years. We regard that as a national tragedy.

As my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said in his brilliant opening speech, the Government's industrial polices have been disastrous over these past five years, for the reasons set out in the Opposition motion. It is interesting that the argument summarised in the motion is strongly supported in a recent report, published by the Cabinet Office, of the advisory council for applied research and development, in which it looks at industrial innovation, which is at the heart of this debate.

The report summarises the main submissions made by people who supplied their expertise towards making the report. It highlights the following important matters as being deleterious to the prospects of innovation: constant changes to the economic environment, discouraging longer-term planning; the lack of incentives for managers and entrepreneurs; the increasing burden of legislation; overmanning dictated by trade union pressure; falling industrial profitability; and the concentration on short-term returns in British management. Those points amply bear out and support the arguments put by my right hon. Friend.

The evidence for the Opposition's views on this matter is on record for everyone to see. The average worker's tax bill has risen over the past 20 years from about 5 per cent. to about 25 per cent. The greater part of that increase has taken place over the past five years. The jobs supposedly saved by job subsidies and job creation schemes, so beloved by hon. Gentlemen below the Gangway, are those saved at a cost of putting extra burdens on the rest of the community, which could provide the jobs given the right climate. The GNP per head is only about half of that in West Germany and two-thirds of that in France. and much of this disastrous decline has taken place over the past five years.

We see a long, slow slither into relative international poverty and decline. This has contributed greatly to the degree of social bitterness and general bloody-mindedness that characterises so much of our industrial scene today. It has made it more difficult for Governments of all parties to ask for self-discipline and to restore self-respect to the British people. It makes it virtually impossible for any Government to afford the levels and types of social provision that we should like to see available to our people.

To develop that thought a little, another aspect of this national tragedy in our industrial scene under Labour's recent stewardship is that there has been too great a tendency by the Government to treat the nationalised industries as if they were mere social services or an extension of social services. Too many of our social services, in turn, have become infected with the worst industrial relations practices imported from some aspects of British industry. We have only to look at recent examples of NUPE strike action or the shortsighted behaviour of some of the British Leyland shop stewards at Longbridge to see the strength of those arguments.

Dangerous misconceptions are contained in the Government amendment to my right hon. Friend's action. The amendment illustrates all too clearly where the Government have gone wrong and the primrose path down which the Labour Party would take us if the elec- torate were foolish enough to return a Labour Government for another five years.

We see that the industrial strategy called for in the amendment is little more than a paper concept, providing jobs chiefly for NEDO bureaucrats rather than real jobs in British industry. The Government's record on picking winners is far less notable than their tendency to shelter losers. It is notable that some of those losers figure in the Government amendment. I refer to steel, textiles and shipbuilding. The doctrinaire extension of the public sector through the agencies referred to in the amendment—namely, the NEB, the Scottish Development Agency, the Welsh Development Agency and the Northern Ireland Development Agency—does not help either. There may be certain sectors where it is appropriate for the State to take a stake, whether in equity or anything else, but not merely for the sake of postponing change and cushioning people from the realities of the industrial scene. That has happened all too often over the past five years.

The conclusion I draw is that the Labour remedy, after five years' bitter experience, would give us more of the same medicine that we have had to take over the last five years, yet it would be more of the same medicine which has come close to killing the patient. This attitude leads to some lunatic ideas, such as that expressed by a Longbridge shop steward recently, as reported on the nine o'clock news. When asked why he took the attitude that he had about the current wage claims, he said to the British Leyland management. The NEB have bailed you out before and they can bail you out again. It is that sort of attitude, that sort of shortsightedness, that is at the root of our problems.

But these attitudes have been exacerbated by Labour, because those who know the truth in this country have flinched from telling it to those who ought to hear it, and those who are in a position to get through to the right audiences are too frightened, too doctrinaire, or too confused to convey the message.

What, then, do I think ought to be done? There are two or three key things. First, we need to recognise that the economic models of the pre-1973 period are now played out. Secondly, the House needs to recognise that it is an illusion to think that we can depend on selective protection against the threat from the newly industrialising nations, or on selective intervention by Government in British industry, because both tend to be slippery-slope operations. Such policies tend to be the main obstacles in the way of a return to full employment in this country.

Thirdly, it is necessary for us to rethink the economic role of the Government in the face of these new threats from the newly industrialising countries and from the new imperatives of tomorrow's technology. The hon. Member for Birmingham, Erdington (Mr. Silverman) talked about technology and the technological threat, but he and his hon. Friends have to realise that we in this House and in this country have no alternative but to go along with technological change of the kind that is before us. If we seek to pull up the bedclothes and hope that the world will go away, we shall recede even further into a position of non-competitiveness.

We must put more emphasis on the supply side of the economy, and on micro-economic policies at the plant and district level to back up the macro-economic policy of the Treasury, whatever its shortcomings over recent years. The answer to this country's problems rests on giving a fairer break to smaller businesses in particular, because of the enormous contribution they can make, and on giving a fairer break to British industry as a whole.

The country may have to wait only a few more weeks or months for a Conservative Government, and it will be under the next Conservative Government that we shall see the right economic conditions and climate created for the changes which are long overdue.

8.48 p.m.

Mr. Robin Corbett (Hemel Hempstead)

I do not recognise the Britain which is described in the Opposition motion. Although there is a problem with unemployment and the dole queue is disgracefully high, there are today more people at work in this country than there ever have been since the Second World War.

I said in an earlier intervention that I do not recognise this picture of people in industry, particularly manufacturing industry, sitting on their bottoms, with their heads in their hands, crying "Woe, woe, woe". That is certainly not the case in Hertfordshire. We are luckier than many of the older towns and cities in the country, because we happen to be involved in some of the newer technologies, particularly electronics.

It is inevitable, in a debate of this kind, that we are perhaps more concerned with investment, incentives, production. productivity and the rest of it, but I believe that that is the wrong end of the problem from which to start. I believe that we have to go back to the beginning of this story, and that at the beginning of the story are people. People are the greatest asset that any organisation, company or country can have. That is easy enough to say, and it is often enough said, but I do not believe that it is often enough understood.

Success in any business, success for the country as a whole, can come only when people have been persuaded to co-operate, to accept change and, above all else, to be involved in what is going on. I believe that something else flows from that, and many of the troubles over the last 43 days in this country have shown it. It is that people at work have to be treated as individuals. They are not just numbers on a clocking-in card or one or a group of 200, 300, 400, 5,000 or 19,000 that clock in. People matter as individuals and must be treated as such.

Although not put exactly in this way, there have been calls from the Conservative Party for the days of the tough, all-powerful employer or the equally tough, all-powerful trade union leader who could bang the table in an executive meeting and order the results of decisions. We must accept that those days are gone and that there is no road back to that kind of centralised control. Most trade unions in this country have properly encouraged and enabled their members to have a more effective say in what happens. That is the reality. Indeed, it is a development that must be encouraged. Far too often, and especially when we do not like the results, this development is seen as a nuisance to appointed management or a threat to elected trade union representatives. But it is neither. It is positive. Like parliamentary democracy, trade union and workplace democracy thrives, develops and contributes best when more people are involved.

To use a simple analogy, the manager of every first-class football team in the country knows that between Monday and Friday he gets the best results from his team by managing and motivating them as individuals. He does that for only 90 minutes' work on a Saturday afternoon. If that is understood in that area, think of the benefits and bonuses that can flow from those responsible for managing people at work learning this lesson for 40 hours a week between Monday and Friday. That is what it is all about. We must find new and more effective ways of dealing with people at work.

But, in the present circumstances, those people who deny small children entrance to cemeteries to place flowers on graves, deny people entrance to hospital for treatment or refuse to bury the dead are behaving in an unacceptable way. There is no argument about that. But it is not enough to state that. We must ask ourselves what makes individual men and women at work behave in this way. What has happened to them? They do not have all-powerful trade union bosses breathing down their necks. Individual men and women at work have taken decisions to behave in this way, and we must try to understand what is going on.

It is no contribution to threaten to hit these people over the head with a new law. If we were quiet and listened better outside these walls, we would perhaps hear what is going on and respond. There are many thousands of people in all parts of the country who feel over-regimented and over-organised by employers, trade unions, Whitehall, town hall, county hall and big business that has become too large, remote and untouchable as it has become increasingly multinational. We should listen to what people are saying individually. They are saying "I am here. I am me. I matter. I want to be heard. My views matter." We must listen and respond, and we shall then have the beginning of a solution to our current problems.

There are three points to be considered. If I use the initials "RIP", Conservative members may see it as a fitting epitaph to our current troubles. But I mean "R" for responsibility, "I" for involvement and "P" for people.

When shall we learn that when we encourage people to exercise real responsibility they grow and respond and feel that they are working for something other than a pay packet at the end of the week? That lesson has been learnt by the voluntary organisations in which many of us are active. The people involved are not paid, but when they are given responsibility, have a say in what happens and have an effective control over the decisions, they respond. Why cannot we do that in industry?

I turn to "R" for involvement. We know that people who have been involved in the taking of a decision feel more ready to go along with that decision than with one which is imposed upon them. I suspect that most right hon. and hon. Members would not be keen to accept a decision which was imposed upon them. But if they are asked and their help and advice are sought most of us would walk over broken glass.

I turn to "P" for people. We must escape the assumption that because many people do the same job in the same type of factory they are the same. They are not. We are all distinct human beings. If we insist that that distinction is recognised outside the workplace, it is important that it be respected within the workplace. When people are respected as individual human beings, they give of their best.

I am saddened by the constant attacks upon trade unions. Trade unions are no more than the sum total of the individual men and women who make up their membership. They are no more than nameplates on buildings. If trade unions are so powerful and militant, why are the basic pay rates in Britain among the lowest in Europe? If the trade unions are so militant, why are we told that up to one-third of trade unionists and their families vote for and support the Conservatives? Clearly, that is not the answer to the problem.

Surely it is time that we in the House—with what influence we have, particularly in the manufacturing sector—learnt that compulsion is out. It cannot and will not work. We do not want it to work. I am sure that no hon. Members want to go back to a forelock-touching work force. If we say that the Government should have instant powers to compel and command people, we go down the road towards the type of totalitarian regime which is rightly condemned in many parts of the world.

The problem cannot be solved by edict. We must treat people as individuals and involve them more in what is happening in their workplaces. We must use that strength, investment and experience to overcome the present troubles.

8.58 p.m.

Mr. Hal Miller (Bromsgrove and Red-ditch)

I can follow the hon. Member for Hemel Hempstead (Mr. Corbett) in so far as I believe that the key to our industrial problems is in attitudes. But I cannot accept the total of the hon. Member's idealistic philosophy, however much I admire it. if he had accompanied me to the Longbridge picket line last weekend he would have found that those who had the responsibility and were involved were not acting responsibly or in the interests of their own future, or, indeed, that of their own members.

He would have discovered that a degree of compulsion was being exercised by the pickets, not only against those who wished to return to work but against those who were attempting to build the new factory and to install the new machines upon which the success of the BL rescue must ultimately depend.

Nationalisation, involvement of the NEB, Government grants, planning agreements or sanctions will not lead to our salvation. The Chrysler example illustrates the weakness of a planning agreement. That example shows that a planning agreement has no effect in the real world if there is not a competitive base that enables us to compete with other countries that pay their workers more than we pay ours. Workers in other countries have higher standards of safety. Contrary to what the hon. Member for Keighley (Mr. Cryer) said, they enjoy higher standards of safey, pensions, holiday pay and better conditions in all other respects. However, they still remain competitive.

The problem lies with attitudes, and that is where the charge of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) against the Labour Government hits home. The Government have failed constructively to channel people's attitudes. They have failed to offer them hope, incentive or reward. The thought that investment is the way out of all our troubles is belied by the experience of money poured into so many industries. What we need to achieve is greater productivity that will in turn achieve greater output—an issue on which I questioned the right hon. Member for Battersea, North (Mr. Jay)—by a greater utilisation of existing capacity and existing investment. That may be seen from a study of productivity.

The greatest increase in labour productivity could easily be achieved if we could return to the stage where, during eight hours' work, seven and a half hours were actually worked, as is the practice in most competitor countries, or seven and three-quarter hours as in some developed countries. We achieve about six hours actually at work during eight hours. When we are at work we work as hard and as effectively as anybody else, but we have allowed our hours at work to fall. A reduction of working hours could easily be achieved as well as a reduction in overtime if more time were spent at work during so-called working hours.

Another significant increase in productivity could be achieved by the better presentation of work to the work force. If the presentation were improved, the work force could make greater use of the time spent at the machines. Better planning of production and a better supply of material would result in increased productivity. There are many occasions when production is delayed by an absence of the wherewithal to do the job. More effective maintenance of machinery by getting rid of demarcation disputes would have the same effect. Let us not look for panaceas such as planning agreements, investment or Government grants. The answer is much nearer home.

Over the past few years we have been witnessing a power struggle. It is clear that that has been recognised by some who have taken part in the debate. My charge against the Government is that they have come down on the wrong side. They have come down against responsible trade union activity. They have come down against managements that are trying to invest and to make a success to ensure that we still have an industrial base to enable us to feed our population.

I shall give some examples of the way in which the Government have been less than even-handed. There is unequal bargaining. It is not possible to have free collective bargaining in unequal conditions. If we are not to have equal bargaining, I agree with the right hon. Member for Battersea, North that we must have a pay policy. I wish that we could return to a more equal bargain. That means enforceable wage agreements. There are enforceable agreements in other countries. The agreements are paid for. Why should such agreements not be complied with in Britain?

There are unequal laws. The Labour legislation on the closed shop gives unequal power against non-union members. There is an unequal law applying to unofficial disputes. There is no equality in the law and no protection for the ordinary citizen when we consider the present state of picketing. There are unequal sanctions. The Government have attempted to enforce their pay policy by requiring employers to do it for them. That was our argument with the Government over the sanctions on Ford. The Government would not stand up for their own policy. They were trying to force employers to do it for them without giving them any protection against unofficial, irresponsible union activity.

Now the Government have tried again with unequal sanctions through the Price Commission and the attempt to control prices, again hitting the employers and leaving them to deal with the unions. No wonder the ordinary union member is so dissatisfied. He realises that he has been put in a bind and that the Government have acted unfairly against his own employer. Finally, there are unequal rights because the elite of the trade unions somehow have a double vote. They have a vote in the election and another vote in the Cabinet. There is no justification for such dual representation. The charge against the Government is that they have not been even-handed. They have tilted the balance of power in exactly the wrong way. Unless they are to redress that balance, they will be driven to having statutory pay policies, as the right hon. Member for Battersea, North pointed out.

This debate takes place at a critical time. The whole future of our manufac- turing base is at risk. Figures were released on the tapes today showing that industrial production in this country had risen by only 1 per cent. last year. We are faced with a situation where our industries are disappearing before our eyes. They have been listed: the steel industry, the textile industry, the shipbuilding industry, the motor car industry and the machine tool industry. The Government's only response has been to pour in money, provided by taxpayers in successful enterprises, and, more cruelly, provided by the workers themselves in those enterprises. No wonder they are fed up with their low take-home pay and the high prices resulting from high interest rates and high Government borrowing.

The Government have raised the expectations of the people but have denied their aspirations. They have flattered the unions but have ended by deceiving them because they have not done anything about unemployment. They have not done anything to safeguard the manufacturing, investment and employment that alone can provide the jobs for people in this country. They have not provided the safeguards whereby unions can conduct their own affairs responsibly against the militants leading unofficial strikes. The Government have adopted a totally static view of the economy. They have resisted attempts to change.

The final charge against the Government is that they have totally failed to govern. Instead of negotiating and dealing with the unions, which is the language that the unions have been brought up to understand, the Government have sought to propitiate and appease them. They have forfeited their respect and led the country down a slope of no return. That is our charge against the Government: they have failed to govern and have spent our money on appeasement.

9.10 p.m.

Mr. John Biffen (Oswestry)

My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) opened the debate with a compelling and philosophic speech, and since then we have covered a wide range of matters, including incomes policy and trade union reform. I should like to reply to the debate on the rather more central issue of the erosion of our industrial base.

In a thoughtful and wide-ranging speech; the hon. Member for Bristol, North-East (Mr. Palmer) observed that the problem is one of long standing. No fair critic would deny that, but there is an urgency that attends our debates because there is now a strong feeling that the time for remedy is short and that that short period has been provided by the advantages that are believed to be conferred by North Sea oil. Perhaps it was put most succinctly by the Governor of the Bank of England, who said, in December: What we plainly must do is to use the breathing space that this bonus"— North Sea oil— affords us to arrest and reverse our industrial decline. I should like to put to the House—this has come through in the debate—that there are two recognisable elements that comprise the danger of de-industrialisation. The first is the profound challenge coming to many of our traditional manufacturing activities from new economies, frequently, though not necessarily, from Asia.

The second and more challenging problem is the steady decline of our economy relative to other OECD countries, which, presumably, is on account of our own industrial conservatism.

I should like to consider both those points—the second at rather more length than the first. I believe that the competitive challenge from without will get much stronger. The speed of Korean industrialisation, relative to how long it took Japan to industrialise, is a guide to what could happen to other economies in the Far East. They will take the faster route of Korea, and, heaven knows, the Japanese route seemed fast enough.

There is also the question of our trade with China, which, it is widely assumed, will take on considerably enhanced proportions. It is not realistic to suppose that the export of United Kingdom aerospace products will be paid for by bamboo shoots or table mats. There will be a reciprocal trade in manufactured goods. I cannot anticipate what they will be, though I note the anxieties of my hon. Friend the Member for Macclesfield (Mr. Winterton). We have to accept that trade with China will result in an increasing invasion of our markets by the products of that economy.

Of course this means that change will have to accelerate. It is a cruel deception to suppose that politicians can protect jobs. Politicians can postpone the moment of economic truth but they cannot avoid it. I give as one example the steel plants that were reprieved in 1975, which now make a melancholy roll call of the current closures—Clyde Iron, Hartlepool, East Moors and Ebbw Vale. The House must accept that there is an accelerating challenge of economic change.

No one who heard the speech of my hon. Friend the Member for Falmouth and Camborne (Mr. Mudd) could fail to have been moved by the eloquent and formidable way in which he defended his constituency interests. At the end of the day the Falmouth yard must be a commercial decision for British Shipbuilders, but the whole House will join me in hoping that another purchaser will be secured for the yard.

The second factor is the rather lacklustre performance of British industry generally. Some hon. Members sought to be specific about this. All hon. Members would have liked to hear more from the hon. Member for Basildon (Mr. Moonman), had he had time to develop his case in a more leisurely way. He had a most carefully catalogued demonstration of the shortcomings of the economy.

The hon. Member for Birmingham, Erdington (Mr. Silverman) urged us not to knock British industry but to acknowledge that there was a competitive challenge for us. There is no doubt that manufacturing industry lies at the centre of our problems. I quote in aid an impeccable source—the Chancellor of the Exchequer speaking to the TUC industrial strategy conference in Birmingham on 16 November. He said: The performance of manufacturing industry is the central problem. Most of the other sectors of the economy—agriculture, retail distribution, the financial services, tourism and so on—are highly competitive. The House would find it instructive to reflect for a moment on manufacturing industry, selected by the Chancellor as being in need of remedy, and all the other areas of the national economy which by his testimony had out-performed manufacturing industry. I do not pretend to divine the complexities which make these other sectors much more efficient than manufacturing industry, but whereas in manufacturing industry trade unionism is dominant, it is not so well established in other areas. Those who argue that there is a fiercely conservative force in trade unionism which impedes rising living standards would do well to diagnose the Chancellor's analysis and come to these conclusions.

I wish to consider four particular policies which I recommend to the Treasury Bench for adoption over the remaining three or four weeks of the life of this Government, so that we can go to the hustings with a degree of consensus. The four points are modest. We are wise to be modest in our ambitions. Recently my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) talked of undramatic progress, and this is just the right rhetoric. For the politics of raised expectation ill serves Britain, no less than the politics of envy.

The first policy point that I recommend to Labour Members is a policy of relaxation in respect of prices. It is, in fact, the very opposite to what the Government have been attempting to do in the recent past. In my view, the whole reason for greater pricing freedom is contained in the deplorable profit figures. Here I should like to pray in aid the speech of the right hon. Gentleman the Member for Battersea, North (Mr. Jay). A great deal of his speech was devoted to the virtues of an all-embracing incomes policy which was to have the most extraordinary, wide-ranging supervisory and regulatory role and was to be an extra-parliamentary body. The more I listened to him, the more I reflected that it would be dear to the heart of the most ambitious Brussels bureaucrat.

But it is not on prices and incomes that I wish to exchange opinions with the right hon. Gentleman this evening, because I am more anxious to establish areas of agreement. He said—and I quote his words—that profits were "pitifully low." The right hon. Gentleman is nodding his head, confirming his wise judgment. Indeed, profits are pitifully low because the rate of return for manufacturing companies, which ran in the early 1970s at just below 7 per cent., has dropped to less than 2 per cent. for most of the life of the present Government. It came back to 3.2 per cent. in 1977, but, according to the Bank of England Quarterly Bulletin for December, Companies' real rate of return (excluding North Sea oil activities) seems likely to tall back, for 1978 as a whole, to the worst level of recent years. The second point I recommend to the Treasury Bench as a policy of modest industrial renaissance is to end the danger of planning agreements. The hon. Member for Keighley (Mr. Cryer)—as I heard his speech I wondered not so much about the manner of his going but how long he had lasted—convinced me that we would do well to mark the potential danger of planning agreements, for I have no doubt that they will feature in the concordat that we are promised for tomorrow.

There is always a danger when politicians and politically motivated trade unionists, rather than business men, set the investment plans. The danger is that there will be misapplied investment. I was encouraged in this view by the comments of Dr. Peter Caudle in respect of the chemical sector working party. I was absolutely riveted when the Secretary of State for Industry quoted the investment performance of the chemical industry as justification, and I should like to tell the House what might have happened.

On 6 December, when Dr. Caudle addressed a market research association, the Financial Times reported: Chemical plant worth £6 billion would be lying idle today if companies had based their investment on the 'totally unreal market projections' put forward by the Government and the trade unions, Dr. Peter Caudle, economics director of the Chemical Industries Association said yesterday. He went on: Company managements, on whom survival of and prosperity of the chemical industry actually rests, cannot afford the mad folly of building real plants, using real national resources, to meet totally unreal market projections. I turn now to the third piece of advice that I generously offer to the Treasury Bench. It concerns the question of interest rates. A minimum lending rate of 14 per cent. is not a rate which allows credit to perform its legitimate commercial function. It is much closer to usury. For many small businesses it means that rates of borrowing will have to be 17 per cent., or perhaps even more. That hits particularly at small businesses and also hits innovative businesses.

I was particularly interested in—my hon. Friend the Member for Carshalton (Mr. Forman) mentioned this—the report, entitled "Industrial Innovation", of the advisory council for applied research and development, because it happened to appear on the very day of the 14 per cent. minimum lending rate. Dr. Alfred Spinks, the director of research at ICI, who chaired that committee, is reported to have said that Governments had neglected the real problems of innovation, such as the cost of entering a market and the long periods of negative cash flow it entailed.

A long period of negative cash flow coincidental with interest rates of this character is fatal. Therefore, the Government's policy is militating exactly against innovation, which is one of the very areas that we should be seeking to encourage.

I wish to have the bodily support of the hon. Member for Colne Valley (Mr. Wainwright) in the Lobby tonight, so I turn to talking about Leeds United. The hon. Member seems to imagine that my right hon. Friend the Member for Leeds, North-East and the Chancellor of the Exchequer—the right hon. Member for Leeds, East (Mr. Healey)—are a kind of Siamese twin of monetarism.

Mr. Richard Wainwright

They are.

Mr. Biffen

That is woefully misconceived, because the monetarism that is being pursued by the Chancellor of the Exchequer is based upon high public spending and massive borrowing, and the whole argument of my right hon. Friend the Member for Leeds, North-East has been against the high public spending and the massive borrowing—particularly for the fact that it would throw a totally unreal, unnatural and unsustainable burden upon interest rates.

In responsible newspapers we see that there is the possibility—[HON. MEMBERS: "Which newspapers?"] I leave hon. Members to draw their own conclusions. I leave it to hon. Members to confirm or deny the likelihood of the speculation. The speculation is that the 1979–80 borrowing requirement could reach £10 billion. That is on the assumptions that there will be no changes in taxation and that public spending will be in accordance with the recent public expenditure White Paper. I have to tell the Treasury Bench that the White Paper is already hopelessly out of date. There is absolutely no way in which prudent financing of the national economy could proceed on a public sector borrowing requirement of £10 billion.

We understand that the Chancellor of the Exchequer is now wrestling with the prospect of cuts in public spending and increases in indirect taxation. It may well be that there should be both. But the Budget must be so constructed as to make a significant impact upon the borrowing requirement and hold out the hope of falling interest rates, whilst at the same time permitting some reduction in direct taxation.

That takes me to the fourth point, where I recommend to Labour Members that there must be speedy cuts in the top rates of taxation. I deliberately use the word "top" but do not imagine that it will bring immediate political popularity. However, there must be a sense of realism to permeate these debates. There must be cuts in the top rates of taxation because, first, they will help to restore management morale—a point which concerned the hon. Member for Basildon—but, secondly, they will facilitate the growth of entrepreneurial small business. That is a challenge which is firmly before the Government.

The Governor of the Bank of England, whose speeches, I gather, do not altogether enjoy the warmest of support of the Secretary of State for Employment, said when talking in the context of industrial revival that it would also include readiness to adjust the balance of taxation to increase personal incentives and thus promote a climate more favourable to initiative and enterprise and to the willingness to work for a better living. If I needed one further witness finally to convince the Secretary of State, I would quote the Chancellor of the Duchy of Lancaster, although I am not sure whether his ambivalence towards the Governor of the Bank of England is the same as that of some of his colleagues. The Chancellor was interviewed by Brian Walden—as good a revisionist as any. Doubtless feeling himself in congenial company, the Chancellor said: The rate of tax on salaried talent is very high in this country, … The putting of this right is a massive problem that will take a little time and I believe this to be a number one priority in the Chancellor's mind for future action—that's my own view: it ought to be". I am happy to endorse those comments, not least because I believe that it is in the small business sector that there will be a chance for growth in employment. Throughout the debate, from both sides of the House, there has been a natural and understandable concern that unemployment is now experienced on a scale that would never have been thought conceivable 10 or 15 years ago. I believe that the small business sector will play a significant role in seeking to remedy that problem.

I was particularly interested in the project that was recently commissioned by Shell UK Limited. A study was undertaken by Graham Bannock, managing director of the Economist advisory group. Mr. Bannock is probably the leading academic spokesman on the problems and opportunities of small businesses. I should like to quote one sentence from his findings: EAG, for example, has recently carried out a review of recent empirical research on inner cities, conurbations and regions to see what light it throws on the role of small firms. This work, which was financed by Shell UK Ltd., suggests that the majority of new jobs are in fact created by small firms. I have mentioned four policies—price liberalisation, abandoning planning agreements, budgetary and monetary arrangements which are designed to produce lower interest rates—I know that to be of great interest to the hon. Member for Colne Valley—and, finally, a policy for incentive tax cuts. Those policies were not chosen at random. Behind them lies an underlying theme and objective—the rehabilitation of price and profit. Price and profit play an indispensable role as the signals of success and failure.

The House should learn that the nation can instruct us, by success and failure in the manufacturing skills at which Britain excels. We must learn to follow the philosophy of backing success rather than reinforcing failure.

The Government have shown that they neither trust nor understand the vital role of price and profit. The consequences of their obdurate negligence condemn them no less than our motion.

9.34 p.m.

The Minister of State, Department of Industry (Mr. Alan Williams)

I congratulate the hon. Member for Owestry (Mr. Biffen) on his performance. It is a pleasure to see him on the Front Bench again. Regardless of the philosophical differences between us, no one on this side doubts the genuineness of the positions which he holds. For that reason, we pay considerable attention to what he says. We may not arrive at the same conclusions, or start from the same points, but we recognise that what he says merits attention.

I was somewhat disappointed that the right hon. Member for Leeds, North-East (Sir K. Joseph) did not mention any positive policy in his speech. I am sure that it would have been welcome in the country as a guide to the positive aspects of his thinking. We received many a penance for past errors and we detected a new-found obsession with chicken farming, but in terms of his long-term thinking there was very little guidance. I should have welcomed the right hon. Gentleman's recognition of his past errors more if I were not so worried about those that he would like to commit in future.

It is imperative, and it has been a feature of the debate, that we must not allow short-term situations to divert us from long-term objectives and opportunities. I think that it is accepted on both sides of the House that we still need to defeat inflation. It is essential to recognise the magnitude of the clawback that this country has made in three years from a 25 per cent. level of inflation to 8 per cent. Whatever differences there may be on approaches to the problem, it is remarkable that that has been achieved by consensus, without a statutory incomes policy, more successfully than any attempts under our Administration in the 1960s or the Conservative Administration in the early 1970s under statutory incomes policies. There is an important lesson here—that, in a democracy, consensus is always to be preferred to compulsion. I hope to return to that aspect in another context later.

The hon. Member for Oswestry said that relaxation of prices was an important prerequisite to increased profits. I disagree with him in the sense that it is essential that we make a break in the psychology of inflation which is now gripping the country. One can make a breakthrough in the monetary levels of inflation, but people still take a retro spective view of expectations. Therefore, it is important that we should not fuel this psychology of inflation, this high level of expectation. I submit that if the hon. Gentleman had his way and increased prices, that would add to the pressure for even higher rates of pay settlement.

As I said, that must remain a priority if we are to solve this country's problems, to remain competitive and to enable our major contractors to compete and tender. For example, the hon. Member for Oswestry referred to enormous contracts in China. Many are medium and longer-term contracts and take time to fulfil. Therefore, it is imperative for manufacturers who are competing to be able to work from a reasonably predictable cost base.

The hon. Gentleman referred to interest rates. I share the hope that I suspect he has that the current level of interest rates will be short-term. Industry tends to ignore any short-term level of interest rates and to take the long-term view.

We would at some stage be pleased to know the views of the right hon. Member for Leeds, North-East on interest rates and how they fit into his monetarist approach. He was singularly coy on that matter today. But I note that, disastrous as 14 per cent. was said to be by the hon. Member for Oswestry, the minimum lending rate reached 13 per cent. in November 1973, before we faced the world recession and oil crisis. Therefore, it seems mildly hypocritical of Opposition Members to bemoan policies pursued by this Government which the Conservative Government pursued in far less difficult circumstances.

Equally, it is important that, in the current atmosphere of difficult and perhaps even soured industrial relations, we should not take measures which risk turning what we all hope is a short-term manifestation into a permanent confrontation. If, as has been suggested in the press, there is a risk to investments from the uncertainty generated by the current situation, the uncertainty would be massively greater if it were thought that the current situation was likely to be perpetuated.

That is why I and many of my Labour colleagues are concerned with the approach of the right hon. Lady the Leader of the Opposition, who wishes to take the route of legal sanctions. As far back as the Betteshanger case and in the recent case involving the Pentonville five, we have seen the difficulties that face Governments who try to pursue this route as a means of controlling industrial relations.

The right hon. Member for Leeds, North-East said that as a nation we must avoid adversary economics. However, the impression given to the country is that the right hon. Lady is hell-bent on a long-term confrontation with the trade union movement, and that is a real danger to industry.

As for the long term, there is common ground in our objectives. Both sides of the House have agreed that we wish to attain a high growth rate and a high productivity economy with high incomes for the work force. But the trade unions must understand that high incomes without productivity mean only lost markets, higher domestic inflation and increasing unemployment.

My hon. Friend the Member for Bristol, North-East (Mr. Palmer) said that the roots of our present difficulties go deep into our economic and industrial history. The goal of growth, high incomes and high productivity has eluded every post-war Government. The combination of balance of payments circumstances and Britain's role as a reserve currency holder has led to our growth being cut time and again through sterling crises. The consequent economic see-saw, which became known as stop-go, discouraged investment by the manufacturer because he could not predict the long-term rate of return. It encouraged the trend of taking on a work force to meet the rise in the market, and troughs were dealt with by shedding the same work force. This created doubts among the work force about investment and new equipment. Therefore, the cycle generated by stop-go has led to under-investment and under-utilisation of investment. It has also resulted in low wages and low productivity.

Let me come to the effect of North Sea oil. North Sea oil—and on this matter the hon. Member for Oswestry and I are at one—is a buffer against currency pressures which have diverted successive Chancellors of the Exchequer under various Administrations whenever they have attempted to go for growth in the past. It gives major advantages to our nation, and, since I speak as a Minister with responsibilities for inward investment, I find that this aspect is a major factor for overseas companies. Those companies are aware of the fact that in the mid-1980s we shall be the only OECD country that will be self-sufficient in energy and that we shall be the EEC's major source of energy.

The discovery of North Sea oil has given us time and resources, but it has not given us the solution to our difficulties. We have an opportunity—but no more than an opportunity—for sustained growth. Therefore, we must not just utilise North Sea resources but must try to maximise them. This is why we give high priority to downstream development.

Let me deal with the hon. Gentleman's comments on petrochemicals. Nobody wishes industry to make investments that will not be viable or productively useful. The fact is that the whole of the petrochemical industry has been taken by surprise by the rapid fall in demand for its products, and surplus capacity has been a feature not just of Western European countries but of many advanced countries.

The aim of maximising the added value from the North Sea is a key element in the industrial strategy. Manufacturing has been given top priority in our allocation of resources. The industrial strategy is based on a voluntary planning process—which is anathema to the right hon. Member for Leeds, North-East. It is a tripartite process, fully supported and advocated by the CBI and the TUC. In a nation which has been beset by the inability of one part of industry to talk to another, it is peculiar for the Opposition to think of setting aside one of the few areas in which constructive communication has been taking place throughout the years about the present and future state of industry.

The aim must be to improve long-term competitiveness and ensure that investment matches opportunities. In the last two years we have seen a small turn around in our fortunes in relation to trade, partly as a result of the combined efforts of industry. Our share of world trade has risen. In the last 12 months, we have seen an increase of 3 per cent. in our GDP. But to take advantage of the opportunity that exists I believe that we must carry on with the fullest tripartite discussion, reach down further into industry, and talk to the decision makers.

I contrast this approach with that of the Conservative Government in the early 1970s. In July 1971, the then Chancellor of the Exchequer, now Lord Barber—the right hon. Member for Leeds, North-East, as well as the Leader of the Opposition, were members of that Government—removed all credit controls without any consultation with industry and without any attempt to establish whether industry had the capacity to meet the demand that would be generated. My discussions with industry indicate that it has never forgiven the then Chancellor and that Administration for that incredible error of communication and judgment.

Within a year, an extra £100 million worth of cars was being sucked into this country. Within two years, imports of domestic electric appliances had doubled. In conjunction with the removal of these credit controls, the right hon. Gentleman committed what would now be almost an original sin, judging from the comments of Conservative Members. In 1970, the growth in money supply was 9.5 per cent. In 1973, by the time they left office, it was 27.5 per cent. Yet the Conservatives lecture to us about the control of the money supply.

The result was that although in 1970 the Tories inherited the best opportunity to attain growth that we have had in the post-war period, they squandered it. In 1971, the surplus on balance of payments was £1,090 million. Yet within two years, as a result of the money supply activities and the credit policy of the then Conservative Government, a £1,000 million surplus had been turned into a £1,000 million deficit.

In 1974, we were left to contend with a £3,500 million deficit. Yet they ask us why we have not attained a higher rate of growth in the economy. They left us to contend with the world recession, with the oil crisis, with their three-day working week, with a historically high level of deficit, and with inflation that was running at 17 per cent. during their last six months of office and at 22 per cent. in their last month of office. Superimposed on that, we inherited the threshold pay deal, which had a major inflationary effect. That we had to fulfil, although it had been introduced by the previous Conservative Government.

I now turn to the question of high productivity and higher incomes. It is imperative for everyone to accept that we must create wealth in order to consume it. It is wrong to fear productivity. There is a tendency for far too many people to fear productivity and the job loss that might ensue from it. If we do not invest in the latest technology there will be no jobs for anyone, as the whole unit will become non-competitive. The Department of Employment carried out a study, based on the years 1950 to 1973, of the 10 industries which had the largest productivity increases in this country. It found that all of them increased their employment. The statisticians and economists in my Department carried out a study over 10 years of those countries which attained the highest levels of efficiency. All had managed to maintain their levels of employment. There is an important lesson here in terms of our own future.

While productivity is low, on average, in this country, it is not universally low. There are many instances where companies attain internationally competitive levels of productivity. Companies such as Cummings Engines, Honeywell, and many international firms will say that they are able to attain levels of productivity in this country equal to those that they attain elsewhere. However, all too often that is not the case.

I turn from the point raised by my hon. Friend the Member for Basildon (Mr. Moonman) about management.

Why is it that some of these international firms achieve the international levels of productivity that other firms cannot achieve, when they are both using the same labour force? The sector working parties identified that higher productivity was essential in most sectors of industry. I must reiterate this point to the Opposition, who see productivity purely as a function of labour. Productivity is a relationship between labour and capital investment. That was recognised by one hon. Member for Colne Valley (Mr. Wainwright) in his comments about investment.

In a National Institute for Economic and Social Research paper last year, it was shown that the average British worker had only £1,000 of capital equipment back-up. The German worker has £2,000 and the Japanese worker £2,500 of backup. The French worker has a back-up of from £2,500 to £3,000. That of the United States worker is £3,000 to £3,500.

I hope that the right hon. Gentleman is about to ask the question that I think he will ask.

Sir Keith Joseph

Could not the same proposition be put that we have two workers for every unit of investment, compared with the economies which the Minister quoted?

Mr. Williams

I am afraid that it cannot. The right hon. Gentleman need look only at the capital stock of a company such as Leyland and compare it with the capital stock of the companies that have been pushing it out of the market, and he will understand the role of capital. It is a worrying day for the country if the right hon. Gentleman and the right hon. Lady do not understand that the failure to provide the appropriate capital back-up will mean that there is no chance of achieving appropriate levels of productivity. That is why we argue that section 8, with its £2,400 million worth of investment projects already approved, and with another £2,000 million of investment in the pipeline, is so important. That is why the Industry Act money is so important. That is why it is so disturbing, at a time when industry is beginning to increase its investment, that the right hon. Gentleman speaks yet again—as the Conservatives did in 1970—of withdrawing the very inducements that could have generated investment.

Let us look at the investment situation. The record of the Conservative Party on investment is deplorable. In 1970 the Tory Government inherited the greatest peak in manufacturing investment ever attained in this country. Despite all their talk about tax cuts, dashes for growth, and pretensions to understand industry, the fact is that the Tories never again equalled the level of investment that they inherited in 1970. Indeed, by 1972, in real terms, the level of investment had fallen by virtually 25 per cent. below the level of 1970. It never got back there, whereas under this Administration, even in the middle of a recession, in 1977, we attained levels of real investment that were higher than those achieved by the Tories in 1972 and 1973, in the midst of their paper boom.

In 1978 we did better again. In 1979, with the growth of investment that is taking place—and when we make allowances for the virtual 10 per cent. of manufacturing investment that now takes place under leasing arrangements—we shall find that investment in this year will probably exceed the previous peak of 1970. Yet the Opposition have the impudence to preach to the Government about the need for investment and how to attain it.

Mr. Richard Wainwright

Without in the least trying to decry the contrast, to which the Minister is effectively pointing, between the rate of investment under the Conservative Administration and now, may I ask the Minister whether he agrees that unfortunately most of our foreign competitors have increased their rate of investment much more strikingly than we have?

Mr. Williams

My memory does not go back far enough for me to know how much investment increased the last time the Liberal Party was in office, but it is a fact that our investment has been too low. We accept that. The important thing is that at last it is moving in the right direction, and the Opposition are talking of doing the very thing that they did in 1970, when they removed the investment grants. The right hon. Member for Leeds, North-East is again talking of removing the incentives and the financial support, and again destroying the growth of investment that we have attained.

In 1977, manufacturing investment, excluding iron and steel, increased by 13 per cent. Last year it increased by between 13 per cent. and 15 per cent. This year it will increase by between 4 per

cent. and 8 per cent. This shows that industry is not as despondent as are Conservative Members. I talk to private industry daily because I am responsible for the private sector, and the figures that I have given are the figures for the private sector. Under this Administration we are attaining levels of investment that were never attained under any previous Conservative Administration.

The Conservatives are very coy and sensitive about public expenditure cuts. If they want to avoid uncertainty in industry, why do they not put industry out of its misery? Why do they not say where the cuts are to take place? Is there to be the £5,000 million cut next year, as indicated in the speech of the Shadow Chancellor last March? He identified only housing and trade and industry. If cuts are made in those sectors, they will mean a cut of 50 per cent. in the public expenditure in those sectors. What effect will that have on the construction industry? What effect will it have on industry generally? What effect will it have on regional policy?

We must remember that a major element in this sector is regional spending. I was on television on 2 February with the Shadow Secretary of State for Wales, who said that it was a figment of my imagination that the Opposition would cut spending on regional assistance. That was on Friday 2 February. On Thursday 8 February, in Committee on the Industry Bill, amendments were tabled by the Conservative Front Bench proposing reductions of £150 million in expenditure by the Welsh Development Agency and reductions of £400 million in expenditure by the Scottish Development Agency. The Conservatives' policies are just not worth the hot air on which they are carried.

Question put, That the amendment be made:—

The House divided: Ayes 277, Noes 261.

Division No.78]	AYES	[10.00 p.m.
Abse, Leo	Barnett, Guy (Greenwich)	Booth, Rt Hon Albert
Allaun, Frank	Barnett, Rt Hon Joel (Heywood)	Boothroyd, Miss Betty
Anderson, Donald	Bates, Alf	Boyden, James (Bish Auck)
Archer, Rt Hon Peter	Bean, R. E.	Bradley, Tom
Armstrong, Ernest	Benn, Rt Hon Anthony Wedgwood	Bray, Dr Jeremy
Ashley, Jack	Bennett, Andrew (Stockport N)	Brown, Hugh D. (Provan)
Ashton, Joe	Bidwell, Sydney	Brown, Robert C. (Newcastle W)
Atkins, Ronald (Preston N)	Bishop, Rt Hon Edward	Buchan, Norman
Atkinson, Norman (H'gey, Tott'ham)	Blenkinsop, Arthur	Buchanan, Richard
Bagier, Gordon A. T.	Boardman, H.	Butler, Mrs Joyce (Wood Green)
Callaghan, Rt Hon J. (Cardiff SE)	Huckfield, Les	Pavitt, Laurie
Callaghan, Jim (Middleton & P)	Hughes, Rt Hon C. (Anglesey)	Pendry, Tom
Campbell, Ian	Hughes, Robert (Aberdeen N)	Perry, Ernest
Canavan, Dennis	Hughes, Roy (Newport)	Phipps, Dr Colin
Cant, R. B.	Hunter, Adam	Price, C. (Lewisham W)
Carmichael, Neil	Irving, Rt Hon S. (Dartford)	Price, William (Rugby)
Carter, Ray	Jackson, Colin (Brighouse)	Radice, Giles
Carter-Jones, Lewis	Jackson, Miss Margaret (Lincoln)	Rees, Rt Hon Merlyn (Leeds S)
Cartwright, John	Janner, Greville	Richardson, Miss Jo
Castle, Rt Hon Barbara	Jay, Rt Hon Douglas	Roberts, Albert (Normanton)
Clemitson, Ivor	Jeger, Mrs Lena	Roberts, Gwilym (Cannock)
Cocks, Rt Hon Michael (Bristol S)	Jenkins, Hugh (Putney)	Robertson, George (Hamilton)
Cohen, Stanley	John, Brynmor	Robinson, Geoffrey
Colquhoun, Ms Maureen	Johnson, James (Hull West)	Roderick, Caerwyn
Concannon, Rt Hon John	Johnson, Walter (Derby S)	Rodgers, George (Chorley)
Corbett, Robin	Jones, Alec (Rhondda)	Rodgers, Rt Hon William (Stockton)
Cowans, Harry	Jones, Barry (East Flint)	Rooker, J. W.
Cox, Thomas (Tooting)	Jones, Dan (Burnley)	Ross, Rt Hon W. (Kilmarnock)
Craigen, Jim(Maryhill)	Judd, Frank	Rowlands, Ted
Crawshaw, Richard	Kaufman, Rt Hon Gerald	Ryman, John
Cronin, John	Kelley, Richard	Sedgemore, Brian
Crowther, Stan (Rotherham)	Kerr, Russell	Selby, Harry
Cryer, Bob	Kilroy-Silk, Robert	Sever, John
Cunningham, Dr J. (Whlteh)	Kinnock, Neil	Shaw, Arnold (Ilford South)
Davidson, Arthur	Lambie, David	Sheldon, Rt Hon Robert
Davies, Bryan (Enfield N)	Lamborn, Harry	Shore, Rt Hon Peter
Davies, Rt Hon Denzil	Lamond, James	Short, Mrs Renée (Wolv NE)
Davies, Ifor (Gower)	Latham, Arthur (Paddington)	Silkin, Rt Hon John (Deptford)
Davis, Clinton (Hackney C)	Leadbitter, Ted	Silkin, Rt Hon S. C. (Dulwich)
Deakins, Eric	Lee, John	Silverman, Julius
Dean, Joseph (Leeds West)	Lestor, Miss Joan (Eton & Slough)	Skinner, Dennis
Dempsey, James	Lewis, Ron (Carlisle)	Smith, Rt Hon John (N Lanarkshire)
Dewar, Donald	Litterick, Tom	Snape, Peter
Doig, Peter	Lofthouse, Geoffrey	Spriggs, Leslie
Dormand, J. D.	Lomas, Kenneth	Stallard, A. W.
Douglas-Mann, Bruce	Loyden, Eddie	Stewart, Rt Hon M. (Falham)
Duffy, A. E. P.	Luard, Evan	Stoddart, David
	Lyon, Alexander (York)	Stott, Roger
Dunn, James A.	Lyons, Edward (Bradford W)	Strang, Gavin
Dunnett, Jack	Mabon, Rt Hon Dr J. Dickson	Strauss, Rt Hon G. R.
Eadie, Alex	McCartney, Hugh	Summerskill, Hon Dr Shirley
Edge, Geoff	McDonald, Dr Oonagh	Swain, Thomas
Ellis, John (Brig & Scun)	McElhone, Frank	Taylor, Mrs Ann (Bolton W)
English, Michael	MacFarquhar, Roderick	Thomas, Jeffrey (Abertillery)
Ennals, Rt Hon David	McGuire, Michael (Ince)	Thomas, Mike (Newcastle E)
Evans, Fred (Caerphilly)	McKay, Allen (Penistone)	Thomas, Ron (Bristol NW)
Evans, Gwyntor (Carmarthen)	MacKenzie, Rt Hon Gregor	Thorne, Stan (Preston South)
Evans, Ioan (Aberdare)	Maclennan, Robert	Tierney, Sydney
Evans, John (Newton)	McMillan, Tom (Glasgow C)	Tilley, John
Ewing, Harry (Stirling)	Madden, Max	Tinn, James
Faulds, Andrew	Magee, Bryan	Tomlinson, John
Fernyhough, Rt Hon E.	Mahon, Simon	Tomney, Frank
Flannery, Martin	Mallalieu, J. P. W.	Torney, Tom
Fletcher, L. R. (Ilkeston)	Marks, Kenneth	Tuck, Raphael
Fletcher, Ted (Darlington)	Marshall, Dr Edmund (Goole)	Urwin, T. W.
Foot, Rt Hon Michael	Marshall, Jim (Leicester S)	Varley, Rt Hon Eric G.
Ford, Ben	Mason, Rt Hon Roy	Wainwright, Edwin (Dearne V)
Forrester, John	Maynard, Miss Joan	Walker, Harold (Doncaster)
Fowler, Gerald (The Wrekin)	Meacher, Michael	Walker, Terry (Kingswood)
Fraser, John (Lambeth, N'w'd)	Mellish, Rt Hon Robert	Watkins, David
Freeson, Rt Hon Reginald	Mikardo, Ian	Watkinson, John
Garrett, John (Norwich S)	Millan, Rt Hon Bruce	Weetch, Ken
Garrett, W. E. (Wallsend)	Mitchell, Austin (Grimsby)	Weltzman, David
George, Bruce	Molloy, William	Wellbeloved, James
Gilbert, Rt Hon Dr John	Moonman, Eric	White, Frank R. (Bury)
Ginsburg, David	Morris, Alfred (Wythenshawe)	White, James (Pollok)
Golding, John	Morris, Rt Hon Charles R.	Whitlock, William
Gould, Bryan	Morris. Rt Hon J. (Aberavon)	Wigley, Dafydd
Gourlay, Harry	Morton, George	Willey, Rt Hon Frederick
Graham, Ted	Moyle, Rt Hon Roland	Williams, Rt Hon Alan (Swansea W)
Grant, George (Morpeth)	Mulley, Rt Hon Frederick	Williams, Alan Lee (Hornch'ch)
Grant, John (Islington C)	Murray, Rt Hon Ronald King	Williams, Rt Hon Shirley (Hertford)
Grocott, Bruce	Newens, Stanley	Williams, Sir Thomas (Warrington)
Hamilton, W. W. (Central Fife)	Noble, Mike	Wilson, Rt Hon Harold (Huyton)
Harrison, Rt Hon Walter	Oakes, Gordon	Wilson, William (Coventry SE)
Hart, Rt Hon Judith	Ogden, Eric	Wise, Mrs Audrey
Hattersley, Rt Hon Roy	O'Halloran, Michael	Woodall, Alec
Hayman, Mrs Helene	Orme, Rt Hon Stanley	Woof Robert
Healey, Rt Hon Denis	Ovenden, John	Wrigglesworth, Ian
Heffer, Eric S.	Padley, Walter	Young, David (Bolton E)
Home Robertson, John	Palmer, Arthur
Horam, John	Park, George	TELLERS FOR THE AYES:
Howell, Rt Hon Denis (B'ham, Sm H)	Parker, John	Mr. James Hamilton and
Hoyle, Doug (Nelson)	Parry, Robert	Mr. Donald Coleman.

NOES
Adley, Robert	Gorst, John	More, Jasper (Ludlow)
Aitken, Jonathan	Gow, Ian (Eastbourne)	Morgan, Geralnt
Alison, Michael	Gower, Sir Raymond (Barry)	Morgan-Giles, Rear-Admiral
Amery, Rt Hon Julian	Grey, Hamish	Morris, Michael (Northampton S)
Arnold, Tom	Grieve, Percy	Morrison, Hon Charles (Devizes)
Atkins, Rt Hon H. (Spelthorne)	Griffiths, Eldon	Morrison, Hon Peter (Chester)
Atkinson, David (B'mouth, East)	Grimond, Rt Hon J.	Mudd, David
Awdry, Daniel	Grist, Ian	Neave, Airey
Baker, Kenneth	Grylls, Michael	Nelson, Anthony
Beith, A. J.	Hall-Davis, A. G. F.	Neubert, Michael
Bell, Ronald	Hamilton, Archibald (Epsom & Ewell)	Newton, Tony
Bendall, Vivian	Hamilton, Michael (Salisbury)	Nott, John
Bennett, Dr Reginald (Fareham)	Hampson, Dr Keith	Onslow, Craniey
Benyon, W.	Hannam, John	Oppenheim, Mrs Sally
Berry, Hon Anthony	Harvie Anderson, Rt Hon Miss	Page, John (Harrow West)
Biffen, John	Haselhurst, Alan	Page, Rt Hon R. Graham (Crosby)
Biggs-Davison, John	Hastings, Stephen	Page, Richard (Workington)
Blaker, Peter	Havers, Rt Hon Sir Michael	Paisley, Rev Ian
Body, Richard	Hawkins, Paul	Pardoe, John
Boscawen, Hon Robert	Hayhoe, Barney	Parkinson, Cecil
Bowden, A. (Brighton, Kemptown)	Heath, Rt Hon Edward	Pattie, Geoffrey
Boyson, Dr Rhodes (Brent)	Heseltine, Michael	Penhaligon, David
Bradford, Rev Robert	Hicks, Robert	Percival, Ian
Braine, Sir Bernard	Higgins, Terence L.	Pink, R. Bonner
Brittan, Leon	Hodgson, Robin	Prentice, Rt Hon Reg
Brooke, Hon Peter	Holland, Philip	Price, David (Eastleigh)
Brotherton, Michael	Hooson, Emlyn	Pym, Rt Hon Francis
Brown, Sir Edward (Bath)	Howe, Rt Hon Sir Geoffrey	Raison, Timothy
Bryan, Sir Paul	Howell, David (Guildford)	Rathbone, Tim
Buchanan-Smith, Alick	Hunt, David (Wirral)	Rees, Peter (Dower & Deal)
Buck, Antony	Hunt, John (Ravensbourne)	Rees-Davies, W. R.
Budgen, Nick	Hurd, Douglas	Renton, Rt Hon Sir D. (Hunts)
Bulmer, Esmond	Hutchison, Michael Clark	Renton, Tim (Mid-Sussex)
Burden, F. A.	Irving, Charles (Cheltenham)	Rhodes James, R.
Butler, Adam (Bosworth)	James, David	Ridley, Hon Nicholas
Carlisle, Mark	Jenkin, Rt Hon P. (Wanst'd&W'df'd)	Ridsdale, Julian
Chalker, Mrs Lynda	Jessel, Toby	Rifkind, Malcolm
Channon, Paul	Johnson Smith, G. (E Grinstead)	Roberts, Wyn (Conway)
Churchill, W. S.	Jones, Arthur (Daventry)	Ross, Stephen (Isle of Wight)
Clark, Alan (Plymouth, Sutton)	Jopling, Michael	Rossi, Hugh (Hornsey)
Clark, William (Croydon S)	Joseph, Rt Hon Sir Keith	Rost, Peter (SE Derbyshire)
Clarke, Kenneth (Rushcliffe)	Kaberry, Sir Donald	Royle, Sir Anthony
Clegg, Walter	Kilfedder, James	Sainsbury, Tim
Cockcroft, John	King, Evelyn (South Dorset)	St. John-Stevas, Norman
Cooke, Robert (Bristol W)	King, Tom (Bridgwater)	Scott, Nicholas
Cope, John	Kitson, Sir Timothy	Shaw, Giles (Pudsey)
Cormack, Patrick	Knight, Mrs Jill	Shelton, William (Streatham)
Costain, A. P.	Knox, David	Shepherd, Colin
Critchley, Julian	Lamont, Norman	Shersby, Michael
Crouch, David	Langford-Holt, Sir John	Silvester, Fred
Crowder, F. P.	Latham, Michael (Melton)	Sims Roger
Dodsworth, Geoffrey	Lawrence, Ivan	Sinclair, Sir Geogre
Douglas-Hamilton, Lord James	Lawson, Nigel	Skeet, T. H. H.
Drayson, Burnaby	Lester, Jim (Beeston)	Smith, Dudley (Warwick)
du Cann, Rt Hon Edward	Lewis, Kenneth (Rutland)	Smith, Timothy John (Aahfleld)
Durant, Tony	Lloyd, Ian	Speed, Keith
Dykes, Hugh	Loveridge, John	Spence, John
Eden, Rt Hon Sir John	Luce, Richard	Spicer, Michael (S Worcester)
Elliott, Sir William	McAdden, Sir Stephen	Sproat, Iain
Emery, Peter	McCrindle, Robert	Stainton, Keith
Eyre, Reginald	Macfarlane, Neil	Stanbrook, Ivor
Fairbairn, Nicholas	MacGregor, John	Stanley, John
Fairgrieve, Russell	MacKay, Andrew (Stechford)	Steel, Rt Hon David
Farr, John	Macmillan, Rt Hon M. (Farnham)	Steen, Anthony (Wavertree)
Fell, Anthony	McNair-Wilson, M. (Newbury)	Stewart, Ian (Hitchin)
Fisher, Sir Nigel	McNair-Wilson, P. (New Forest)	Stokes, John
Fletcher, Alex (Edinburgh N)	Madel, David	Stradling Thomas, J.
Forman, Nigel	Marshall, Michael (Arundel)	Tapsell, Peter
Fowler, Norman (Sutton C'f'd)	Marten, Neil	Taylor, R. (Croydon NW)
Fox, Marcus	Mates, Michael	Taylor, Teddy (Cathcart)
Fraser, Rt Hon H. (Stafford & St)	Mather, Carol	Tebbit, Norman
Freud, Clement	Mawby, Ray	Temple-Morris, Peter
Fry, Peter	Maxwell-Hyslop, Robin	Thatcher, Rt Hon Margaret
Galbraith, Hon T. G. D.	Mayhew, Patrick	Thomas, Rt Hon P. (Hendon S)
Gardiner, George (Reigate)	Meyer, Sir Anthony	Thorpe, Rt Hon Jeremy (N Devon)
Gardner, Edward (S Fylde)	Miller, Hal (Bromsgrove)	Townsend, Cyril D. Trotter,
Gilmour, Rt Hon Sir Ian (Chesham)	Mills, Peter	Neville
Gilmour, Sir John (East Fife)	Miscampbell, Norman	van Straubenzee, W. R.
Glyn, Dr Alan	Mitchell, David (Basingstoke)	Vaughan, Dr Gerard
Godber, Rt Hon Joseph	Moate, Roger	Viggers, Peter
Goodhart, Philip	Monro, Hector	Wainwright, Richard (Colne V)
Goodhew, Victor	Montgomery, Fergus	Wakeham, John
Goodlad, Alastair	Moore. John (Croydon C)	Walker, Rt Hon P. (Worcester)

Wall, Patrick	Whitney, Raymond
Walters, Dennis	Wiggin, Jerry	TELLERS FOR THE NOES:
Warren, Kenneth	Winterton, Nicholas	Mr. Spencer Le Marchant and
Weatherill, Bernard	Wood, Rt Hon Richard	Mr. Michael Roberts.
Wells, John	Young, Sir G. (Ealing, Acton)
Whitelaw, Rt Hon William	Younger, Hon George

Question accordingly negatived.

Main Question, as amended, put and agreed to.

Resolved,

That this House welcomes the general objectives of Her Majesty's Government's industrial strategy and in particular the fostering of growth industries such as micro-electronics, the measures to ease the difficulties of industries like steel, textiles and ship-building which face cyclical and structural problems, and the promotion of industrial ventures on a national and regional basis through the National Enterprise Board and its regional boards, the Scottish Development Agency, the Welsh Development Agency and the Northern Ireland Development Agency.