Public Enterprise

HC Deb 09 November 1982 vol 31 cc447-520

Mr. Speaker

For today's debate I have selected the amendment in the name of the Leader of the Opposition.

4.39 pm

Mr. Stanley Orme (Salford, West)

I beg to move, at the end of the Question, to add: But humbly regret the absence from the Gracious Speech of any measures to meet the crisis facing vast sections of British industry, in particular steel; condemn those proposals for British Telecommunications and British Shipbuilders which continue the policy of stripping the taxpayer of public assets by selling them at knockdown prices to private interests and the introduction of private profit replacing public service in the generation and supply of electricity, which will have a disastrous effect on employment in these crucial areas of British industry, and add to the grievous toll of mass unemployment which has been brought about by deliberate Government policies; and reaffirm the next Labour Government's commitment to re-acquire at the earliest opportunity the shares of denationalised concerns by paying exactly what the Government received for them. The debate is taking place against a gloomy industrial background. British industry, in particular its manufacturing sector, is in crisis. Since the Government came to power manufacturing output has fallen by one-seventh and employment has been cut by 1½ million—over one-fifth.

Conservative Members are fond of quoting improvements in productivity as a sign that all is well in the real economy. What nonsense. If BP and ICI were the only firms left, productivity would still be higher. So what? It takes the logic of a Dr. Pangloss to secure a reduction in manufacturing jobs of 2,000 a day as a stunning policy success.

The trends are continuing. Manufacturing output is below the level of a year ago and the CBI has stated publicly that it sees no sign of recovery. How does the dogmatic sale of national assets contribute to a reversal of the economic disasters of the past three years?

A buoyant manufacturing sector is vital to the economy, yet all the Government are doing is changing the ownership of assets at prices which, no doubt, will be appealing to their friends in the City. They are not getting to grips with curing the downward spiral of the manufacturing sector, on which many services, such as transport, depend. The manufacturing sector is a multiplier. Its effects are dispersed to the benefit of the whole economy. Until recently it contributed to the balance of payments, enabling us to import food and fuel. It is the engine room of growth.

A fast-growing manufacturing sector is associated with a fast-growing economy, and vice versa. It is no surprise that the disastrous performance of the real economy over the past three years has gone hand-in-hand with the massive fall in manufacturing output.

Let me underline the situation. Next year the engineering industry will be taking on only 7,000 apprentices and technicians. In 1974, it took on 30,000 and in 1978–79 23,000. When an upturn comes—however much the Government have delayed it—where are the skilled workers being trained to produce the goods within the British economy if they are not to be sucked in with imports? Only 7,000 technicians and apprentices are being trained throughout the British engineering industry. That is a disgrace.

We must judge the Government's industrial measures in the Queen's Speech against that background. The Chancellor's statement yesterday goes no way towards resolving the problem. I have no doubt that the Secretary of State will refer to the further reduction of the national insurance surcharge. He will tell us that he has given industry £700 million. In fact, he has taken back £175 million in national insurance contributions. According to my calculation, the resulting improvement in labour costs will be ½ per cent. compared with a 3 per cent. loss in our competitiveness over the past three years. That is the sum total of the Chancellor's proposals.

I turn now to the proposals in the Gracious Speech to privatise or denationalise—whichever term one prefers—British Telecom. Incidentally, that measure is not to be found in the Conservative manifesto of 1979. Conservative Members might think that that is interesting. It means that the largest measure of privatisation in Britain has not got a mandate from the country.

British Telecom, and its predecessors, has been built up over many years by the public for the public. It has net assets of well over £10 billion, and possibly over £15 billion. It is difficult to assess them because they have not been on the market as such. All those assets are publicly owned. British Telecom does not receive any grant or subsidy from the Government. It has been profitable for the past seven years. All its loans from the State are at market rates of interest. In no sense whatever is BT a burden on the taxpayer. On the contrary, all the profits earned by the corporation are ploughed back into the business, except when the Government insist on a special payment to the Treasury. What is wrong with that? How will the Government's proposals improve matters?

Shareholders of a privatised BT would expect it to invest in only high profit areas of the network in order to obtain the greatest possible return so that high dividends would be available. That must surely result in substantial reductions in the service offered to the low or non-profit sections of the business. Therefore, the services most under threat would be in the rural areas, public call boxes, the extension of the telephone into the homes of those currently without and residential call charges outside peak hours. I hope that the Secretary of State will answer the points that I am making.

It is unlikely that the benefit of new technology will be extended to those areas of the United Kingdom which are not heavy users of telecommunications services. Therefore, privatisation will prolong the existence of two nations—those with and those without a telephone connection. That is socially divisive in an age of information technology. A large question mark hangs over the future of the 235,000 employees of BT. They are not satisfied that their pension rights are fully and adequately protected, because if BT is privatised it will reflect the values, including pension arrangements, of the private sector. Also, job security is threatened. My right hon. Friend the Member for Chesterfield (Mr. Varley) will deal with that aspect in more detail.

The future of BT is also linked to cabling, which again could be developed through a publicly owned network. BT's proposal for a switched multi-star configuration with the maximum use of optical fibre from the beginning is the most sensible. The star structure is being developed in Japan and France. I ask the Secretary of State for Employment what is so funny about that.

The Secretary of State for Employment (Mr. Norman Tebbit)

It is clear that the right hon. Gentleman does not have the remotest idea of the meaning of the words that he is reading.

Mr. Orme

Coming from the Secretary of State for Employment, that is a bit thick.

Mr. D. N. Campbell-Savours (Workington)

The right hon. Gentleman is a bit thick.

Mr. Orme

Some of us have gone into these matters in detail with those in BT. If the right hon. Gentleman does not understand the issues, we do.

Sweden's public service is a world leader and France is investing enormously in public telecommunications. BT has expanded as a public corporation with stability and assurance. However, the United States has run into a crisis in many areas with its privately owned systems.

There is mounting criticism against the Government's proposals, not least from the Director General of the NEDC, Mr. Geoffrey Chandler, who has asked the Government to make a clear statement giving priority to public and productive industry. An editorial in the Financial Times claims that the Government have been over-hasty with privatisation. Why, therefore, are the Government going ahead? Who gains from privatisation? The Conservatives say that to denationalise is to put industry in the people's hands. But what are the facts?

Shares in British Aerospace were sold at 150p, but as soon as they reached the Stock Exchange they were traded at 171p—an immediate speculative gain of 14 per cent. The Government sold 50 per cent. of Cable and Wireless shares at 168p each, and when they reached the Stock Exchange they were traded at 203p—another immediate profit of 21 per cent. There was the scandal of Amersham International, the shares of which were over-subscribed 23 times. There was a loss to the public purse of £23 million. Will the proceeds from the sale of BT shares finance further investment in BT?

The Secretary of State has received a letter from Mr. Glynn, the general secretary of the Society of Post Office Executives. The letter refers to words of the right hon. Gentleman that were quoted in The Times: It is proposed that BT as an integral organisation should offer shares on the market to the public so that the public can then finance more of the investment in BT, rather than it should fall on the telephone subscribers as it does at the moment. Mr. Glynn's question to the Secretary of State, which I underline, is whether that means that the proceeds from the sale of the shares—51 per cent. to the public and 49 per cent. to the Treasury—will finance investment in BT.

The Labour Party rejects the Government's privatisation proposals. We shall reverse the policy and return the industry to a democratically controlled publicly owned British Telecommunications. Shareholders will be repaid precisely the amounts that were paid for the assets at the time of sale. We shall ensure that no speculative gains are made at the nation's expense.

Mr. Michael Morris (Northampton, South)

Where is the democratic control in British Telecom at present?

Mr. Orme

The council that represents consumers in the Post Office is effective, but it is to be abolished by the Secretary of State.

The crisis in the British steel industry continues unabated and there has been no response from the Government so far. I reiterate the Labour Party's firm view that a further decline in British steel manufacture to below 14.4 million tonnes would be unacceptable. The five major units of production must be maintained. We cannot contemplate another Consett or Corby. My Scottish colleagues have produced an analysis of what will happen in the Ravenscraig area if the plant were to close, and the reverberating effects on the whole of Scottish industry. The same consequences would be felt in Scunthorpe, Port Talbot, Llanwern and Teesside.

What are the causes for the decline? I have a letter from the British Steel Corporation in which it clearly states that it is of the opinion that the lack of demand and the imports coming into the United Kingdom are two of the basic and damaging factors facing the steel industry. The private sector is unable to survive the import penetration, and it is BSC's largest customer. After major closures. a 20 per cent. cut in capacity, tens of thousands of redundancies, a major capital reconstruction and the MacGregor plan, the steel industry is again in desperate straits, thanks to the Government's recession and their failure to act against imports.

The Government cannot stand by and watch the crisis worsen. They have a responsibility to act. We need reflation in the industrial sector of the economy and we need action on imports now. The high value of the pound is another crucial factor which is having an effect on steel. I have a letter from the corporation, dated 16 September, which states: In the long run, our principal concern continues to be the weakness in the main steel using industries in the UK … In the short term, however, our principal concern is not so much the level of steel consumption but the increasing penetration of imports into this country. We make the following demands of the Government. First, there should be a ban on all steel products sold at dumped prices. Secondly, there should be an across-the-board freeze on imports while urgent negotiations are held to arrange new controls. Thirdly, we should place a ceiling on steel imports which in no circumstances can be exceeded. We have seen what our American competitors have done. We have seen how they have shut the door. There is a strong rumour that the United States will extend the new measures on certain steel imports to others that are not part of the newly signed pact. I hope that the Secretary of State will comment on that. There is also the effect that cash limits are having on the British Steel Corporation. It is clear that the limits should be extended.

In the Scottish context there is the threat hanging over Ravenscraig, to which I have already referred, and the crisis at British Aluminium's Falkirk rolling mill. The disgraceful feature of the crisis is that when BACO closed the Invergordon smelter at the end of 1981 the Government gave it a gift of £21 million, which they justified as being needed to protect jobs elsewhere, especially at Falkirk. However, the money was not tied to the Falkirk operation. We warned the Government that the Falkirk plant would remain in jeopardy. The Government have wasted £21 million of British taxpayers' money. We demand that they make every effort now to remedy this gross error and ensure that the Falkirk rolling mill remains open.

There is a reference in the Gracious Speech to privatisation of the shipbuilding industry. The shipbuilding and aircraft building industries are crucial to our economy and employment. Those two basic industries were saved by public ownership under the previous Labour Government. Privatisation has not helped the aircraft industry, which is now in crisis. Yet the Government intend to go ahead with selling off the British shipbuilding industry, or part of it, which is fighting to maintain itself.

Let us examine the facts. British Shipbuilders has been in operation for five years. During that time the industry has been through the most traumatic change. Since 1977, nine yards, 38 building berths, and three engine-building facilities have been closed and 22,000 jobs have been lost. Strikes in the industry are few. Good industrial relations appertain in the shipbuilding industry. We believe that the public ownership of the industry provides the only means of achieving, in the first instance, survival, and eventually recovery. Any break-up would destroy the national agreement and with it the unions' commitment to assist the industry through its crisis.

Through consultation with British Shipbuilders the unions are aware that the present market in shipbuilding is the worst experienced in living memory. The uncertainty that would result from further legislation would affect the morale of the work force and the confidence of the customer. The unions have also expressed outright opposition to any form of denationalisation which will put at risk an industry which has made great progress in the past few years, and with it the jobs of 65,000 workers in areas where unemployment is already far too high.

The privately owned ship repairing industry, which was left out of public ownership, has suffered in the recession. The private sector now employs fewer than 2,800 people, compared with 9,000 only three and a half years ago.

The shipbuilding industry is linked firmly to the defence equipment industry, which involves public money which should continue to be invested in a publicly owned industry.

Therefore, I should like to put forward to the Secretary of State and to the Government the following proposals. There should be no privatisation or hiving-off of British Shipbuilders or any part of it. There should be increased Government aid in the short term. A scrap and build programme should be introduced. An expansion of industrial democracy within British Shipbuilders should be carried out. British shipowners, Government Departments and nationalised industries must buy British. What a battle we had over the "Atlantic Conveyor." Had we not received that order, many of the yards in the North-East would have been devastated by lack of orders. There should be a national maritime policy. The Opposition propose the maintenance of the real value of the intervention fund at the 1978–79 level and its extension to cover offshore platforms. These issues are relevant to the shipbuilding industry in the United Kingdom. To move towards privatisation and to sell off the profitable parts of the industry at this time is not in the interests of the British economy or of British Shipbuilders.

Mr. Alan Haselhurst (Saffron Walden)

Will the right hon. Gentleman explain how the ownership of a particular industry affects the demand for the goods that that industry supplies?

Mr. Orme

The ownership of the industry and the attitude of the Government to their ordering policy have a direct effect. If this industry is broken up, we shall be left without a British shipbuilding industry. A few years ago we were providing 30 per cent. to 40 per cent. of world shipping. That figure is now 1 per cent. or 2 per cent. We brought the industry under public ownership to save the British shipbuilding industry. That is the basis of the Opposition's argument.

I turn now to British Aerospace which, in a sense, is linked to British Shipbuilders. British Aerospace is in an impossible position. To meet the civil and defence requirements, a great deal of capital is required. Although the industry is part privatised—perhaps the hon. Member for Saffron Walden (Mr. Haselhurst) will take note of this point—money is not forthcoming from the market. The only way that the industry goes forward is by substantial launch aids from the public purse. If we want to have and protect basic industries, we must pay for them. The private sector has not in the past helped those industries to survive.

Under full public ownership the industry was profitable, owing much of that profit to sales to the Government for military and civil aviation purposes. However, as the Public Accounts Committee pointed out, the sale to speculators meant a loss of £22 million to the taxpayer.

Will the Government give unqualified support to the production of the A320 airbus? Their support is essential to maintain an airframe industry in Britain. As hon. Members will know, the A320, as proposed, is a 150-seat short-medium haul aircraft of a completely different type which will use half as much fuel per seat as the generation of aircraft currently in service—the DC9, the Super 80 and the Boeing 737. It is estimated that there is a market for more than 3,500 of this type of aircraft. So far, only Air France has placed an order—for 50 A320 aircraft.

A new, modernised turbo-prop engine will have to be designed for the aircraft. Who will make the engine? Provided that the decisions are taken quickly, the A320 could be off the assembly line by 1987. But at the moment there is nothing on the drawing board, and the next two years are important for the survival of the airframe industry in the United Kingdom. If this is to be a European project, it will not be sufficient for Britain to manufacture only the wings, which would be 20 per cent. of the total aircraft. That would not be sufficient to maintain full employment. Therefore, the Government must clearly state their policy and put their support behind this civil aircraft.

I turn now to the P110, which has been renamed the agile combat aircraft. Will the Government give the go ahead? I understand that there is great frustration within the industry. When the management of British Aerospace visits the Department of Industry it is asked question after question, but no decisions have been taken. The industry is pressing for some firm answers from the Government. The Opposition wish to know today what action is being taken.

Mr. Robert Atkins (Preston, North)

As the right hon. Gentleman knows, this point affects my constituency and others of many of my hon. Friends. Can he be more explicit about the problems that the industry is apparently having on the agile combat aircraft? This morning I spoke to the project director, who assured me that he is satisfied with the progress being made in his discussions with the Ministry of Defence. From where does the right hon. Gentleman receive his information?

Mr. Orme

My information comes from the management of British Aerospace, which is dissatisfied with the shilly-shallying of the Departments of Industry and Defence. I wish to place that firmly on record.

Will the Secretary of State say anything more positive about the future forward ordering of Nimrod aircraft, which affects the constituents of the hon. Member for Preston, North (Mr. Atkins) and my hon. Friend the Member for Preston, South (Mr. Thorne)?

I have several questions about the motor industry—in particular, British Leyland. I was pleased to see that British Leyland increased its market share, but unfortunately it missed the 18 per cent. for which it had planned. This percentage is a dangerously low share of the market, and in our opinion every effort should be made to increase it. One major factor is imports. When will the Government stop talking about this and take some action?

The Spanish situation is completely unacceptable. The tariff for Spanish cars coming into the EEC is 7 per cent., but the tariff for cars going into Spain is 30 per cent. If Spain joins the Market next year, it will be allowed 10 years to phase out those tariff arrangements. That is completely unacceptable. That is only one example. I could point to others in Europe, Japan and America.

The viability of British Leyland is crucial. I notice that Mr. Rhys, the permanent adviser to the Select Committee on Industry, has said: BL is now too small for the economies of scale needed for a company trying to produce a full range of vehicles. Any attempt, therefore, by the Government to break up BL and to sell off the so-called profitable parts would mean the end of a British independent motor vehicle producer. The effects of this upon imports, motor vehicle accessory producers and the use of British steel would be catastrophic. We ask the Government to desist from any mad venture in this direction.

The Gracious Speech is not relevant to our industrial problems. We need investment, we need to be competitive and we need to increase productivity, but these should be developed in the interests of the community as a whole, not of a small section that hopes to gain from the hiving off of any profitable areas.

The Government are on the rampage with privatisation and denationalisation. They have done nothing to improve the efficiency of industry or the well-being of people who work in it. Their pursuit of income tax cuts to be financed by selling off our industrial base shows just how shabby they are. They simply will not face the real problems in our production industries—declining output and increasing unemployment. Instead, they seek to deflect attention from their disastrous economic policies by cheap gimmicks to line the pockets of their friends in the City.

The nation needs to get industry moving again, and we want to see the benefits dispersed in society to those who have earned them and to those who need them.

5.14 pm

The Secretary of State for Industry (Mr. Patrick Jenkin)

We have listened to the right hon. Member for Salford, West (Mr. Orme) with interest, and I shall endeavour to reply to some of the points that he made.

I am intrigued that the right hon. Gentleman made so little reference to the amendment. I must draw the attention of the House to one of the most remarkable propositions ever to have found itself in an amendment moved by the official Opposition. The long and wordy amendment, with its criticism of privatisation and the introduction of private profit replacing pubic service says that it will have a disastrous effect on employment in these crucial areas of British industry". That is a strange proposition, because it appears that the Opposition are now seeking to support public ownership and nationalisation, which has as its prime purpose the creation or safeguarding of jobs.

Mr. Orme

Yes.

Mr. Jenkin

I am glad to have the right lion. Gentleman's endorsement of that. If that is the case, nationalisation has been an even bigger failure than any of us might have guessed. Has the right hon. Gentleman forgotten that under the last two Labour Governments about 200,000 jobs disappeared in the nationalised coal mining industry; that about 40,000 jobs disappeared in British Steel under the Government of which he was a member; that in British Rail three jobs out of five have disappeared in the last 20 years—

Mr. Dick Douglas (Dunfermline)

What was the level of unemployment then?

Mr. Jenkin

—or that by next year two jobs out of every seven in British Airways will have gone; or that of the 87,000 shipbuilding jobs that existed when the industry was nationalised, only 65,000 remain today?

If one of the purposes of public ownership is to preserve employment, the right hon. Gentleman has kicked a remarkable own goal. If the purpose of nationalisation is to generate employment, the right hon. Gentleman had better explain to private industry how it is expected to meet the higher costs and charges that that implies. If what private industry says to him is anything like what it says to me, he will know that private industry is convinced that it has been in the public services, which do not face the same commercial disciplines as the private sector, that overmanning and inefficiency have been rife.

If that is what was said, presumably the right hon. Gentleman retorted "Well, what do you expect? Overmanning is what public ownership is meant to be all about." What else does the amendment mean if it does riot mean that? This is one of the most astonishing propositions for any Opposition to commit themselves to, and the right hon. Gentleman talked more rubbish today than usual.

Mr. Reg Race (Wood Green)

Will the right hon. Gentleman give way?

Mr. Jenkin

I have only just started, and perhaps the hon. Gentleman will allow me to continue.

Even within the Labour Party, many people now understand that the debate about jobs must be a debate about making British industry efficient and competitive. It should be a debate about the direct link between satisfying customers and safeguarding jobs.

Crucial to that is the defeat of inflation. Inflation is the mother and father of unemployment". Those are the words of the right hon. Member for Cardiff, South-East (Mr. Callaghan) when he was Prime Minister. Does the right hon. Member for Salford, West agree with his right hon. Friend? Why did he not mention the subject and welcome the continuing and substantial fall in inflation as necessary for the safeguarding and creation of jobs? Why did he say nothing about the fall in interest rates?

We had a catalogue of demands for help for one industry after another. The right hon. Gentleman talked about a maritime policy and massive help to the aircraft and shipbuilding industries. However, there was no sign that he understood that the fall in interest rates of 7 per cent. since last autumn has on the CBI's own estimates reduced company finance charges by between £1½ billion and £2 billion.

The right hon. Gentleman said that I would mention the national insurance surcharge. Indeed I will. Perhaps the right hon. Gentleman is a little sensitive as the national insurance surcharge was Labour's tax on jobs. It was imposed by Labour and increased by Labour. It is utter humbug for the Opposition to demand that we cut it faster. It was their contribution to increasing the burden on industry and adding to the problem of unemployment. When yesterday's announcement by my right hon. and learned Friend the Chancellor takes effect, the Government will have cut the national insurance surcharge by 2 per cent. which is worth £1 billion to private industry this year, 1982–83, and £1½ billion in 1983–84.

The right hon. Gentleman mentioned energy costs. He will know that the Chancellor has announced help worth £250 million for industry in the past two Budgets. Energy costs have been reduced by £250 million, national insurance surcharge has been reduced by £1½ billion and interest rates have been reduced, saving nearly £2 billion. That is what British industry has been asking for and it is what the Government are doing. I would listen more sympathetically to the right hon. Gentleman's pleas for help for industry if the Labour Government's record had not been so dismally awful.

Mr. Peter Shore (Stepney and Poplar)

Perhaps the right hon. Gentleman will answer what his right hon. and learned Friend the Chancellor found it so difficult to answer yesterday. Taking into account the measures that he has just announced, is British industry more or less internationally competitive? Does he agree that we are 36 per cent. less competitive than we were three and a half years ago? If so, what will he do about it?

Mr. Jenkin

I shall deal with competitiveness later.

Mr. Shore

It is an important matter.

Mr. Jenkin

I agree.

What of the friends of the right hon. Member for Salford, West in local government? I am surprised that when talking about the costs that fall on industry he did not mention rates, as they are one of the biggest taxes paid by industry. Almost without exception, the highest rates in Britain are imposed by councils in which Labour councillors have a majority. In South Yorkshire, Teesside, the West Midlands and inner London, the burden of rates is destroying jobs. If the right hon. Gentleman doubts that he should ask the unemployed in Sheffield, Middlesbrough or Sandwell.

Mr. Orme

What about the Government's reduction of rate support grant which has thrown the burden on to local taxpayers?

Mr. Jenkin

That has been the case only if local authorities do not abide by their spending targets. The great majority of councils do abide by them. It is only a small minority of Labour-dominated councils that are flouting them and destroying jobs through high rates. I hope that we shall hear no more from the right hon. Gentleman about Socialism's contribution to safeguarding or creating jobs.

It is customers who create jobs in industry, whether public or private. The important point is how British industry can meet the needs of British customers and respond effectively and quickly to changes in the market place. It is against that background that we must ask how the nationalised industries can be organised best to help the country earn its living.

We should stand back for a moment and examine nationalisation's record in Britain. There may be one or two exceptions but I doubt whether many Opposition Members now believe that the hopes for nationalisation that were held out by the post-war Attlee Government have begun to be fulfilled. The public do not think so. According to a recent national opinion poll, only 16 per cent. believe that nationalisation offers any way out of our difficulties. Even among Labour voters only 38 per cent. support nationalisation. Taxpayers know that nationalisation has been a millstone around their necks.

The cost of capital write-offs and grants since the Second World War has been a staggering £40,000 million in today's pounds. In the past seven years alone, £8,000 million has been spent on grants and write-offs to the nationalised sector.

As for the idea of some starry-eyed Socialists who in the dim and distant past used to believe that nationalisation would make people feel that they had a stake in those industries, how many of the right hon. Gentleman's constituents believe that they own the CEGB or have shares in the British Transport Docks Board, the British Airports Authority or the North of Scotland Hydro-Electric Board? Any hope that those industries will become more responsive and accountable to the public than privately owned companies have been shattered by experience.

Many conscientious and hard-working people are employed by those industries. They strive to do their best—there can be no question about that—but the system is against them. State control and ownership stifles the enterprise of management and imposes a burden on the taxpayer. Moreover, it often alienates customers by its bureaucratic inefficiencies. No one should accept that system uncritically. On the contrary, it must be changed.

I find it puzzling to listen to lofty pronouncements, whether from the vicar's tower or from the Front Bench below the Gangway, that where the boundary between public and private industry lies today, there it must remain for ever.

To argue that the problem is only one of management and that ownership is irrelevant ignores three fundamental weaknesses in the public trading sector. The three weaknesses are monopoly, finance and accountability. None of them is primarily a question of management. They are all questions of ownership.

Anyone who argues in the light of nearly 40 years' experience that there must be a way of managing State monopolies that will increase their efficiency, satisfy their customers and yield a return on the taxpayer's investment instead of being a burden on the taxpayer must believe in fairies. Successive Governments have tried. Some of the ablest business men in the country have been put in charge of nationalised industries and they have tried. There have been any number of White Papers, cash limits, financial targets, required rates of return and cost objectives. Every device has been tried and none has solved the fundamental problem of the State industries. Nor can they, because the fundamental problem remains—State monopoly, financed by the taxpayer and nominally accountable to Parliament through Ministers. The system has failed. Are we to sit back and do nothing about it? That is what the right hon. Member for Salford, West suggests. That is what the Social Democrats suggest.

Mr. David Penhaligon (Truro)

rose—

Mr. Jenkin

I shall not give way unless there is a difference of view between the hon. Gentleman and the right hon. Member for Salford, West.

Mr. Penhaligon

I should like to point out that the Government have enjoyed quite a lot of support from the Liberals for the break-up of monopolies. I do not understand how British Telecom will be any less of a monopoly after the proposed legislation than it was before.

Mr. Jenkin

I understand the hon. Gentleman's point. I accept that some State industries must remain in the public sector as there is no viable alternative. There are, however, many instances where the best thing for the industry concerned, its customers and its work force is to free it to compete for markets and finance in the private sector. That is not a dogmatic approach. It is a common sense one that the mass of the British people readily understand and want.

I shall now deal with our proposals for British Telecom. I am happy that the majority of the House will welcome them as the largest ever measure of liberalisation from State control. For a nationalised industry, British Telecom is unique. The right hon. Member for Salford, West gave some figures. I shall give a few more.

Voice communication over the telephone and data processing by computer are converging to give us what is called information technology, one of the most rapidly growing markets in the world. Since 1972, the number of subscribers to the BT network has almost doubled to nearly 20 million. Growth at this rate requires enormous sums for investment. We also need to replace much exchange equipment that has been outdated by the electronic revolution.

The Government have begun to deal with this problem by opening up the field to competition—competition in trunk networks for business subscribers through the Mercury consortium, competition in value added networks for all sorts of new applications, competition for equipment and for attachments, competition for radio telephones and so on. Already BT is beginning to respond to the new challenges it faces but so long as its investment needs, which are running at hundreds and hundreds of millions of pounds a year, come either from existing subscribers through charges or from the Treasury through its EFL, BT's hands will be tied.

The crucial question is how BT's investment programme is going to be financed. At present, 90 per cent. of the investment programme goes straight on to the charges of subscribers. Everyone knows that telephone bills are a source of major consumer dissatisfaction. The logical answer is that BT must be freed so that it can raise capital on the market, so that the investment programme can be speeded up and so that the burden falling on the consumer can be reduced.

The disciplines of the market will increase efficiency. For instance, BT's installation and maintenance staff average about three visits a day. The staff of the privately owned AT & T in America average seven. There is no reason at all, given the right environment, why BT cannot approach this American figure. Once BT is freed from Government financial control and once those who work in BT acquire a stake in the business, as we want to see, there will be powerful incentives for it to be more efficient and competitive.

There is no reason why BT, freed from State control, should not develop over the years into a major force in world electronics and information technology ranking with AT & T, IBM and other international companies. It will be, and will remain, a national asset. Is British Aerospace no longer a national asset because the majority of its shares are owned privately? Is British Petroleum no longer a national asset because the majority of its shares are privately owned? This guff about national assets is sheer and absolute rubbish.

I have given categorical assurances about pensions. They are on the record; I shall stand by them. I have also been asked about rural areas. I have made it clear that no one who is entitled to attachment to the network now will be denied it on privatisation. There will be provisions in the licence to make sure that there is fair pricing between different categories of consumer. I was also asked if the proceeds of sale would be available for BT. That is a matter that will fall to be decided by the Government at the time when the shares are floated on the market.

Mr. John H. Osborn (Sheffield, Hallam)

Is it not a fact that the main purchasers of these shares when they go on the market will be the institutions and the pension funds of the people of this country? As a result, people will have their pensions without being too dependent on the State.

Mr. Jenkin

I expect the institutions to be interested on behalf of their policy holders and pension fund members in subscribing for shares. I hope that it will be possible to make arrangements not only for BT's employees but also for telephone subscribers to be able to subscribe for shares in the new company.

The right hon. Member for Salford, West mentioned cable. If anything, cable strengthens the argument. I wonder if the right hon. Gentleman read the speech of the chairman of BT, Sir George Jefferson, last week, in which he put forward a number of ideas showing how BT might seize the opportunities that are opening up with the cabling of Britain and to do so with what he called adequate longer term commercial and financial viability. That Sir George can look forward to doing so with adequate commercial and financial viability stems directly from the proposal in the Gracious Speech. As a nationalised industry dependent on either customers or the Treasury for its money, it could not contemplate seeking a significant stake in cable. Telephone subscribers would not stand for it and the Treasury has its constraints. As a private sector company, BT will be free to raise money on the market, win cable orders and create jobs. That is the real link between ownership and jobs. If the right hon. Gentleman really believes that ownership determines the pattern of employment, he will I hope come into the Lobby with us tonight.

In America, where AT & T is a private company, jobs in telecommunications have been growing at 6 per cent. a year or more. There is no reason why BT, freed from the constraints of financing, should not be able to do the same. I hope therefore that we shall have the right hon. Gentleman's support.

I turn now to British Shipbuilders, in relation to which a Bill has already been introduced and will be receiving a Second Reading shortly. The Bill's main purpose is to remove the present statutory obstacles to privatisation. I accept that private enterprise and private sector entrepreneurial skills have a part to play in revitalising the shipbuilding industry. Of course, the industry faces severe difficulties. Even in Japan, we read, shipbuilding orders are down some 60 per cent. What the Government are not prepared to see is viable private sector jobs, for instance, in ship repairing, being undermined by public sector losses. The present statutory arrangements provide too rigid a framework. We have to change the law. These matters will no doubt be debated when the Bill comes before the House.

Mr. Bill Homewood (Kettering)

I should like the Secretary of State to recap on what he has been saying about the connection between privatisation and an increase in jobs. In the three and a half years of this Government, there has been privatisation measure after privatisation measure. We were told yesterday, however, that unemployment will increase by 200,000—a figure that most of us believe to be an underestimate. Where is the connection between privatisation and an increase in jobs?

Mr. Jenkin

The hon. Gentleman will forgive me if I do not repeat what I have been saying. Information technology offers the fastest expanding market we can see. At present BT is not able to take advantage of that because it is tied either to the Treasury or to subscribers for its funds. We want to free it. I think that deals with the hon. Gentleman's question.

Mr. Michael Grylls (Surrey, North-West)

On British Shipbuilders, will my right hon. Friend accept that many of his hon. Friends would like to see private capital brought into the warship yards as soon as possible? These yards have been starved of capital by British Shipbuilders. All the money that it has made has gone to support the other side of the corporation. These yards need money for investment.

Mr. Jenkin

I well understand the point that my hon. Friend makes. The former owners of the warship yards have kept in touch with the Department. They have seen the Bill. No doubt, as the Bill goes through the House, and afterwards, they will be able to make their proposals.

Mr. Don Dixon (Jarrow)

rose—

Mr. Jenkin

I hope that the hon. Gentleman will forgive me. I must proceed with my speech.

I come now to the passage in the Gracious Speech that deals with private generation of electricity, where we shall be introducing legislation. The Bill will remove existing statutory constraints on generating electricity as a main business and will require the electricity boards to purchase electricity from the private generators at a fair price. It will open up electricity generation and supply to competition, it will encourage industry to use waste heat, as in combined heat and power schemes, and will encourage private investment in renewable energy sources, such as hydro-electric and wind power.

The House will recall that I made a statement on the steel industry and answered questions on 22 October. Subsequently, there were questions about it at Question Time. I fully understand the anxieties that are felt in all parts of the House about the steel industry. Across the world, markets for steel have been collapsing and there is a world-wide excess of steel-making capacity. This country is not alone in facing a crisis in its steel industry.

The British Steel Corporation is now considering how to respond to the downturn and is reappraising its medium-term prospects. I have asked Mr. MacGregor, the chairman, to put forward a number of options for the future so that the Government can consider the problem on the widest canvas. In recent weeks, I have made it clear to the House that to the extent that these options concern the future of BSC's five major integrated steelworks, neither the Government nor the corporation has any intention of taking precipitate action based solely on short-term considerations. That would be very short-sighted.

However, we must take a careful look, as far ahead as possible, at the prospects for the steel industry if we are to reach sensible decisions on the future strategy of such an important basic industry. I do not want to disguise from the House the difficult decisions that may face the Government, and for which the Government will accept responsibility. However, the review of BSC's five main integrated works cannot and will not hold up other measures that BSC needs to take urgently to restore its financial and commercial position.

Mr. Orme

I have been listening carefully to the Secretary of State and he is on a vital point. We understand that he does not want to be precipitate and that he wants to discuss any decision in depth before coming to the House. However, there is great uncertainty both within and outside the industry. Trade unions and those working within the industry are nervous about the situation. Will there be a statement before Christmas, or after Christmas?

Mr. Jenkin

I am acutely aware of the anxieties that are felt in many parts of the country. I have said privately, and will say again today, that I hope that we shall be in a position to reach decisions and to make announcements before Christmas. However, the right hon. Gentleman will understand that, given the gravity of the issues to be faced, it would be unwise of me to give a cast-iron guarantee. Nevertheless, I shall do my best.

Mr. A. E. P. Duffy (Sheffield, Attercliffe)

It has been suggested that the Government should explore any opportunities that are available to help the industry. The right hon. Gentleman will know that under last year's Iron and Steel Act powers are still available to enable him to help the industry and to write off still further some of its indebtedness, and thus relieve it. However, those powers run out at the end of the year. Does the right hon. Gentleman intend to exercise them?

Mr. Jenkin

I am sure that the hon. Gentleman would not expect me to prejudge any decisions that the Government might reach in the light of the corporation's advice. Therefore, perhaps I can duck that question. Today, we agreed to increase the amount of money to be made available under the private steel scheme. I hope that we shall be able to respond favourably to most, if not all, of the applications that had to be in, under that scheme, by 25 September.

Since the subject has been raised, I should remind the House that the Government have provided well over £1 billion to help to rationalise British Leyland. I am sure that the Opposition are as pleased as I am that the board can report that a break-even is now in prospect and that it expects to seek private sector equity over the next two years in its mainstream businesses. I hope that Opposition Members welcome that as unreservedly as we do. British Leyland negotiated a two-year wage settlement with its work force. Such settlements help jobs, because excessive wage claims—often uncritically backed by Opposition Members—destroy jobs if they are met. I see that the right hon. Member for Chesterfield (Mr. Varley) is deep in "The Times Guide to the House of Commons". He has something to answer for and I hope that he will do so when he replies to the debate.

During Mr. Scargill's barnstorming campaign for a 30 per cent. pay increase in the mining industry, the right hon. Member for Chesterfield appeared on a platform and told his audience something that was quoted on BBC radio. He said: This is the most crucial battle that you are facing and if you don't win this battle then just imagine what Margaret Thatcher will do. She will go out on Downing Street, there will be the assembled television cameras and the hordes of reporters and she will say 'rejoice, rejoice.' That would be a disaster for us. There was then applause. The right hon. Gentleman clearly backed the 30 per cent. pay increase for miners every inch of the way, although he prides himself on being a sensible moderate. He has tarnished his reputation—I hope, for his sake, not beyond redemption.

The terms of the Opposition's amendment and the content of the Gracious Speech have led me to concentrate most of my remarks on the public sector. The world recession has hit private industry hard. Nevertheless, the picture is far from all black. Productivity in manufacturing industry, expressed as output per person hour, was, in the second quarter of this year, almost 9 per cent. above the average for 1979. Having lost—I come to the point raised by the right hon. Member for Stepney and Poplar (Mr. Shore)—about 50 per cent. of our competitiveness between 1975 and 1980, we have won back some 10 per cent. to 15 per cent. However, as the right hon. Gentleman will recognise, those figures show that we still have a long way to go. The Government are ready to do all they can to help. I have already described the help, worth several billions of pounds, given by the Government to industry in the form of reduced interest rates, national insurance cuts and help with energy. My Department has a further contribution to make.

The House will remember that in 1979 payment of regional development grants was deferred for four months to reduce public spending and the public sector borrowing requirement. Its continuation has involved, and still involves, an extra financing cost for industry which it could well do without. The Government have therefore decided that the four-month deferment should end. The amount involved is about £150 million and I hope to clear this within a month. From today, new grants approved will be paid without deferment. I am today placing in the Library a note giving details of how that will be done. The regional development grant scheme does not extend to Northern Ireland but my right hon. Friend the Secretary of State for Northern Ireland will also act to end deferment as it applies to the standard capital grant scheme in the Province.

The measure will, I know, be warmly welcomed by industry. It will give a valuable boost to company liquidity in the manufacturing sector in the regions. It is further evidence of the Government's determination to play their part in helping industry to reduce its costs and to become competitive. At the heart of our industrial policy lies the truth that it is customers who create jobs. To win customers, industry must be efficient and competitive. Many British firms are efficient and competitive. They are able not only to safeguard jobs but often to take on new people. However, many firms are not yet competitive, although most are making strenuous efforts to become so.

The prime responsibility for that lies with industry. The Government can help through lower inflation and lower interest rates and by helping industry to cut costs, to introduce new technology and to invest. The Government can also help by freeing industry from the burdens that nationalisation has, over the years, imposed upon it, and by giving the State industries the freedom to become as efficient as their private sector customers. The Gracious Speech contains important measures to achieve this. The amendment moved by the right hon. Member for Salford, West is deeply and irremediably rooted in the Opposition's past failures. I ask the House to reject it.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. Mr. Speaker has asked me to remind the House that yesterday long speeches prevented a number of right hon. and hon. Members from taking part in the debate. Today, many more hon. Members wish to speak. I ask for brevity.

5.50 pm

Mr. William Rodgers (Stockton)

For a large part of this afternoon we have been discussing the privatisation of the public sector. No doubt we shall do so during much of this debate.

If the autumn statement of the Chancellor of the Exchequer yesterday had been a prospectus with which to launch a company, nobody would conceivably have bought the shares. It was depressing on every possible count. As has been pointed out to the House, it assumes that in 1983 we shall have 3.5 million registered unemployed, with a peak figure certainly larger. My favourite sentence, and one which is very finely honed, Ls the final one in paragraph 1.18: At the end of 1983, the inflation rate may still be around 5 per cent. Anybody who has ever had ministerial responsibility, particularly in the Treasury, will know the amount of midnight oil which was burnt to find a phrase as acceptable as that. It hides a great bending of conscience, because we face the prospect that in the coming year unemployment will rise to a still higher level, while the fall in inflation which we have seen will be reversed and we shall be back to double figures again.

The most depressing paragraph in the depressing statement that the Chancellor published is paragraph 1.12: Over the past five years or so, and partly reflecting the poor level of competitiveness, UK industry has lost share in both overseas and domestic markets. Between 1977 and the first half of 1982, the volume of world trade rose by a total of about 18 per cent, while UK exports of manufactures were unchanged. In the domestic economy over the same period, the demand for manufactures changed very little; but import volumes rose 40 per cent, while output of the UK manufacturing sector fell 14 per cent. That single paragraph tells the whole immensely depressing story. Because of the period it covers, it conceals the Government's responsibility for the disaster, and disaster it is. We must judge the relevance of the Government's measures in the Gracious Speech by the extent to which they will lead to a better performance in future and to a further, less depressing autumn statement.

What is happening to industry today? We should face the character and depth of the crisis. There is, indeed, as the right hon. Member for Salford, West (Mr. Orme) and others have implied, a monstrous crisis in the steel industry.

I welcomed the remarks of the Secretary of State when I understood him to say that more money was to be made available to the private sector, but he will agree and the House knows that both the private and public sectors have been affected by the collapse. Certainly the disaster in the public sector could soon become a catastrophe. We are all aware of the savage social consequences of any further major closure. I am deeply concerned in my constituency capacity with the future of Redcar, which was once the symbol of Britain's industrial regeneration but is now a menacing shadow of industrial decay. What applies to Redcar applies to the other four major plants throughout the country. The industry has shed half of its labour force in the past four years and there has been a remarkable rise in productivity—at least until this autumn—but, despite those considerations, we all desperately fear the review which is taking place. Difficult decisions have to be taken and there is every prospect that they will be damaging to the future of the British industry. Morale in the industry is low and is getting lower.

The problems of industry are not only those of the public sector, though the speech of the Secretary of State might have suggested that. Britain's engineering industry is battered as well. It ought to be generating the demand for home-produced steel. Instead, there is short-time working, redundancies and closures. The bad news yesterday from Lucas was only a measure of how some of our most successful firms find themselves in difficulties. The story in the engineering industry and a large part of the private sector is one of falling orders, falling output, falling investment and falling employment. On top of that, there is the danger of a trade war which would be very damaging to the whole of Britain's economy.

Judged by that sad and tragic story, the Chancellor's measures appear piffling. The least that he should have done was to abolish the national insurance surcharge. That would have been a major step forward, and I greatly regret that he did not have the courage to do it.

Mr. Patrick Jenkin

Will the the right hon. Gentleman remind the House whether he voted for the introduction of the surcharge and for its increase?

Mr. Rodgers

There was a very good case for the national insurance surcharge when it was introduced, because there were no problems of unemployment rising on the scale that we have seen in the past three and a half years or of unemployment at the present level. The strongest case against the national insurance surcharge is the present level of unemployment and the prospect that it will rise further. That is the overwhelming reason why the Government should have got rid of it and not prayed in aid the case made for it five years ago.

Mr. Tebbit

The right hon. Gentleman's memory is at fault. The "good reason" for introducing the national insurance surcharge when he voted for it was that the IMF told the Labour Chancellor of the Exchequer, whom the right hon. Gentleman supported at the time, that he had to do it.

Mr. Rodgers

It was entirely necessary in the circumstances at the time.

The Secretary of State for Industry asked why I supported it then and do not support it now. The truth is that the economic circumstances of the country have wholly changed since 1976. That is the truth and there is no getting away from it.

Dr. Jeremy Bray (Motherwell and Wishaw)

The imbecility of the interventions from the Government Front Bench is shown by the IMF's index of relative unit labour costs which was 92, 90 and 96 in 1976, 1977 and 1978, respectively, compared with 133 today. It is today's figure which is totally destroying the competitiveness of British industry, and the Secretary of State for Industry knows that.

Mr. Rodgers

I am grateful to the hon. Gentleman for that intervention.

The Government's response to this failure of performance is not to get rid of the national insurance surcharge, which they should have done, but to go for a further programme of privatisation, which is wholly irrelevant to the major economic and industrial needs of the country.

The official Opposition are more or less committed, depending on whom one may speak to, to nationalising 25 of the top 100 companies. They are further than ever away from having the chance of doing so or of reversing the privatisation measures that the Government intend to introduce. At the same time, whatever the nonsense embodied in the Opposition's proposal, the Government must justify their measures in terms of the state of the country and our principal needs.

Not only are there the proposals in the Queen's Speech for British Telecom and shipbuilding, but later this week we have the sale of Britoil shares, about which the Secretary of State for Energy intends to make a statement tomorrow, which will no doubt include the terms of the disposal, loyalty bonus and all. I agree with that normally cautious publication, The Sunday Times, that this is a doctrinal sale wholly irrelevant to Britain's needs either in the oil industry or in relation to our industrial performance as a whole.

The same applies to British Airways. I can claim my part, nearly 15 years ago, in enabling British Caledonian to become another flag carrier. Although that decision was not always popular with the party for which I sat, I defended it because there was a good case for providing British Airways with competition. Subsequent events have justified that decision, although airlines have always had plenty of international competition. But it is a totally different matter to try to sell off British Airways after it has returned to profitability.

The Secretary of State made a passing and rather snide remark about the recent speech of Mr. Geoffrey Chandler, the director general of NEDO. Like many others, I agree with Mr. Chandler's good sense in presenting a check list for industrial recovery in his remarks made on 20 October. Mr. Chandler referred to the excessive debate about ownership that had gone on for too long. He said that any gain from changes of ownership between the public and private sectors was dwarfed by the absence of continuity. He touched the nub of the matter when he said that what mattered was operational efficiency, not ownership.

That is the nature of the problem. It is tragic that the Government and the official Opposition are so committed to changes of ownership that they are not lending their weight to meeting the need to change the performance of British industry at every level, whether in the public or private sector.

Mr. Michael Marshall (Arundel)

A year ago the right hon. Member for Stockton (Mr. Rodgers) spoke positively about the future of the nationalised industries. Will not the Government's privatisation policy help to stabilise ownership and improve industrial performance as a result of employee participation through shareholding, and so on? Is not such depoliticisation of industry worthy of serious study rather than the suggestion that there is a pendulum?

Mr. Rodgers

There is a pendulum. What is worthy of serious study is private capital in the public sector. There is an important difference between allowing a nationalised industry to go to the market, for which there is a very good case, and deciding to transfer majority shareholding in the way that the Government are doing through legislation. The two policies are poles apart. I am more than prepared to examine ways in which nationalised industries can meet their capital needs. I welcome co-operation between the public and private sectors and I welcome competition, too. In those respects, I have no objection to the Government's decision to license the Mercury network, but the Government's introduction of competition into telecommunications is no reason to seek to transfer the rest of the shareholding and make the industry another political football, as my hon. Friend the Member for Thornaby (Mr. Wrigglesworth) has put it.

We now have new and rigorous standards in British shipbuilding, with higher productivity and fewer employees. I understand that trading losses in the industry have been substantially reduced, despite competition from heavily subsidised overseas shipbuilding. What is the Government's attitude towards Britain's strategic interest in shipbuilding, the unfair nature of foreign competition and the dependence of the Ministry of Defence upon the warship building yards? The Secretary was unrevealing about the Government's intentions. It would be outrageous and totally unnecessary to sell off the warship building yards when the Ministry of Defence is their largest customer.

What is the future of British Leyland? It has been in massive need of improvement, and some progress has been made. I read that one part of British Leyland—Jaguar—has made a remarkable recovery and is now very successful in United States markets. Jaguar is now in public ownership and has absorbed much of the taxpayers' money as well as management time. Will Jaguar soon suffer distraction and disruption through privatisation? There is no case for proceeding in that way when a company in public ownership is producing the goods that people want to buy. It is yet another instance of any gains from privatisation being far outweighed by the sheer upset and diversion of energy that privatisation represents. It is time to call a halt to the switches between the public and private sectors.

The only argument in favour of privatisation that I have heard relates to the capital requirements of the nationalised industries. The chairmen of the nationalised industries have complained about this often in the past. They feel that they are the victims of the Government's insistence that the capital needs of the nationalised industries should be included in the public sector borrowing requirement. But that is simply a theological matter. It is a Treasury convention. The Secretary of State said that the Treasury had its own constraints, but they are self-imposed constraints that the Chancellor of the day has accepted. It is only the self-imposed constraints and conventions of the Treasury that deny the nationalised industries the more flexible financial structure which would make it unnecessary to justify changes of ownership. as the Chancellor does, on the basis of the capital requirements of the industries.

I make four brief points about what I think should be the constructive approach to the public sector. First, I believe in a long arms-length relationship between Ministers and the nationalised industries. There is a great deal to be said for that, as it would move the industries further into the commercial sphere and away fom everyday political decisions.

Secondly, the chairmen of the boards of nationalised industries should be appointed by a wholly independent body drawn from industry which might itself sanction major structural change.

Thirdly, nationalised industries that are capable of competing should do so within the discipline of market forces.

Fourthly, there is everything to be said for making monopolies and public utilities subject to an efficiency audit commission. This would strengthen their commercial character and diminish their political role.

A great deal more hard thinking is needed about the role of the public sector and how it should be managed by Ministers. The House of Commons is falling down on its job because successive Governments have been more concerned with ownership than with trying to raise the morale of nationalised industries, now desperately low at every level, and giving them a settled future in which they can contribute fully to the health of the nation. Alas, however, neither the Gracious Speech nor the Chancellor's autumn statement yesterday holds out any prospect of industrial recovery or of allowing the nationalised industries to contribute to it. In those circumstances, privatisation is doubly irrelevant.

Although the official Opposition amendment contains a number of very fair points, especially about the depressing state of British industry today, I regret that it contains the wholly irrelevant proposal that in some way renationalisation would remedy the damage done by privatisation. I do not believe that that is so. All our industries, both private and public, need a settled environment for success. By voting for our own amendment tomorrow, my right hon. and hon. Friends and I plan to make that clear.

6.9 pm

Mr. Chris Patten (Bath)

I shall follow the points made by the right hon. Member for Stockton (Mr. Rodgers) in a moment. My first point is about the Gracious Speech. One is often struck in this House by how little resemblance there is between the original script and the developing plot. It is rather as though we were living in one of those modern plays in which people make up the script as they go along. For example, one scours the laminated prose of the Queen's Speech last year in vain for some reference to the events which, more than any others, shaped our destinies in the last Session.

This time last year, those of us who did not think that there was a great deal of good news for the economy were regarded with about as much enthusiasm as something that the cat brought in. It was believed that the economy was on the brink of recovery, but the Government's political standing in Ladbroke's did not inspire much confidence. Since then, the position has been reversed. The recovery has receded by a millimetre or two, but the Government's standing has made a substantial comeback. That is partly due to my right hon. Friend the Prime Minister's leadership during the Falklands campaign. Those who criticise her now for accepting a degree of credit for what happened would have been the first to put the boot in if things had gone wrong.

This year's script is fine as far as it goes. I am surprised—no, not surprised but perhaps confirmed in my sad reflections on the current political and intellectual condition of the Labour Party by its choice of this amendment to discuss today. I speak as someone who does not take the fashionable nineteenth century Liberal view that everything that the State does or tries to do should be cut or curbed. Nevertheless, I find it difficult to associate the word "enterprise" with the public sector. There is a disjunction between those words.

That is not entirely a criticism of the public sector. There are some things that State-run organisations cannot conceivably do in a particularly enterprising way, partly because their chairmen have Members of Parliament breathing down their necks. On the other hand, there are some organisations that could and should be run with more commercial enterprise and flair. Most organisations would benefit from escaping from Treasury control over, for example, their investment programmes. The cliché "dead hand" is wrong; it is the all too live hand of the Treasury that is the problem.

I can understand how, as a result of one's value judgments, one might think that nationalised industries should be preserved more or less as they are. I can understand how, as a result of one's value judgments, one might think that more industries should be taken into State ownership. I do not share those value judgments, but I can comprehend that point of view. However, I cannot see that there is any argument that nationalisation, or public ownership to use that rather paradoxical jargon, is justified by the increasing efficiency of our use of the nation's economic resources. There is not a jot of evidence to support that proposition, as my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) said.

The fact that the Labour Party is still committed to this rather Neanderthal way of looking at the economy goes some way to explain the rather limited affection and esteem in which it is held by the British electorate. The right hon. Member for Stockton talked about irrelevance, but what is really irrelevant is the amendment, which is particularly irrelevant to the sorts of economic problems that have been referred to in a number of speeches from both sides of the House since the debate commenced.

We have heard much about inflation and the success that the Government have had in the past few months in reducing the rate, mostly from the Government Benches. We have heard much about the terrible rise in unemployment, mostly from the Labour Benches. It is a great pity that so much of manufacturing industry, while perhaps leaner and fitter and raring to go, is still flat on its back. The prospects for inflation, output and unemployment read rather as they did last year. We shall see more success with inflation and more difficulties with output and unemployment.

Unemployment is one reason why I am so keen—keener than I have been—that we should do something to restore, or rather go the whole way to restore, the woeful 5 per cent. cut in unemployment benefit. It is a great pity that the Chancellor of the Exchequer was not able to say something about that yesterday. It seems extraordinary, when he knows that we are spending £120.5 billion in the coming year, that he could not say that he would provide the small amount to restore the cut.

Mr. Hal Miller (Bromsgrove and Redditch)

Could it not be equally, and more convincingly, argued that any such additional funds that the Chancellor might have available should go to reducing industrial costs and providing more competition and more hope for employment, rather than to increasing unemployment benefit?

Mr. Patten

I shall come in a moment to things that the Chancellor might do to increase the competitiveness of British industry. However, as my hon. Friend knows, the cost of restoring the 5 per cent. cut is about £60 million, which is just over one-tenth of what the Inland Revenue is getting from the taxing of short-term benefits. There is no real problem about funding. I hope that the Chancellor, or somebody, will be able to put our minds at rest about the 5 per cent. cut, otherwise the House will have to take the matter into its own hands.

I hope, too, that my next point about inflation will not be thought unfair by my right hon. Friend the Secretary of State for Employment, or any other Minister. Deep recessions and substantial deflations normally have the result of reducing the rate of inflation. They normally have the result of cutting pay-push inflation. They also, if we are lucky—this has happened in this recession, partly because of some of the things that the Government have done—have the result of cutting out restrictive practices and helping to cut out unproductive plants.

However, we might remember that recessions also cut investment for the future and the amount of money spent on research and development. Sooner or later one has to try to come out of a recession, not least because long periods of high unemployment and long periods of recession are just as destabilising as periods of high inflation. The trick is to escape from a recession without triggering off the sort of pay-push inflation that has always in the past—and would again—aborted recovery. There is, to borrow a phrase from the pages of history, a middle way between managing a recession and unleashing an inflationary boom. In this country in the past decade or so we have demonstrated our ability both to manage recession and to preside over inflationary booms. So far, unfortunately, nobody has hit the jackpot in between. That is what we should be trying to do now.

Even if we were to carry on precisely as we are, even if, to quote the history books again, there is "no change of gear" and the Government continue as they are, my strong feeling—I am sorry to make such a vulgar point—is that the Government's political standing will hold up. We are more likely than anyone else to win the next general election. The main reason for that is not General Galtieri—that is a rather idle point. The main reason is that the decisive factor in British politics has changed. The decisive factor in every other election, no matter what the political scientists said, was "throw the rascals out." Now we have a different factor—"do not throw the rascals in." That attitude will be decisive at the next election. At least in private there is probably a consensus on that on both sides of the House.

But if the Government are better poised than anyone else to win the next election, it does not make much difference to the economic argument. Before or after the election we must try to get out of the recession. Even the Treasury must realise that we have to inch our way forward. I use no more heroic term than that.

Someone who knows the difference between a boom and a recession and knows the consequences of a recession made this point the other day. The speech was quoted in the Financial Times. He said: Now we are told that if we tighten our belts and keep quiet, the depression will simply go away. Nobody knows how. We are back in the age of witch doctors who tried to make the weather by making the right kind of speeches to their constituents. That was said in the Carlton Club—which is still standing—by Mr. Harold Macmillan. It hit several nails, and one or two other things, squarely on the head. Sooner or later we shall have to find a place once again in our political lexicons for the word "demand" and face the decade-old problems of the British pay bargaining machinery that makes it almost impossible for a Chancellor to get out of a recession without provoking another round of inflation.

Such arguments break against the Treasury walls like waves upon a stern and rockbound coast; but even if it will not countenance our arguments, it is surprising that it will not countenance its own. The central point for Treasury Ministers is the PSBR. It is presumably as bad to undershoot the PSBR as to overshoot it; for the second year running it will be undershot—the White Book that we received yesterday suggests by about £½ billion. To take up the phrase used by my hon. Friend the Member for Croydon, South (Sir W. Clark) yesterday, I do not know many thinking people who reckon that that is anywhere near the figure; it will be far nearer last year's figure of £1¾ billion.

It is therefore above and beyond argument that the Chancellor's policy is more contractionary than he meant it to be at the time of the Budget, and it affects all industries, whether nationalised, denationalised or whatever. As the Financial Times pointed out this morning, we also get that message when we look at the exchange rate.

I was pleased that the Chancellor did a bit to take up the slack on the PSBR yesterday through the national insurance windfall for industry this year. It would be wrong to be churlish about the cut; all my speeches since I came into the House have denounced the national insurance surcharge. But even within his self-imposed constraints the Chancellor could have done a great deal more. I should have liked him to do a little more with the windfall on the national insurance surcharge, and he could have done what his predecessor did when he undershot the PSBR and dealt with tax allowances straight away. As we saw in 1977, that can be done in a couple of months. The problem then was that the Chancellor overegged the pudding the following spring.

Had my right hon. and learned Friend acted on tax allowances now he could have spent all the money, within his own contraints, next spring on abolishing the national insurance surcharge and helping to cut industrial costs. Those factors affecting demand and industry's competitiveness are more relevant to its problems than the Opposition's proposition that a major reason for our economic decline is that we have not nationalised enough or that nationalised industries have not had enough industrial or political clout. Those factors do not come near the top of most lists of what is credible.

There are limits to what a Chancellor can do in a couple of Budgets or what he can do on his own in the present international economic conditions. That is why, if I had the time, I would press particularly the Prime Minister, who has the authority to do so, to ask for an earlier economic summit and one that came to more sensible conclusions than previous ones.

When the chairman of Lloyds Bank says that there is a one in 20 chance of the world banking system collapsing—those are pretty good odds from a banker—and when other equally sober citizens tell us that any recovery will be anaemic, fitful and short-lived, we should give a good deal more attention to the changes needed in our international economic arrangements. The problems could be every bit as difficult and damaging as those in the 1920s and 1930s.

During the Summer Recess there was excitement about a report, apparently from an organisation which, from what it said, appears to show scant regard for the truth in calling itself the Think Tank. It was addressing entirely the wrong question. It is true that if we continue domestically and internationally as we have been we shall have enormous problems funding the Welfare State. That is even more true of funding our defence. Those problems are doubled and redoubled in trumps. In other words, if we continue with the economic policies that the right hon. Member for Down, South (Mr. Powell)—I am sorry that he is not in the Chamber—has been urging with felicity and fortitude for a number of years, we shall fetch up. willy-nilly, only being able to afford the defence policies of which he is in favour.

The real question for the Think Tank, and for the Government, is how to help to end the recession domestically and internationally without unleashing another decade of inflation. I hope that we shall hear a little more about that. I am sure that we shall hear a lot more that is a lot more convincing from the Minister when he winds up the debate and I hope that we shall hear even more in the weeks and months before the general election campaign.

6.27 pm

Mr. Stan Thorne (Preston, South)

You drew attention a few moments ago, Mr. Deputy Speaker, to the length of Back Bench speeches yesterday. Already 37 minutes have passed since the Front Bench speeches and we have had only two Back Bench speeches. A number of hon. Members will not be able to take part in the debate before the Front Benches wind up. The only solution is a 10-minute embargo on Back Bench speeches.

Ministers have made accusations against the Labour Government about the national insurance surcharge. The right hon. Member for Stockton (Mr. Rodgers) also had the temerity to address that subject. Unlike him, I did not vote for the surcharge when the Labour Government introduced it. The measure should never have been brought to the House even in the difficult economic situation.

The amendment deals with the present economic situation, privatisation and unemployment. In the Preston travel-to-work area the most recent figures are, for male unemployment, 13,011, and for female unemployment, 6,552. There are 20,000 people unemployed, which is a rate of 13.2 per cent. The Government's activities have doubled the figure in the past couple of years.

The textile industry was in some difficulty before July 1979, but the Government's actions have done little to help. Job losses in the textile industry in the Lancashire area are horrific. The Government's policy on the campaign with the slogan "Make it British" has failed. Foreign manufacturers gain entry to Great Britain far more easily than they do to any other country in Europe, and the effect of the Government's policy has been to worsen that in the textile industry.

In the Preston area—I am grateful for the comments by my right hon. Friend the Member for Salford, West (Mr. Orme)—aircraft play a major part. British Aerospace was publicly owned until a few years ago. There was a new spirit within British Aerospace because of that public ownership. A considerable improvement in morale in the Preston area was evident following that measure, but the Government take no account of that. It is something that apparently they can sweep on one side in the interests of benefiting the private capitalist entrepreneur or shareholder—call him what one will—in British society.

My right hon. Friend the Member for Salford, West was right to point out that the workers of the aerospace industry desperately need a decision about the advanced combat aircraft. In Bristol and other parts of the country, there is urgent need for a decision about the A320. The civil aircraft industry desperately needs a Government commitment.

In the local media one of the Government Front Bench spokesmen, the Minister of State for the Armed Forces, is reported recently as having suggested that 15,000 redundancies in British Aerospace in Warton, Salmesbury and Preston could occur during the next few months. That suggests that the Government will not take a decision about the ACA that would protect the jobs of men in those factories.

A more constructive approach and firmer commitment involving £50 million to the demonstrator programme may have been welcome, but it is a drop in the ocean in the forward planning that is essential. The sooner we get a clear statement from the Government, the sooner we can restore the morale that has been lost during the past three or four years in the British Aerospace industry. British Aerospace—as hon. Members know—is a high technology industry. Highly skilled engineers are involved in research and development. We shall see a drift away from the industry by those highly skilled technologists unless the Government take decisions shortly.

If the Government have alternative work for those skilled engineers—there are several thousands of them—in the near future, the Government should make a clear and comprehensive statement about their proposals. The publicly owned British Aerospace industry had begun to show a stability which is being eroded by uncertainty about the Government's intentions.

That is one of the problems being experienced in my area by British Telecom. A decision was taken not long ago to separate British Telecom from the Post Office. It was said that one was a loss maker, although today I understand that it is making reasonabe profits. The other was a higly profitable industry. The Government were anxious to sell to their capitalist profiteers an industry that would assist them in the pursuit of private profit. One should not be surprised about that. The protection of private profit is part of the philosophy of the Conservative Party. People should become increasingly aware that when a decision has to be taken between the pursuit of private profit and the provision of a public service the Government are committed clearly to the protection of private profit.

The privatisation of British Telecom has an important impact on jobs. It seems to me that a private telecommunications industry will seek to run down jobs in unprofitable rural areas. I understand from the Mercury announcement that it will be cheaper to telephone from London, and therefore there will be a tendency to centralise the industry in London.

In the past British Telecom bought British goods. The hon. Member for Saffron Walden (Mr. Haselhurst) asked my right hon. Friend the Member for Salford, West a question about the effect of ownership on the product market. Privatisation will affect British Telecom because it will go abroad to purchase gimmicky equipment and import it. That will mean a loss of jobs for the British manufacturer of that type of equipment. Nobody has suggested that there will be an embargo against that when it is privatised. It will have a blank cheque to use foreign manufactured goods and that will have a profound effect on jobs.

Although I sat here for several hours yesterday, I was not fortunate enough to catch Mr Speaker's eye and I could not make the points that I wished. I shall make them as briefly as possible now. Jobs were relevant to yesterday's debate on the Welfare State. Many jobs could be created in the Welfare State. There would need to be inputs in certain areas which I shall outline. Our economy is faced with the cost of six and a half million people who depend on supplementary benefit. The Government have failed to take action about long-term unemployed people. Despite the immorality of the position, long-term unemployed people lose £10.60 per week in supplementary benefit because they must register for work that is not there. Again, the Government are not prepared to take action. The Tory Government have cut £2 billion from social security benefits when there is a great need for them.

In a recent report that I read at the weekend, the DHSS reveals that in the Preston, Leyland and Chorley districts £1.2 million in benefits is unclaimed. About 7,000 people are said to be involved. In the Blackpool area, £1.8 million is unclaimed and 10,000 people are said to be involved, mainly the elderly and families with children. Staff shortages are said to make it impossible to deal with claims promptly.

I wonder whether staff shortages also explain an interesting letter from the DHSS at Preston to the director of Preston polytechnic about the abuse of social security benefits. The gentleman from the DHSS asked the director whether he would supply in confidence information about people who let accommodation in their houses to polytechnic students. He was also asked to provide the names and addresses of such landlords and any additional addresses with which they may be associated. Does that mean that staff shortage in the DHSS is so bad that not even the fraud squad can deal with abuses and that instead, we have to call upon the directors of polytechnics to supply information? If the director supplies the information every landlord named is entitled to be informed in advance. Commercial confidentiality is involved.

My time is running out, although I wanted to say much more. One Government Member spoke for 29 minutes yesterday so I hope that none of his hon. Friends will ridicule long speeches from Opposition Members.

Home helps are needed in Lancashire. About 250,000 extra hours work costing £500,000 are urgently needed. The meals on wheels service needs to be extended and to be given £1 million per annum for the next five years to meet existing needs. Jobs are involved.

One can talk about adult training, residential places, sheltered schemes, about the 3 million people over the age of 75 and the inadequate provision that we make for them. I could refer to the Government's failure to implement the recommendations of the Royal Commission on the National Health Service. It is a crime even to consider the closing of the Royal Marsden breast screening programme since the report recommends a major expansion of such proven programmes. About 1,600 doctors are unemployed. The Royal Commission report recommends that doctors retire at 65, especially if they have small practices. One then thinks of the East End of London, Liverpool and many major cities.

Drugs cost the National Health Service £1 billion a year. A DHSS working group was intended to report on prescribing. What has happened to its report? Perhaps the Secretary of State, who is a master cyclist, can employ his bike to find out the answer to that question. Where is the report?

Drug companies, through pricing policies, inflate the expenditure that the Government are forced to meet to supply drugs. We spend £12 million a year on tranquillisers such as Valium and Librium. They do not cure patients. They are mere substitutes for care. If we provided the much-needed jobs in the Health Service, we could provide the means to prevent some of the terrible deprivations created by the Government.

I agree with some of the comments by the hon. Member for Bath (Mr. Patten), but I reject his forecast of the outcome of the next general election. The sooner that we have a general election, get rid of this Government and put the country on the road to sensible Socialist policies, the better it will be for the British people.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. The hon. Member for Preston, South (Mr. Thorne) referred to long speeches made yesterday. I remind the House that the shortest speech so far today has lasted 18 minutes and I am told that 24 right hon. and hon. Members wish to speak.

6.47 pm

Mrs. Jill Knight (Birmingham, Edgbaston)

I gladly acknowledge the substantial help given to industry this week. The cut in the national insurance surcharge is of immense importance. I was amazed that the right hon. Member for Stepney and Poplar (Mr. Shore) called it a "cosmetic change". That is part of the trouble with the Labour Party. Its Members have no understanding of spending taxpayers' money. To call a £1 billion benefit package "cosmetic" is absurdly unrealistic.

I am pleased at the freeze on gas prices, but I wish that industry's power costs could be further cut. Certainly industry believes that it is unfairly discriminated against compared with continental firms, and perhaps more help could be given in that direction.

As a West Midlands Member, I feel bound to express my grave anxiety about the continuing decline of industy in the area. I see no sign of conditions improving. With exactly the same ungratefulness, arrogance and greed displayed by little Oliver Twist, I must ask for more.

The seeds of today's problems were sown years ago. They go back to the 1950s and 1960s when it looked as though prosperity was here to stay and industry would prosper for ever. The sun was going down on the empire, but it was thought that it would shine for ever on industry and Britain. Governments felt at that time that industry was a milch cow that could be taxed and taxed and rated and rated. We are still suffering from those actions. When the industrial rating system was abolished in 1960, it perhaps did not seem a bad thing, but the effects of rates on industry today are crippling.

In the following decade a sort of chessboard policy was adopted, moving industries and parts of industries all around Britain, wherever officialdom deemed that it would be of advantage. It may have helped to provide instant jobs for a time, but if a scheme is to flourish it should be based on viability and not used just for short bursts. A tree without firm and healthy roots does not grow. It may be all right for a while, but the leaves will soon start to turn brown and fall. That is what has happened with the transplant of industry that took place.

Mr. Quinton Hazell, the chairman of the Supra Group, whose influence is respected and heeded far outside the West Midlands, spoke at Aston university yesterday. He spoke about the motor industry. He said that the hub of that industry was the Midlands, Oxford, Luton and Dagenham. He said that to split this asunder … was disaster number one", and he went on to say: It has become more and more obvious, as it has been to us in the Industry ever since and even before it occurred, that you cannot splinter the Motor Industry as political pressures did in England. You cannot have production lines 300 miles long. I hope that we have learnt that lesson, because our competitors in Europe and elsewhere do not have production lines 300 miles long. They operate where everything is nearby—whether steel, pressings, components or accessories—and where labour and management are close. It means that they have a tremendous advantage.

The enterprise zone policy causes great resentment. It may not be expressed, particularly by people who are lucky enough to be in an enterprise zone. Such people will say "Thank you very much, Minister. Do keep on giving." However, it is hard for people just over the line where the enterprise zone stops. They get nothing, while the chap across the road not only gets help from the Government in a dozen different ways, but frequently, because of the special help, gets orders. People placing orders now look to see where the enterprise zones are and put their orders there, because it is likely that the product will be cheaper if it comes from firms receiving Government help. The point has been put to me again and again by industrialists in Birmingham that the Government should understand that the whole system of enterprise zones causes enormous resentment. In my view, that resentment is well based.

How best could the money now spent on enterprise zones be spent? In my view, help should be given to industry through rates. That would be a far better form of help.

Mr. Homewood

rose—

Mrs. Knight

I shall not give way, because I am anxious to get on with my speech. Many other hon. Members wish to speak in this debate.

The money would be more wisely spent on rates help than on enterprise zones. The notion that industry, in its present state, can pay full rates is as out of date as a cloche hat. Industry pays the full rateable value and gets no equivalent service back-up. Rates have gone up by more than one-third in the last two years alone. The tragedy is that as rates went up and up the prosperity of industry went down and down. The position of industry was almost intolerable. More and more businesses have been hit by the recession. Moreover, it is unfair that industry is not allowed a vote. Businesses cannot even say what they think about increased rates, although it is true that many of them vote with their feet and leave areas where rates are high. That is particularly noteworthy in London.

It is important to realise that businesses often have to reduce manpower to pay the rates bill. As the rates bill increases, more and more people are thrown on the dole, while businesses scratch around to find the money to pay the rates. Moreover, money is lost for research and development, which is crucial to successful business. I know firms which have not introduced new technology because of their heavy rates bills. That, in turn, means higher production costs for businesses in Britain than for businesses abroad, whose Governments look sympathetically at rates as they affect business.

Today the rates are the two-ton straw that breaks the back of a camel suffering from anorexia nervosa. The Minister should realise that something will have to be done to help industry. At present, when a factory is left vacant because of bankruptcy or contracting business, it is sometimes razed to the ground because what is left of the firm cannot afford to pay the rates. Unless the factory is rendered totally unusable, the rates have to be paid. There have been many instances in the West Midlands where, if the factory has not been totally razed to the ground, its roof has been taken off.

When the upturn comes, it will be crazy to have to rebuild a factory which was solid and existing. The situation is sheer lunacy. Not only are buildings being destroyed, but there is a knock-on effect on the machinery inside. One cannot store machinery in a building that has no roof. The machinery is sold off, frequently for next to nothing, to overseas firms which then flood the market with cheap imports manufactured on the very machinery which was sold at about 5 per cent. of its real value. Mr. Hazell drew attention to that fact also.

I should have preferred the outright abolition of the national insurance surcharge, and I hope that it will come. I hope that something more will be done about energy costs, but I do not support those who say that the high pound should be devalued. I recall industrialists who now complain to me about the difficulty of the high pound when they export complaining to me some years ago about the difficulty of the low pound when they had to import. So I view that complaint with scepticism.

We have good news for industry on the national insurance surcharge. We have good news on inflation and on interest rates. It is very good news that productivity per man over the past six months has increased by 10 per cent. That is the sort of good news that we want to hear. That is what will help industry. However, I beg the Government to heed the dreadful predicament of industry over rates. I plead with my right hon. Friend the Secretary of State for Employment to consider again the policy on enterprise zones. He should ask himself whether it might be better to spend the money in such a way as to help industry more and reduce unemployment more.

7 pm

Dr. Jeremy Bray (Motherwell and Wishaw)

The hon. Members for Birmingham, Edgbaston (Mrs. Knight) and for Bath (Mr. Patten) who have spoken from the Conservative Back Benches see no signs of recovery and nor do Labour Members. It seems to me that they dare to strike but fear to wound. Lustier action will be needed if we are to edge Britain out of recession. Later in my speech I shall speculate on the part that those hon. Members, and others who think like them, may play in that process.

I start by discussing the gravest industrial crisis we face—that in steel. In the worst recession since the war, the gross domestic product has fallen by 4 per cent., manufacturing industry output by 15 per cent. and steel production by 50 per cent. since 1979.

All obsolete steel capacity has already been closed. There has been speculation that the Government will now close one, or even two, of the remaining big five steel works which form the hard core of a modern, efficient and highly productive steel industry.

The speculation has often mentioned Redcar works and Ravenscraig works in my constituency as being the furthest from the markets and the most likely to suffer. I do not believe that the Government will close Ravenscraig, or indeed any of the big five. If they were to do so, the social devastation would be appalling.

Unemployment in Lanarkshire is well over 20 per cent. with 10,000 jobs already having been lost in steel. Our unemployment would soar to over 50 per cent. Thirteen thousand jobs would be lost directly and indirectly in the steel industry; its suppliers, and service industries which would go to the wall if the community lost its basic income of £100 million a year. There would be industrial action across many industries and a work-in supported by the whole of Scotland which would make that on the Upper Clyde look like a Sunday school picnic.

With or without the resignation of the Secretary of State for Scotland, the Government's authority in Scotland would be destroyed. It is not only the Conservative Party which would suffer. There is little of it left in Scotland. The union with Scotland would suffer too. I cannot conceive of any Government being so foolish as to close Ravenscraig.

But it is not the social or political arguments which will stop the Government doing that, or closing any of the big five. It is the economic need for steel, if Britain is ever to recover. To close one of the major steel works would be to admit the failure of the Government's economic strategy, not just for a year or two but for the next decade. No Government will do that just before an election or, as I shall show, after it.

If there were one works which fell clearly behind the others, that could suffer, but there is no such works. Ravenscraig never had the large labour forces once employed at Port Talbot and Llanwern. However, when manpower was reduced in South Wales, for a while Ravenscraig's productivity did fall behind that of other works. That has now changed. In the second quarter of this year productivity at Ravenscraig, when it still had a reasonable loading, was 4.54 man hours per tonne. That is the highest in Britain, way above the BSC and international averages.

Freight and energy, where British Rail and the electricity board have been treating Ravenscraig as a pork barrel, push up costs, but they can be reduced. However, it is not appreciated generally, and in particular by the press, that Ravenscraig produces the highest qualities of strip and plate, which is where the future market lies.

While the mill at Port Talbot is ageing and Llanwern is without continuous casting, Ravenscraig is the only works with a completely modern plant from the sinter plant through iron and steel making, secondary steel making, continuous casting and hot and cold strip and plate mills. It is able to supply qualities of steel for everything from one piece deep-drawn tin cans to nuclear submarine hulls which cannot be supplied from elsewhere in BSC.

Even so, it can be argued that the steel market will not rise to the 14.4 million tonnes of manned steel capacity that exists now. The steel industry cannot judge that question because in the deepest depression it cannot tell how far the fall in final demand has been amplified by stock reductions in successive stages of industry. Perhaps the steel content of GDP has fallen, but it has not fallen 50 per cent., which is that shown by the fall in output relative to the fall in GDP since 1979.

Historically, industries have always been too despairing in a recession and too euphoric in a boom. More importantly, the industry cannot tell what policy this or other Governments will follow, particularly as regards the exchange rate and competitiveness.

In the short term, the Government will raise BSC's cash limits and do what they can within the framework of the European Community's policies to limit the damage through agreed production levels, prices and the linking of Government aid to the rationalisation which has already occurred in Britain but has yet to be carried out in other European countries.

In implementing that policy, Governments in the European Community will become responsible in January for the inspection and implementation of the Davignon measures, previously the responsibility of Community officials. Therefore, I hope that we shall see a great tightening up of import controls and prices. The Secretary of State for Industry must make it clear at the Council of Ministers' meeting on 18 November that his action on imports from Europe will be related to theirs on production and prices.

Within such a policy framework, the Government will still seek to cut back capacity and costs. Therefore, to avoid any possibility of later misunderstanding, let me say that if the Government were to close or mothball the second blast furnace and the hot and cold strip mills at Ravenscraig and Gartcosh, it would be tantamount to closure of the whole works and all the consequences to which I referred would follow. Ravenscraig is not viable merely as a plate producer.

Once major units are mothballed the likelihood of their ever reopening is slim, except in an old-fashioned war. Start-up costs are huge with the costs of relining furnaces, training workers and recommissioning plant. Operating plants are constantly updated and a mothballed plant would fall quickly behind the state of the art. It would be argued subsequently that it was cheaper to import steel, steel products, products of steel products, and so on. The process of deindustrialisation would be irreversible.

The main consideration is what is happening to the economy. The Government will say that they are waiting to see what is happening to the market and meanwhile do not wish to take any irreversible decisions. I give the Secretary of State for Industry honour for saying that this afternoon. The cost of perhaps £50 million a year to maintain a steel works in production is tiny compared to the £1 billion or more that it would cost to replace it.

Underneath, it is not just the steel market, it is the will of the people which will manifest itself, not just in the election—though certainly in that—but in the shape of the economy which they wish to see emerge. There we are bound to see a major change in policy whatever happens in the election.

Last month the following judgment was made in evidence to us in the Treasury and Civil Service Committee: At its peak in 1981, the 'real' sterling exchange rate was not only about 50 per cent. above its depreciated value of 1976 but about 30 per cent. higher than in 1972. This is by far the most excessive over valuation which any major currency has experienced in recent monetary history … the large real appreciation of sterling from 1979 to 1981 was probably the most important element in that period of British economic policy as concerns its effects both on domestic inflation as well as on British trade, production and employment. The judgment that a reduction in inflation has been bought at the cost of trade, production and employment by the most excessive overvaluation in recent monetary history was made not by one of my hon. Friends on the Left, not by some distraught Keynesian economist but by Dr. Otto Emminger, former President of the German Bundesbank. There has been only an 8 per cent. recovery in competitiveness since 1981 and competitiveness has been estimated by Philips and Drew this morning to be 17 per cent. worse than its average for 1973–78.

This misalignment of the exchange rate cannot be sustained. The artificial reduction in inflation that it has bought at the cost of such painfully increasing idleness can be sustained only so long as British industry continues contracting and the share of imports rises. Once there is no industry left to contract further, the balance of payments will deteriorate and the exchange rate will collapse. Anticipation that the rot cannot continue will bring about the realignment of exchange rates at some earlier but uncertain point of time.

The Government cannot allow that to be before the general election because realignment will raise prices, and the Government's much prized reduction in inflation will be shown as the chimera that it is. But once the election is over, whoever wins, and whatever the nature of the Government, the constraint will be removed. The realignment cannot be postponed for ever. It will be in the interests of a new Government to bring it about sooner rather than later in the life of a new Parliament. It will transform the prospects for steel and manufacturing generally. It will need to be accompanied by many other fiscal and monetary measures.

Here is another description of what has happened: The Government's policy was ultimately an act of faith in an incompletely understood adjustment mechanism that was undertaken for largely moral reasons. It carried with it a belief that any overvaluation of sterling that resulted would be removed by reductions in British prices and costs or rises in overseas prices and costs, that the results would be good for trade, if only by inducing stabilisations elsewhere by force of example, which would benefit an internationally oriented economy such as Britain's. Once the decision was made and announced there was no going back on it. How often have we heard "There is no alternative"? That is not a description of the Government's medium term financial strategy, though it fits exactly. It is a description of Mr. Churchill's return to the gold standard in 1925 from Moggridge's "British Monetary Policy 1924–1931." However, Mr. Churchill's over-valuation was in the neighbourhood of only 10 per cent. whereas now it is 17 per cent. at least. That is the lowest possible estimate. The result in 1925 was to keep Britain in the doldrums. The result today has been to plunge Britain into depression. To make the gold standard policy work, it was necessary to achieve a reduction in wages such as happened in 1921. Perhaps the Government will try that again. However, the general strike in 1926 put a stop to the possibility of any wage reductions and wage rates remained almost constant from 1922 to 1938.

The moral commitment of Conservatives in 1925 was to the gold standard and the dollar exchange rate. Even the Labour Government of 1929–1931 clung to it in the crash of 1931. Philip Snowden, the then Chancellor of the Exchequer, bleated pathetically to the Cabinet as recorded in the minutes of 22 August 1931. This was two days before the collapse of the then Labour Government. The minutes read: The Chancellor of the Exchequer informed the Cabinet of the nature of the consequences that would follow a departure from the gold standard. So far as he was concerned, he had no doubt whatever if he was compelled to choose between retaining the Labour movement in its present form and reducing the standard of living of workmen by 50 per cent., which would be the effect of departing from the gold standard, where his duty would lie. Yet no sooner had the Conservatives regained control in the National Government than they were off the gold standard in a month. With no coherent international strategy, exchange rates fluctuated, but gradually, with cheap money and expansionary fiscal policies, the slow recovery began in 1932. For those lucky enough to be in work, neither wages nor prices fell or rose by more than the odd per cent. until 1939.

History never repeats itself exactly. However, even if the Conservatives were to remain in government after the election, which Heaven and the electorate seem likely to conspire to forbid, circumstances would force a change in the exchange rate and a new Conservative Government would be quick to recognise it in 1983 as the National Government were in 1931. As the overvaluation is far greater this time, the concealed inflation will manifest itself whoever is in office and the Government's boast of having reduced inflation will be exposed for the fraud it is.

If we are to bring the country back to sanity, we must take seriously the moral reasons, however twisted, which have fortified the Prime Minister and her lackey on the disastrous and fraudulent course on which they have led the nation. As The Times puts it today in its leader on inflation, Five per cent. is too high. It is a lesser deceit than 10 per cent. but a deceit for all that. That is a quite different conviction from that which drove Sir Montague Norman, Governor of the Bank of England, who led Mr. Churchill on to the gold standard. The foreign exchange rate, which the Prime Minister and the Chancellor of the Exchequer now regard as a wayward and dispensable consideration, was for the Tories of the 1920s the sacred cow. They believed that the pound must exchange for $4.85 yesterday, today and tomorrow. That was their belief. They took the view that a contract is a contract is a contract. "Not so", say the Tories of the 1980s. They say that a pound today must exchange for a pound tomorrow. We cannot have them both. Only in Heaven is that possible, that deadly equilibrium Heaven, in which nothing ever happens.

The Government are clinging to an arithmetical mistake and not a moral principle. Morals are to do with men, not arithmetic. The only rule in arithmetic is "Thou shalt not make a mistake". Unfortunately, that is what the Government have done.

In a strange but revealing perversion of the parable of the Good Samaritan, the Prime Minister said that the Samaritan could not have saved the man who fell among thieves if he had had no money. The whole point was that the priest and the Levite who passed by on the other side had plenty of money. It was only the Samaritan who knew when he had to spend it. It was only the Samaritan who had a heart.

I have spelt out elsewhere in more painful and more technical detail than any other Member what the Government need to do to restore the economy to some semblance of balance and sanity, and to contribute constructively to world recovery. If the details are not for today, the result in terms of the lives and livelihoods of steel workers and their families, and of workers everywhere, is compelling. The Government must stay their hand before it further mutilates their industries and plunges them deeper into unemployment.

7.18 pm

Mr. Alan Haselhurst (Saffron Walden)

My text, if I need one, from the Gracious Speech is the statement that the Government will take further steps to encourage initiative and enterprise. I welcome most warmly the paragraph on Europe, which is a good indication for me of the Government's earnest in respect of initiative and enterprise. The full and wholehearted terms in which it is expressed will find support on the Government Benches and among those in industry who understand that Britain's membership of the Community is an essential part of hopes for recovery.

I should like to ask the Government about the relationship between manufacturing and service industry and then to see how, in the light of that relationship, we might best help our industry. I hope that the Government will treat with scepticism the somewhat trendy notion that manufacturing industry is now of such declining importance that it can be relegated to the sidelines and all our eggs placed instead in the basket of the service sector.

There is no doubt that employment in the manufacturing sector will decline. There is therefore a corresponding importance to be attached to the service sector, but I do not believe that that in itself is an argument for downgrading the importance of manufacturing and I propose to adduce a number of arguments in that direction.

All things being equal, I would query whether services can be counted on to take up the slack in the British economy left by a decline in manufacturing, whether one assesses that in terms of wealth or employment. Let us consider the export of goods and services for 1980. For manufacturing, the value added was 50 per cent. A further 25 per cent. was attributable to getting the products of manufacturing industry to the market, and only 25 per cent. to services unconnected with manufacture.

A breakdown in the balance of payments for 1980 of the credits for private services shows that the total of all things that could be classified as services—some of these include industries that are related to manufacturing—was £15,412 million, compared to a total £37,000 million attributed to manufacturing exports. It is asking a great deal of tourism, financial services and overseas students to expect that gap to be made up in the foreseeable future.

In this connection, some manufacturing sectors obviously have to be seen as strategically important to the British economy. The hon. Member for Motherwell and Wishaw (Dr. Bray) made that point as effectively as anyone. We must also remember that part, at least, of the contribution that the service industry can make to our economy depends upon its relationship to manufacturing. There is a limit to the number of jobs that even services can provide. One has only to examine what is happening in the banking world, the hotel industry and in retailing to realise that we cannot expect to see those as areas in which jobs will mushroom. Some people would look to the potential of tourism, which I accept is important, but there is a limit to which these small islands, even if we exploit our entire geographical area, can provide the number of jobs that would be needed as a substitute for manufacturing industry.

On the positive side of the argument, we should not ignore the innovative potential of British industry. It is interesting to note that the science and technology agency of Japan's Ministry of International Trade and Industry produced some figures last year about technological innovation leading to significant breakthroughs. The proportions that it assigned were as follows; Japan 8 per cent.; West Germany 13 per cent.; the United States of America 24 per cent.; and the United Kingdom 55 per cent. On the basis of those figures we should not easily he railroaded into writing off British manufacturing industry. Manufacturing industry still remains the greatest potential wealth earner, even if robots do a great part of the producing.

If, as I would argue, manufacturing is vital to the continuing success of, and hopes for, the British economy, how can we best help manufacturing industry? It will not be helped by anything that the Opposition have suggested so far, whether in this debate or elsewhere. The attack of the right hon. Member for Salford, West (Mr. Orme) was hopelessly ill-founded. He peddled the sterile thesis of yesteryear, which is that if the State were to embrace all manufacturing in Britain this would somehow save us, without beginning to adduce one shred of evidence to explain how that in itself would create more demand or make our industry competitive and efficient compared with that of other countries. He gave the game away when, in answer to my right hon. Friend the Secretary of State, he virtually admitted that the Labour Party's plan would turn our industry into a social service.

I do not want to be a mouthpiece of the CBI, although I sometimes consider it odd that there are not more mouthpieces of the CBI on the Conservative Benches. It would be odd if the voice of industry were not echoed in speeches from the Conservative Benches. I sympathise with the CBI in its argument about the burden of costs upon industry today. Therefore, I obviously welcomed the tenor of the Chancellor's economic statement yesterday, although I had a tinge of regret on two counts.

There was nothing in the statement about the burden of rates. I recognise that the problem, whether it be domestic or non-domestic rates, is a knotty one, but some of us feel sad that the Government, who have shown courage in many things, have somehow not been able to find the courage to deal with this particularly difficult problem.

My other regret concerns the 5 per cent. abatement of unemployment benefit. I do not believe that industry would rout the argument that there has to be balance and that if, unfortunately, a percentage of the population are unemployed of necessity because of a changeover in our economy, those people must be carefully and sensitively looked after. Not many people would disagree with that.

Yet I am surprised that even the CBI does not make more of the need for demand in the economy. Cost reduction is, of course, important. The fact that the national insurance surcharge is being reduced, the fact that interest rates are falling and the fact that industry has within its own power the ability to control wage increases can all help industry's competitive position. Will those things by themselves cause business men to invest and, as a secondary question, would such investment if it came create a greater number of jobs rather than a smaller number? We are left with the tantalising possibility that the Chancellor in his next Budget may bring about some major reductions in personal taxation.

There are two perfectly respectably argued points of view about how far the reduction in direct taxation is crucial to the recovery of industry. I am much inclined to the argument that a reduction in taxes helps to stimulate demand and bolsters incentive, and I should like to see those reductions made, but I am bound to admit that in the present state of the British economy a cut in income tax could be a somewhat blunt instrument. If more demand is released in a general sense, the Government have no actual control over what people do with the extra money that they find in their wallets or in their handbags. If a high proportion of that money were to go into the purchase of Japanese video recorders, Italian refrigerators or more cars, whether from Japan or other overseas manufacturers, what would be the benefit to British industry of such a reduction in taxation?

If £2,000 million is to be released into the economy, I would ponder with my right hon. Friends whether there is a case for saying that the money could do more good for British industry and our people if it took the form of a commitment to capital spending, whether at local or national level. Then at least we could ensure that in the first place orders were placed on basic British industries, which would be likely to create more employment in the short term. If, later, the money earned goes to buy Japanese video recorders, at least it will have done some good to British industry on the way.

I hope that as we analyse Britain's industrial needs we shall do so correctly, remembering that what suits one sector may not accord the same help to another. We should not lightly dismiss the future role of manufacturing in our economy. In the action that we take we should above all be sure that the initiative and enterprise which in the Gracious Speech we are committed to encourage lie substantially within the British Isles.

7.30 pm

Mr. David Penhaligon (Truro)

Many of the comments made so far have revolved round the proposal in the Gracious Speech to denationalise or privatise British Telecom. I should like to state the Liberal Party's view.

Over the years, and certainly during this Parliament, we have supported a considerable amount of Government legislation when we believed that that legislation improved competition within various sectors. I think immediately of transport. We take the view that any practical measures that break up monopolies are to be welcomed. It was with that in mind that last Session we supported Government legislation to introduce some competition into the vital British Telecom sector.

However, no impressive reasons have been advanced in support of the proposals regarding British Telecom. Indeed, the only one advanced was that it would improve its financial pattern and investment ability. The Government argue that if the money is borrowed from the market instead of from the PSBR, that will help the British economy. I do not accept that. It is time that we differentiated between money borrowed for sensible, long-term, credible investment and money borrowed for other purposes. I suspect that over the years the money borrowed for British Telecom has had a better return on capital than the money borrowed for British Rail. There should therefore be a differentiation in the way that we borrow money for various purposes.

Even if one accepts the Government's argument—which I do not—that it is important to go to the market as opposed to the PSBR, I do not see why the law cannot be changed so that British Telecom can have direct access to the market, given that it is a commercially viable business. Leaving aside that argument, there are few other reasons in support of what the Government are doing.

Mr. Tebbit

I am following the hon. Gentleman with considerable interest. Who would decide whether the borrowing was for a profitable and useful purpose or whether it would go down the drain, like the other £40,000 million of taxpayers' investment in the nationalised industries?

Mr. Penhaligon

The Minister poses a fair question, and I admit that at the margin the problem is difficult. I suspect that over the years he and I would not have found great difficulty coming to such a decision. Whether we would always have had the courage to admit it in public as elections drew near is perhaps another point.

Several hon. Members have also spoken about rural areas, kiosks and pensions in the context of British Telecom. Those aspects will depend on what the clauses in the Bill provide. It could be a disaster for rural areas, such as mine, if there were not some controlling legislation. On the other hand, the legislation could be phrased so as to improve services in the rural areas. Much the same can be said about kiosks and pensions.

Some of the letters that I have received asking me to vote against the denationalisation of British Telecom—which I shall—have tempted me to transfer my allegiance to the other side, because some of the arguments are false, and I suspect that those who advance them know it. The Government have presented only one competent reason for this denationalisation—that British Telecom should have free access to the market as opposed to the PSBR. I concur with that observation. There is no reason why British Telecom as it exists today cannot be given access to the market, which can lend it money if it chooses.

I await with interest the share launch of British Shipbuilders. The Labour Party accuses the Government of making profits for their friends in the City. I imagine that the Government will have to pay people to take shares in British Shipbuilders, except perhaps in the warships sector which attracts Government contracts. That is not competition, and nor is it anti-monopoly. The Liberal Party will not support that proposal.

The third proposal relates to electricity generation. If it proves to be what I believe it is, we shall support and welcome it. It could do much to make practical use of heat generated in industry and could encourage innovation and alternative sources of generating electricity. A proposal that is sensibly drawn could well be advantageous to our economy and in the long term might introduce some exciting innovations in electricity generation.

That is the Liberal Party's general attitude to the denationalisation proposals in the Gracious Speech.

I have always regarded the hon. Member for Birmingham, Edgbaston (Mrs. Knight) as a firm Government supporter. When the hon. Lady says that she sees no sign of improvement in that great city, we begin to realise that something fundamental and desperate is happening. Like many hon. Members, I have spent more time in Birmingham in the past few weeks than hitherto I expected, and I met a number of manufacturers. It was quite clear that, if anything, the hon. Lady underestimated the situation.

Many companies are now being run more on hope than on faith. As the hon. Member for Motherwell and Wishaw (Dr. Bray) said, the fact that their competitiveness is down is overwhelmingly linked with the exchange rate. It is true that industrial productivity has improved and that there has been some marginal progress on inflation, but even both taken together do not make an impact on the loss of competitiveness that has occurred because the Government have allowed the British exchange rate to reach its present level.

I agree with every hon. Member who has said that our industrial base, upon which we all depend, has eroded and declined. I go further. I believe that the Government, perhaps not through malice, are pursuing a series of policies that are destroying our industrial base. If hon. Members do not believe that, I do not know what they have been doing during the Summer Recess.

The Association of Independent Businesses, at the small end of the market, has spoken of a decline in the fortunes of our sector". The National Federation of the Self-Employed has concluded that the Government have failed small businesses. The real wealth producers in the manufacturing sector know that the pressures on them are enormous and nearly all of them fear for the medium and long-term future of their businesses.

The Government believe that they have shown some ingenuity in the small business sector and that they have produced several interesting ideas, but it is like carrying buckets of water into the middle of the desert. There is nothing wrong with that, but they do not help much or for long. Small businesses need a good climate and customers who want to buy their products. All the small measures that one can imagine do not overcome the most basic requirement of anyone who wishes to set up a small business—a good business climate.

It is fashionable for hon. Members to blame rates. The Government are making a colossal electoral error in not doing something about them. It is an asinine way of collecting revenue. The notion that rates are causing the great decline in the manufacturing sector is preposterous. It is constantly being argued that businesses are moving to low-rated areas. I am the Member of Parliament for the lowest-rated area in England. If that is so, one should not be able to move in Cornwall for the manufacturing sector, but we have about 20 per cent. unemployment. It is patently not true and the Government probably know it. In a few areas, where extremely Left-wing Labour councillors have been elected, money is spent like dishwater, but to cite that as the main reason for industrial decline is preposterous and Conservative Members know it.

We must regain competitiveness. As the hon. Member for Motherwell and Wishaw (Dr. Bray) said, the Government must face up to exchange rates. I hope that they do so sooner rather than later. If they leave it until much later, there will not be much industry to recover on the new competitive base.

7.41 pm

Mr. Michael Marshall (Arundel)

The principal theme of the debate, as suggested by the Front Bench spokesmen, has been the Government's role, their relationship with the nationalised industries and the principles of privatisation. It is worth examining the principles of the Government's privatisation programme. I shall relate that to previous privatisation of British Aerospace and Cable and Wireless—in which my interest is well known—and the management part of the National Freight Corporation. the Phoenix development in the British Steel Corporation and the opportunities before us in the Queen's Speech.

With regard to privatisation in the British Steel Corporation, I listened carefully to a moving part of the speech of the hon. Member for Motherwell and Wishaw (Dr. Bray). He made several fair points. Privatisation is one way to approach some parts of an industry to identify particular market segments with more precision than has been done in the past. That is true of the recent bringing together of the forging interests of the British Steel Corporation and the private sector in a fifty-fifty public-private enterprise. That is a good move.

The hon. Member for Motherwell and Wishaw spoke of the problems that might afflict Ravenscraig or another major plant. I urge caution on my right hon. Friend the Secretary of State in the time that he takes to examine that problem, especially if we relate it not only to the market assessment but to the problem that must be cracked in the European Coal and Steel Community—how we reach a fair share of the market. There must be a Community view and a Community solution.

My right hon. Friend should be encouraged in his deliberations by recalling the time that the Labour Government spent on their closure review. No urging from Opposition Members to hasten that would be appropriate, nor do I believe that it would be accepted.

I shall now deal with the principles of privatisation that the Government have displayed. A few of the arguments were not addressed to the basic issue. The reason for examining what is now proposed for British Shipbuilders and for the future pattern of British Aerospace is to solve the problems that must be overcome for large parts of our nationalised industries, because they are internationally competitive manufacturing industries. That clear distinction was first drawn when we examined the Government's shopping list.

The right hon. Member for Salford, West (Mr. Orme) displayed a prehistoric approach. I would be happier if he were bending his mind to the problems of new industries. British Telecom is such a new industry. That is why I shall argue later that it must change and evolve to respond to the opportunities before it.

In an intervention I tried to urge the right hon. Member for Stockton to consider mixed ownership. It is not the easy cop out, sell-out or profiteering that the Opposition say it is. It raises the important question whether a capital structure in a mixed public-private enterprise is regarded by the public as a reasonable approach to bringing stability to nationalised industries. It is more effective than the childish suggestion that we should stay as we are. The Westminster-Whitehall mixture is singularly ill-geared to provide the necessary freedom of manoeuvre to internationally competitive manufacturing industries. All hon. Members know that from their experience of Select Committees. There are many grave disadvantages for major industries, such as British Aerospace that must compete in the world at large, in the form of nationalised industry that we have evolved. That is why the Government approach deserves close consideration.

Capital structure is not an academic exercise. It provides an opportunity for employee shareholding. That, and the opportunity for home ownership, offers opportunities for a new climate in which an individual lives and works. It is exciting that many people in BT will look forward to that opportunity. Those who met the lobby in Westminster Hall recently know that behind the rhetoric many people are interested in the proposition. Moreover, I met many ex-employees of BT during the weekend. They are also interested in the opportunity.

The availability of capital should be examined carefully. It is not simply a matter of Treasury insensitivity or semantic argument. Any hon. Member who has had an opportunity of working in Government will know that there are serious difficulties when discussing risk-taking enterprises. As BT moves into the communications and information technology age with its great commercial opportunities, it must inevitably enter the risk-taking business. I suggest that, as it does, no Government Department will find itself comfortable or qualified to handle such risk-taking decisions. My right hon. Friend the Secretary of State for Employment made that point in an earlier intervention.

If capital availability for many of those industries is of the greatest importance, we should consider what is happening in reverse. We should remember that capital was being denied to the warship building side of British Shipbuilders because its profits were being channelled to underwrite the losses of the merchant ship building side. That is an example of internal problems in the early years of nationalisation.

That is why the proposal in the Queen's Speech will allow freedom to privatise warship building. It will not be easy and it will not happen in the short term, but it must be right. That is what shop stewards in Vosper Thornycroft in my constituency will argue. They have clearly lost out in the balance of power in bringing together nationalised industries. The same argument applied to the bringing together of the 13 largest steel companies into the nationalised British Steel Corporation. In that kind of merger, the politics that come into play are damaging to the interests of many long standing successful parts of British industry. We have reached the stage where we should try to step aside from reflex actions in arguing about nationalisation and denationalisation. New structures, new opportunities for shareholding and new access to the capital market should be matters that everyone takes seriously.

The BT situation is classic. The right hon. Member for Salford, West sought to make some play of this proposal because it did not appear in the Conservative Party's manifesto. Part of the problem of our political system is that if we were to try to predict the course of industry over the next five years we would never get it right. As industries begin to accelerate and respond to change, many new opportunities arise that could not have been foreseen in 1979. Those who were involved in the proceedings on the British Telecommunications Bill will recall that the Government were accused of creaming off. Now, when we seek to give BT the opportunity to act as a private company, to compete—I am among those who believe that it must be on all fours with any other private company—and to use its judgment in moving up or down market or into attachments, the argument about freedom of access to the capital market is reinforced.

BT's approach to privatisation should encompass its access to the capital market, freedom of movement and the greater flexibility in management that private ownership will allow. These are points that the hon. Member for Truro (Mr. Penhaligon) might wish to reconsider. I was disappointed that he closed his options, having been half persuaded, as I have been more than persuaded, by many of the bogus arguments that are flying about. Hon. Members will look to see that full assurances are given on pensions just as they were for British Aerospace. In considering how shares are to be made available, I hope and believe that the small investor, starting with employees, will be given every opportunity. I sincerely hope that a place will be found for ex-employees in that kind of scheme.

Job security is far more likely when BT occupies, so far as we can see, 90 per cent. of the market. There will be more opportunities to move widely in the international sphere than now exists. There is a tremendous pool of excellence in this country. The great centre of excellence at Martlesham has not been exploited because of the problem of capital shortage. This could be built upon. I see scope for job growth in BT and the whole of the industry. Employees and customers will gain. The onset of competition has improved beyond recognition BT's service in the provision of lines for offices. Those who were previously told that they would have to wait six months are now offered lines in office buildings before they are even built. The changes are of great importance.

Hon. Members have described how BT's charges have been used to gather money for investment. This has been happening not only over the last three years, but for a long time. It is not a sensible means of financing a business. The opportunities to bring down charges should be attractive to customers.

For those within BT the way is open to a great opportunity for a company that in many ways has been outstanding in the technical sense but thwarted in its commercial development and its opportunities to trade with the world at large. The Government are to be commended on their approach. I hope that the legislation will be implemented as soon as possible—indeed, before the election. Whatever happens, I shall be happy to go to the electorate and say that we have either implemented the legislation or intend to do so. I am confident of the reception of the public to that suggestion.

7.55 pm

Mrs. Renée Short (Wolverhampton, North-East)

I am sorry that the hon. Member for Truro (Mr. Penhaligon), despite making a speech that contained many good reasons for voting with us, will not be doing so. The hon. Gentleman made a lively speech. I hope that his constituents will read it and mark it. It is fascinating that he has been the only hon. Member to refer to small businesses. The Government are not playing that record any more. They are playing the denationalisation record.

I found the speech of the Secretary of State arrogant and disappointing. The right hon. Gentleman put forward a poor case. It is clear that the Government think that this is an issue that can be presented to the electorate as a cure-all for the evils that they themselves have created since they came to office in 1979. They came to power by bamboozling the electorate—I hope that that is not an unparliamentary word—about tax reductions and ending unemployment, and by appealing to the lowest common denominator to obtain their ends. They had every intention of using unemployment created deliberately by them as a weapon to reduce the economic power and therefore the standard of life of millions of people. That is what they have done. They have forced people into giving up their determination to improve their standard of living. People who are on the dole and receiving supplementary benefit tend to lose their desire to fight or to feel that they have a stake in changing their condition.

The Government bamboozled people and appealed to their greed. Not unnaturally, they were not able to fulfil any of the promises that they made at the time of the election. The reduction in the rate of inflation, the rise of which to unprecedented heights was entirely due to the Government's policies, was achieved at a cost of nearly 4 million unemployed. That is the situation today. Those policies have effectively destroyed domestic production by one third and created an industrial wasteland in every region, especially the West Midlands.

How the Prime Minister and the Chancellor of the Exchequer have the nerve to claim that this has been a successful policy is beyond comprehension. They have not merely cheated ordinary working people who fell for their mendacious promises, which they never intended to fulfil, in 1979. They are trying to do the same again on the post-Falklands wave of false patriotism. It was Churchill, was it not, who said of the Tories of his day that patriotism was the last refuge of the scoundrel? That holds good today.

The Government have not even kept their promises to their own natural supporters, the industrialists and the manufacturers. Even the CBI has been moved to protest at the Prime Minister's policies, which it did at its last conference and the preceding one. It is concerned about the stagnant economy and the unprecedented number of bankruptcies. The Government made record profits for the financiers and the banks with their high interest rates. They did very well. When nationalised industries are thrown on the market at scandalously low prices, the same thing will happen again over Britain's oil.

In the West Midlands there were no fewer than 170,000 redundancies between 1979 and September 1982. Of those, 12,000 were in Wolverhampton and more than 1,000 redundancies are pending. In the West Midlands as a whole, in addition to that 170,000 there are 10,000 redundancies pending. The construction industry is one of the most seriously hit sectors, although it represents 10 per cent. of our national product. More than one third of its labour force is on the dole. The output of new houses is the lowest, as a proportion of existing stock, in the whole of Europe. That is a nice record for this Tory Government.

The contraction of the building materials and building components industry has been a striking success for the Prime Minister's policy of destroying British industry and I hope that she is proud of it. In the West Midlands there are 34,000 unemployed building workers, which amounts to 10 per cent. of the total number of unemployed in the region.

Once we take into account the needs of the building industry as a whole and the need for local authorities in our industrial towns and cities to rejuvenate their housing stock—whether privately or publicly owned—it becomes obvious that one way of getting the economy moving again is to stimulate building. However, the Government steadfastly refuse to do that. The decision of one of our largest industries, Ready Mixed Concrete, to close several of its aerated concrete block factories and to discontinue the manufacture of reinforced aerated concrete roof and wall slabs is the latest example of the decline in the building components industry.

Such production is no longer economic in the present, depressed state of the economy, and therefore many more skilled technicians and workers will now join the ranks of the unemployed, but components are still needed because some building is continuing. The Prime Minister should have the following lesson rammed home. We are still using the types of blocks and components that that firm produced, but they are not British produced. They are imported from Holland.

That is only a small example of what is going on, but it is typical. We run down our industries and are unable to supply what our customers need. As a result, imports from Europe and everywhere else in the world further depress our market. It is the economics of bedlam. Imports are being sucked in as a result of the Prime Minister's policies, because British industry is no longer in a position to fulfil even the present, reduced legitimate demand.

All we hear from the Prime Minister are complaints that British industry will not produce the goods that are wanted and as a result people are turning to imports. She is blaming her supporters for Britain's ills. Indeed, many of them must be sick of that. In the monetarist economy that she has created it is vain to expect financiers and industrialists to invest huge resources without some assurance of a safe and secure market. As long as the Prime Minister refuses to give a measure of protection to at least part of our beleagured industry, which is under pressure from Japan, Spain, Korea and anywhere one can name—but, above all, from Germany, France and Italy, whose industries are substantially Government subsidised—she will fail to save British industry Is that not a scandal? For as long as that continues, British industry will continue to decline.

The path that the Prime Minister has set out upon, aided and abetted by her Ministers, is one of continuing and further decline for British industry. The Secretary of State for the Environment makes dramatic gestures, asking local authorities and even nationalised industries to increase their expenditure on capital projects by £1,000 million this year, and that is very nice, but of course he fails to provide the necessary resources to cover the revenue implications and the cost of maintenance, repairs and all the contingency payments that would follow.

When my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) tackled the Prime Minister, on 3 November, about the revenue implications she refused to answer the question whether local authorities that did as they were told would be immune from penalties for exceeding their expenditure limits. I should be grateful if the Minister would give us that answer tonight. It would be of great interest to local authorities, as I am sure that they are anxious to carry out some capital building work.

If local authorities are to be penalised for following apparent Government policy, that policy is clearly a sham and the Prime Minister should come clean and admit as much instead of encouraging the Secretary of State to tell local authorities to build more. I do not know what sort of Britain the Conservative Party thinks it has created, or what sort of Britain it thinks it will have created by the next general election, but as a result of its policies Britain is rapidly becoming an industrial wasteland.

The Labour Party will have the task of recreating Britain's wealth after the general election. The people of Britain are sick and tired of the double talk practised by the Prime Minister and her Ministers, of her disruptive and hostile policies and of her doctrinaire attempt to undo what was done by Labour Governments after the war, simply to justify the misguided policies that she insists on pursuing.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. The House will understand that I have no control over the length of speeches. Many hon. Members have been waiting all day to take part in this important debate and the concluding speeches will begin at 9 pm. Therefore, I make a special appeal for short contributions.

8.8 pm

Mr. John H. Osborn (Sheffield, Hallam)

I shall heed your remarks, Mr. Deputy Speaker, and try to confine my speech to 10 minutes. The hon. Member for Wolverhampton, North-East (Mrs. Short) spoke about waste. I have had to comment on the fact that, in the Attercliffe and Brightside areas of Sheffield, steel works have been closed and pulled down. However, that has not happened only in the past three years. It has happened steadily over the past decade.

I want to talk about steel and Sheffield, the snags with nationalisation, the advantages of promoting free enterprise—I do not like the word "privatisation"—some of the aspects of unemployment, and finally the international scene.

I have no illusion that much of the collapse of the private sector of the steel industry has been due to the nationalisation of steel in Sheffield and elsewhere. It started in 1945. The steel masters in the 1950s and 1960s had the sword of Damocles of renationalisation over their heads and could not raise the funds to modernise their industries because of that threat.

Nationalisation created two classes of management—those who had the State as their employer and those who had not. It also created two grades of steel worker—those who call on the State to pay their wage bill and those who depend on the sales of what they make for job security, their wage packet and the level of their wage. In Sheffield, particularly in the small businesses, many have accepted a wage reduction to keep their jobs going.

An example of what I mean is that the EEC has made retraining grants available for those who are declared redundant, but for some unknown reason it takes about six months for the money to come through, while in the BSC. which depends on the public purse and the taxpayer, an advance payment is made for training immediately. Those who have been made redundant in the private sector have to wait a long time for their money and I have had many complaints on this subject. I should be grateful if my right hon. Friend the Secretary of State would bring the House up to date on that position.

Even more disturbing in a city such as Sheffield, management and shop floor workers who have been declared redundant in the public sector have had much higher disbursements than those who have had to leave the private sector, because when contraction has taken place in the private sector the funds to pay for the redundancies have just not been there. This has created a privileged group in the public sector, compared with those declared redundant in the private sector. After the indecisions of the then Government and my right hon. Friend the Secretary of State for Industry's predecessor in the late 1970s, the steel industry was presented with an immense challenge. I supported the appointment of Ian MacGregor. In my view, he has been a good man for the industry, but the rationalisation of the industry in this country, with the inevitable contraction, has presented problems.

Today I am not dwelling on the fact that in Britain we have no readily available iron ore. Cheap iron ore is available to our competitors, as is open-cast coal. The sad thing is that with the BSC facing possible further contraction the suppliers to the steel industry—those in the private sector who supply the moulds and refractories—are facing grave difficulties. I hope that the Secretary of State is aware of this.

The sensible merger of Johnson and Firth Brown was announced in August. The company is perhaps better known as Sheffield Forgemasters Holding PLC. This has brought together a Phoenix III after Phoenix II and Phoenix I. I welcome that, but there has been strain and unrest and even in this area strikes do not create jobs; they let in the competition.

One of the difficulties that we have to face is that our problems are not our own. The problem in the West is that too many countries have found too much of their gross domestic product taken up by public sector expenditure. Throughout the world this has been a problem as a result of the energy shock and the subsequent wages shock which went with it.

The Gracious Speech makes it clear that the Government will encourage the development of free enterprise. I welcome that. I have been concerned with DBS and cable television and have met teams from Mercury, Cable and Wireless and British Telecom. In my view, the fact that British Telecom has been released from the Post Office and put in a competitive environment has brought a breath of fresh air into the attitudes of its management. As my hon. Friend the Member for Arundel (Mr. Marshall) said, that is to be welcomed.

The provisions of the Oil and Gas (Enterprise) Act 1982 were in force when I went on an energy studies visit to BP's Forties field. The British National Oil Corporation had been both poacher and gamekeeper. It produced oil and had a regulatory function that gave it access to privy information about competitors in production and exploration. In meetings and in visits to sites, I found that BNOC's release from its poacher-cum-gamekeeper role was encouraging other operators in the North Sea.

The Government's attitude is one of encouraging competition and new ideas and fearing State monopoly powers that oppose innovation and competition.

Mr. Douglas

Will the hon. Gentleman give way?

Mr. Osborn

No, I shall not give way.

The Council of Europe had a long debate on unemployment and the economic situation at its last Assembly in October. Dr. van Lennep spoke of moving in "uncharted waters". I said that I felt that we had moved into a post-industrial revolution era, on the assumption that the industrial revolution had lasted 150 years.

I welcome the assertion of my right hon. Friend the Secretary of State for Trade that the balancing of exports and imports in the steel industry will be examined. However, I hope that my right hon. Friend's statement yesterday will mean that the private sector will have the same agreement as the public sector. Imports of stainless, alloy, tool and high speed steels have reached a penetration of 60 to 70 per cent. of the United Kingdom market. That penetration calls for discussions within the industry and monitoring of imports by the Government; I have raised this on a number of occasions.

Time prevents me from doing so now, but on another occasion I shall talk about unemployment in Sheffield. The Secretary of State for Employment knows that I welcomed job splitting. He also knows that I consider that the Government should go much further, perhaps in the direction of part-time jobs, reduced overtime and possibly a review of the Employment Protection Act. I was at the CBI meeting last week and I know that there is much more to be done for industry. I therefore ask my right hon. Friend to investigate further what can be done to mitigate the high level of unemployment.

8.17 pm

Mr. A. E. P. Duffy (Sheffield, Attercliffe)

The hon. Member for Sheffield, Hallam (Mr. Osborn) conceded that Attercliffe and Brightside in the east end of Sheffield had been reduced to wasteland, but he was at pains to argue that the destruction had not all happened under the Tory Government. He knows better than that.

During the last three years 20,000 industrial jobs have been lost in that area. In that time the work force has been decimated at plants such as Hadfield's, Firth Brown, Sanderson Kayser, Edgar Allen Balfour and Aurora, and in both the stainless and special steel areas of BSC. The hon. Gentleman knows that during the past three years firms such as Brown Bayley, an honoured name in industrial circles, have disappeared. The announcement of the next firm to disappear was made only a fortnight ago. It is Bone Craven, a firm that has long decorated the Sheffield industrial scene.

I could add to that list of job losses by moving just a little further afield into Brightside and mention Arthur Lee. I could move into the centre of the city and other hon. Members' constituencies and double that list. The hon. Member for Hallam knows that. He has no right to try to brush over the devastation of Sheffield and so many other parts of the country. I realise that he is in some difficulty, but he could have spoken with more sensitivity.

My right hon. Friend the Member for Salford, West (Mr. Orme) brought out the full horror of the present condition of British Steel. If the BSC chairman is again forced to wield the axe, Britain will no longer have a place as one of the world's major steel producers. The hon. Member for Hallam must know that. He has been connected with the steel industry all his life. He should know more about it than we do, but he simply brushed over the matter. That is not good enough. We have heard about the problems facing BSC. There is world steel overcapacity.

Mr. John H. Osborn

The hon. Gentleman leads me to regret that I did not take 20 minutes for my speech. I should then not have brushed over those points so quickly. That was perhaps unfortunate, but I certainly share the hon. Gentleman's concern about what has happened in Sheffield. It has happened gradually, however, although the impact has been recent.

Mr. Douglas

Who did it?

Mr. Osborn

The Labour Government.

Mr. Duffy

First, there was world steel overcapacity. Then there was the European problem, including imports from third countries. Now the United States market can no longer be relied upon and protectionism is assuming forms that would surprise even hon. Members. Finally, the hoped-for upturn at home has not materialised. Indeed, demand has slackened so alarmingly that the chairman of BSC has told me in correspondence that he has been forced to reappraise the corporation's plant configuration. I take that to mean that even the plan to reduce the work force to 92,400 by March next year—it was more than 200 ,000 in 1976—will be nowhere near enough and the chairman fears that when the upturn comes demand will not recover even to the level of five years ago. As the chairman previously admitted, however, any such reduction in capacity and manpower would mean Britain's abandoning any lingering dream of remaining a world force in steel making.

The real tragedy is that the latest crisis has come at a time when the gains from past sacrifices were beginning to materialise. Productivity, quality and delivery times have all improved dramatically, as the chairman acknowledged in the corporation's latest annual report when he said that in some works productivity was comparable with "best European levels". The special steels division improved its output by 27 per cent. in the year to last April, and overall productivity for strip products was 8.7 man hours per tonne of liquid steel in March 1982, against 13.2 in September 1979.

Similar improvements can be seen in BSC's sections and commercial steels. Large steel users such as Ford say that quality and delivery times have improved impressively. I am sorry that the Secretary of State for Employment is not present to hear me make those claims on behalf of a nationalised industry, in view of his earlier sneers at public enterprise.

BSC's strategy for stainless steel has been equally successful. Exports to France and Germany have increased. If the hon. Member for Hallam knows all this, why did he not make even a brief acknowledgment of the performance of steel, with his background and in his city? Production, quality and delivery times have all improved and the operation of the Sheffield complex has proved successful and efficient. You may protect the hon. Gentleman here, Mr. Speaker, but he will not be forgiven in Sheffield. The speech that he made today will be held against him for many years to come.

New records have been notched up time and again this year in stainless steels as well as in special steels. BSC stainless now produces a higher percentage of stainless steel through the continuous casting route than any other producer in Europe. It has also made several important market breakthroughs, including the development of stainless steel accommodation modules for offshore oil rigs. Yet in June it put 600 of the Sheffield workers responsible for those achievements out of work.

Some of those people had given up jobs in other sectors of British Steel to join the stainless sector, and that was their reward. They feel bitter that they have had to bear an unfair share of the consequences of the industrial problems that face the whole of Europe and they greatly resent the fact that British steelmakers, who had accepted the need to reduce capacity and to modernise, are now being penalised.

Last year BSC's stainless turnover increased by £20 million—scarcely a sign of a flagging business—but the sudden pressure of the new recession at a time when the Government are imposing strict cash limits on BSC as a whole has turned Sheffield's stainless steel dream into a nightmare. Like the special steel sections, Sheffield stainless has long recognised that the only way forward is to take the long hard road to better productivity and to concentrate on making high quality finished steel products that are competitive in world markets.

That the Minister may be contemplating further job cuts in Sheffield after such a hard slog is viewed as intolerable, as the hon. Member for Hallam must be aware. The men are not in the mood to take much more because, on top of everything, their union is now expected to put up with the sneaky privatisation that we can see in the current Firth Brown-River Don merger, which is a shotgun marriage. One would not have realised that from the reference made to the merger by the hon. Member for Hallam. He tried to put a good complexion on it, but it is a shotgun marriage with no consultation with the work force. Hundreds of jobs are now at stake—700 immediately, and the figure may rise to 1,100. The hon. Gentleman made no reference to that.

Mr. Martin Flannery (Sheffield, Hillsborough)

They are on strike at the moment.

Mr. Duffy

Are they on strike at the moment?

There is exemplary shopfloor leadership in the persons of the chairman and the convener of shop stewards at Firth Brown, who are left distraught with anxiety and worry. Again, that was not reflected by the speech of the hon. Member for Hallam.

The men in steel want a Minister in this Government who will stand up for British Steel, not consign it to the knackers' yard. From the public they want the recognition that those who buy Italian washing machines, German cookers, French fridges and cars from anywhere but Britain are putting their steel workers out of jobs. Foreign car imports alone are now costing the Sheffield region the equivalent of more than 100,000 ingot tonnes of steel in orders lost each year.

The present labour force in Sheffield steel is being maintained by extensive use of the short-time working compensation scheme. Once it is exhausted, inevitably the consequences for jobs will be serious. Will the Minister say what his plans are for the short-time working compensation scheme, because it is of fundamental importance to the east end of Sheffield and to BSC?

BSC faces huge problems, but to regard it as a public industry that has failed the nation is absurd. I remind the Secretary of State for Employment, in his absence, that its expertise in technology is universally acknowledged. Its highly modern plant includes the £140 million stainless steel development in Sheffield, with continuous casting techniques and the high standard of finishing required for aerospace and high technology, and is probably the best in the world outside Japan.

British Steel has done a tremendous job since taking over the 14 separate companies at nationalisation in 1967. Management and men have achieved much under the worst possible circumstances, and suffered much. It is hardly an example of an industry dragging its feet or failing to face the challenge of change.

Comparison is often made with our European competitors, but they, as my hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) said, are, almost without exception, losing money. Most of them are now nationalised or supported by their Governments. Fuel costs are subsidised, interest rates are lower and by and large they do not have to contend with contracting markets at home or strengthening currencies abroad.

Has the Secretary of State for Industry made it clear in Brussels that there is a limit to the amount of capacity that we can take out of the British steel industry without prejudicing product mix, the needs of manufacturing industry in Britain, or the provision of weapons systems within the Western alliance? The Secretary of State, safe in London with his southern-based constituency, refused in June to contemplate any change in the decision to strip much of South Yorkshire of even its meagre Government assistance. How many jobs must go before the Government realise that South Yorkshire is sliding fast into economic and job chaos and that what is at stake is the economic survival of South Yorkshire?

It is unthinkable that that portion of the steel industry that is basic to the South Yorkshire economy, and the remainder which produces the basic requirements of so much domestic engineering, should not survive. However, with over half of their combined market now taken by imports, we are moving rapidly to that situation. I wonder how many people realise how desperate is the steel industry's situation.

The prospect of a Britain with little more than a token bulk and special steels industry is ominously close. I sense that the Secretary of State for Industry is well aware of that and is disposed to take a long-term rather than a short-term view of the industry's future. The Government must decide whether Britain is to have a steel capacity that can always be relied on to meet the nations's basic needs. Alongside that must be a special steels capacity. Both will need money now and for the foreseeable future if they are to survive in even today's skeletal form.

8.30 pm

Mr. Jonathan Aitken (Thanet, East)

To judge by the tone of the speech of the hon. Member for Sheffield, Attercliffe (Mr. Duffy), the election campaign in Sheffield has already started. I do not believe that the cheap debating points made against my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) will convince the constituents he has served so well for over 23 years.

The right hon. Member for Salford, West (Mr. Orme) said that he opened the debate against a gloomy background. It appears that lugubrious pessimism has permeated both sides of the House, but it is out of tune with the mood in the country, which has been dramatically influenced by the Falklands victory. The Falklands factor, which I take to be a short-term psephological factor, is neither here nor there in our long-term political history, but the Falklands campaign has changed the national mood and public confidence in the process and authority of government.

In the eight years in which I have been a Member of the House, I have seen locust years of economic disappointment, cutbacks, retrenchments, withdrawals, compromises and national humiliations. It was a tonic after that long history of Government failures suddenly to experience the glorious success of the Falklands campaign. It restored authority and faith in the process of government. If it had stood alone, one might have dismissed it as an aberration, but the Government have followed it by another major long-term success—the victory over inflation. It is no flash in the pan.

Between 1971 and 1980 under successive Governments our inflation rate averaged 14.2 per cent. The Government have reduced that to a year-on-year figure of 7 per cent. and are confidently forecasting 5 per cent. by the spring.

Mr. John McWilliam (Blaydon)

What is the average?

Mr. Aitken

To have more than halved what was widely regarded as the most intractable rate of inflation in the industrialised world is a formidable achievement.

Mr. Flannery

By sacking everybody.

Mr. Aitken

But just beating inflation is not enough. Unemployment remains the scourge of our country. There are no magic formulas for ending it. Certainly none has been prescribed by the Opposition this afternoon. From where I sit here in the unreal world, listening to gloomy speeches, and in the real world, running a public company that employs people, I believe that there are grounds for cautious optimism that the British disease is being slowly cured and an improvement in the employment figures is slowly working through.

Mr. Flannery

Come off it!

Mr. Aitken

The hon. Member for Sheffield, Hillsborough (Mr. Flannery) is another Member from the area where the election campaign has started. Let me give him evidence of what I say.

Demand is expanding faster now than for over three years. There is something of a consumer-led recovery. High street retail sales in the July-September quarter are 3 per cent. up on the same period last year; new car registrations are up 12 per cent.; net building society receipts have doubled; and labour productivity in manufacturing is improving at nearly 7 per cent. Above all, the commercial activity of ordinary people is getting the economy slowly moving again. They are spending more by saving less. It is a spontaneous recovery that is being made possible by falling interest rates, lower wage costs, reductions in mortgages and, above all, tumbling inflation.

There is a snag in the good news. It is a consumer recovery—real though it is—that could so easily be frittered away if the extra purchasing power goes on imports. There are some ominous signs that that is happening. The volume of imported manufactured goods was 12—3 per cent. higher during the first nine months of 1982 than in the same period last year. That is why rising demand is not yet resulting in more jobs, and may never do so unless the Government take some bold and decisive action on their trade policies.

We want to see the rising demand turn into more jobs. The smack of a British Government's firm hand has to be felt on the bottoms of some foreign trading nations and institutions. We should smack first at the bloated bureaucrats of the EEC who are responsible for such outrages as the extraordinary fact that a British car being exported to Spain has to pay a tariff of 37 per cent. while an imported Spanish car pays a tariff of only 4 per cent.

We should hit out at those nations which cheat in their international trade by unfair import regulations, especially the Japanese, or those which believe that international trade is some sort of one-way street, as do the Koreans and the Taiwanese. Free trade must be fair trade, and our Trade Ministers must not end up like Sir Austen Chamberlain of whom it was said that he always played the game and always lost it. We have to see a more robust, nationalistic fighting spirit in our trade policies. I hope that we shall not shrink from suggesting those measures in our discussions on GATT and elsewhere.

I shall pick only one further item in the Queen's Speech to which I wish to draw attention and which I support strongly—information technology. I welcome the Government's commitment to what are called the "sunrise" industries, such as cable systems, microelectronics, fibre optics and information technology generally. They are new industries that are growing at an annual rate in excess of 14 per cent. They offer by far the greatest hope for new jobs, commercial opportunities and potential for British research and inventiveness.

We have already had our share of success stories. My hon. Friend the Member for St. Marylebone (Mr. Baker) is more like a Messiah than a Minister when it comes to spreading the gospel of what he rightly calls the new industrial revolution. It is essential that we do not lose Great Britain's momentum and lead in that revolution. By all means let us have debates on the Hunt report on cable television, but let us not get too bogged down and distracted by academic arguments about regulatory bodies. There must be some ground rules for cable television, but let us not lose sight of the fact that cable television is one small part of the huge information technology potential of cable systems. The Cabinet's information technology advisory panel, in its excellent report, said: We have to accept that cable systems will go through an initial phase when their attraction will be based on entertainment considerations. Let us not get so excited about the small problems of regulating the initial entertainment considerations that we lose sight of the glittering prizes that a national cable network can bring in renewed economic vigour, new jobs and industries. I support the Gracious Speech.

8.40 pm

Mr. John McWilliam (Blaydon)

I welcome the criticism by the hon. Member for Thanet, East (Mr. Aitken) of the Government's attitude to cable television. The Hunt committee was not allowed to examine technology and the development of a national cable network. Its prime function was to examine information infrastructure. I wish that the hon. Gentleman had made that citicism when the statement on the report was made.

It is time that hon. Members realised the full implications of what we are doing. The argument revolves around whether the new service should be all sport and porn instead of reaching its potential for a truly national information network. If "off the shelf' technology—a Government euphemism for obsolescent or 40-year-old technology—is involved, the vision will never come to fruition.

I took no pleasure from the Secretary of State's speech today. There was nothing in his speech to give real hope to the 200 people who have just been declared redundant at TI Churchills at Blaydon. That firm makes computer numerically controlled lathes. If that seed-corn of industrial development is destroyed, what hope is there for industry? At the same time as the 200 people lose their jobs, shares in the company increase in value because it is going into consumer durables. Where is British manufacturing going? How will the Secretary of State deal with the problem?

I hope that we can hear more about the denationalisation of British Telecom. I am sponsored by the Post Office Engineering Union. I have 22 years' experience as a telephone engineer and I find some statements from hon. Members on both sides of the House worrying. I realised that I had cause to worry when I received a letter from the Secretary of State for Industry on 19 October. It used the words "Ringing the changes". I was worried in particular about the left-hand side of the top of the letter which carries the good old-fashioned quad cable, circa 1910, and the right-hand side, which looks a little like a 1940 coaxial cable. There is not much hope for the future since the Department cannot even use the latest technology to circulate its propaganda—and it is pure propaganda.

The letter states: We are determined to protect rural services. Everyone who has access to telephone services at present will continue to have access to telephone services in the future. That is marvellous, but what about people who do not have access to telephone services? When will the expansion take place? There will not be any such expansion. The Secretary of State never promised that.

In his speech today the Secretary of State tried to dodge the issue. Mr. A. Scott, in a paper published on 24 August, outlined the assumptions to be used in BT's 1983 medium-term plan. The paper identifies Government intentions with regard to the privatisation of BT. The paper was leaked extensively in The Guardian and other newspapers. Of pensions the paper says: The POSSF deficiency liability will not pass to BT plc". The only reason why the Post Office staff superannuation fund has a deficiency is that when it became a funded scheme the Government insisted that, instead of having a block of stock with its various bits and pieces, the entire liability should be met by consols. That is why there is a liability. I agree that that liability will diminish, but the responsibility for existing pensioners still exists. Nowhere in these documents have I seen an acceptance of that responsibility by the Government. Indeed, they have sought to evade it.

Today the Secretary of State tried to dodge the issue when he spoke about the sale of shares. He asked where the proceeds of the sale would go. He tried to suggest that no decisions had been made. This document says that the Secretary of State offers 1.275 billion shares for sale on 1 April 1984 and a further 1.275 billion shares for sale on 1 April 1985 and retains the proceeds of both sales". There is no messing; it is quite clear. That is what the Department of Industry is saying to BT. So I do not know why the Secretary of State tried to confuse the House today. It is clear that his Department has already told BT what is happening.

There are other problems, too. The Secretary of State suggested that staff will be as well off as they ever were, and that there will be no problems. He suggests that the fact that BT will offer shares will not mean that dividends have to be paid to anyone. At least, his letter suggests that. All of us, as reasonable men and women, know that that does not seem likely. Let us look at the document again. It says: BT plc will pay a gross dividend in 1984–85 and subsequent years of whichever is the less of current cost profits and 50 per cent. of historic cost profits (before charging supplementary depreciation)". It means that a dividend of about £350 million is to be distributed. That does not seem to be hayseed. To me, that seems a most desirable share. Moreover, it is £350 million which otherwise would have been reinvested in services of which the hon. Member for Arundel (Mr. Marshall) spoke, whereby BT would develop in the ways that people wanted it to develop.

Incidentally, I agree with the hon. Member. I do not see BT being the same body as it was in the past—inward-looking and obstructive to developments. British Telecom is quite capable of development—indeed, so capable that some friends of Conservative Members have screamed rape and blue murder, because BT has started to compete with them. So let us have no illusions. Any future BT organisation will have to be flexible and it will have to keep its eye on the technological developments which Britain needs.

That brings me to another criticism of Government policy. I challenge the Government to tell me where, with the exception of Amersham International, the risk technology capital is. In fact, there is none. Whenever firms go into the high reaches of technology, they expect the Government to bail them out. We are no different from the Americans or anyone else. High technology in America has developed almost entirely on the basis of federal research programme grants. Anyone who has visited the National Technical Information Centre in Springfield, Virginia, knows what I am talking about. However, they are more crafty about it than we are.

When someone has a patent with the NTIC, funded by federal money, it is closed to all but American industry for the first 18 months, and is opened up only after that. We do not do that. We either snare the patent up with the British technology group, when it does not get out at all, or we offer it to the lowest tender and probably flog it to the Japanese who undercut us fifteen ways from Sunday. We are not clever about that either.

We have other problems too. It is argued that one of the reasons for privatising British Telecom is its inefficiency. I challenge the Secretary of State now to name five private companies the productivity of which, over the past 10 years, is as good on any objective analysis as British Telecom, or the Post Office as it was before. He will not be able to. They do not exist. This debate has befuddled hon. Members with assertion and political dogma. We should talk about the reality—that which is best for the people of Britain. What is best for the British people is a flexible telecommunications system which will meet future needs and the needs of those in rural communities, the sick, the old, the disabled and those people in cities who are otherwise isolated, but which will also meet the needs of business.

The privatisation of British Telecom will mean an excellent service between London and Birmingham, London and Manchester, London and Glasgow, and London and Edinburgh, but God help those who have a small company in Hexham, in Consett or, for that matter, in Arundel or anywhere else that is off the main lines. They will get clobbered in the quality of their service and the tax that they pay.

Another fundamental objection is also contained in the letter to which I referred. At the Conservative Party conference the Secretary of State for Industry said that the Government wanted the 200,000 or so people in British Telecom to be shareholders. It happens that at the moment there are 245,882 people working in British Telecom, so his figure is a wee bit of a shortfall. Perhaps it was a slip and he did not count the employees correctly. However, we return to the leaked British Telecom policy document. It says: The Department of Industry have mentioned maxima of 230k men"— for the uninitiated that is 230,000 men— for 1984–85 and 200k men for 1986–87. There are an awful lot of people missing there, are there not? There are 50,000 people missing—a drop from 245,882 to 200,000. That worries me.

When I was a telephone planning engineer in the dear old days three and a half years ago when there was difficulty in maintaining the grade of service at an exchange, my job was to work out what was wrong, write up a work guide, order the stores, design the job—and nothing happened. Nothing happened because there was no investment or no staff, usually both.

When I was a union branch secretary 10 years before that, I was conscious that routine maintenance in telephone exchanges was being written off as a matter of course by management. It was not being done. I do not know where the figure which the Secretary of State gave today of three visits per clay per faultsman came from. When I was a maintenance control officer nobody made fewer than eight visits a day. If they did, they were on the carpet. The average was between eight and 12 visits a day. The right hon. Gentleman must have been looking at the rural service, because his figures are not accurate.

No one is idle in BT, but much of the work that needs to be done is not being done. If 50,000 are to lose their jobs over the next few years, there will be a worse service for some than the current one. There are not so many new electronic exchanges which will reduce manpower to be introduced. These exchanges will only reduce manpower from four to two or from four to one, and there are not so many employed in telephone exchanges in any event. If 50,000 lose their jobs, there will not be the bodies available to provide even the present service.

The Secretary of State has a duty to tell us where the cuts in the standard of service will be made. Will they take place in the rural areas or the urban areas, or will services be cut between the main centres? Will Mercury take the demand? Mercury is another laugh. It will be all right for those in London or Birmingham but it will not be any good, for example, for those in Newcastle. That is because it is not going there. Are we to see increases in domestic tariffs? Are business tariffs to be further reduced?

If Conservative Members want a better telephone service, there is one easy way to get it. First, they should forget the daft ideas that amount only to providing shares for their friends. Secondly, they should cut the manpower productivity targets for BT so that it can afford to employ the staff that will give a better service. If there is a fault in someone's telephone, a machine will not be able to put it right. Someone will have to visit the premises in which the telephone is situated and fix it. That is the only way to do it.

I take the greatest exception to the proposed share issue. The two tranches of billions of pounds are, in effect, to be flogged off and the Government will take the money. It is not taxpayers' money. It is money that has been contributed by those who have subscribed to the telephone service over the years. The Government will take away their part of the investment into the capital structure of BT. They will then flog it off and the proceeds will he used to give nice tax handouts in an election year or the year immediately following the election. Those who contributed to the development of the capital structure—the telephone exchanges and the individual telephones—will not get a bent farthing.

This will be the biggest rip—off in history and it should be seen as such. When the Secretary of State replies to the debate, I hope that he will be duly contrite. He will be saying to his constituents, my constituents and everyone else's constituents who happen to have a telephone, "I am sorry, mates, but it is far more important to me to let my friends in the City get their noses in the trough than to provide you with a decent service and to recognise the contribution that you have made to the development of our telephone service." I hope he will say that and say it clearly. That will be the result of flogging off shares.

It appears that 50,000 jobs are at risk. I invite the Secretary of State to deny that that is the effect of the Department of Industry's directive. We are talking about employees who are already overworked. They are already not able to do that which Conservative Members are now asking of them. When the 50,000 are made redundant there will be nowhere for them to go. Currently, there are 4 million unemployed. This is a terrible indictment of any Government and it is the clear implication of this Government's policy. I am willing to put the letter to which I have referred on the Table of the House if anyone wishes to see it.

8.59 pm

Mr. Hal Miller (Bromsgrove and Redditch)

I hope that the hon. Member for Blaydon (Mr. McWilliam) will forgive me if I do not reply in detail to his remarks. However, it must be a triumph for this Administration if they have imbued some spirit of competition in British Telecom. The hon. Gentleman's speech was tarred with the same brush as the other speeches from the Opposition Benches in that it had very little to do with the debate and offered no constructive solution to Britain's problems.

One of the most interesting facts is that, with the exception of the hon. Member for Motherwell and Wishaw (Dr. Bray), the genuine debate in terms of exchange rate and demand has come from the Government Benches. It is significant that the Opposition have failed in their duty to provide any credible alternative policies, as was evinced in the by-election result in Birmingham, Northfield. There is no credibility in the policies offered by the Opposition. Therefore, we have to look to the Conservative Government for the policies that must be pursued.

I welcome the opportunity to take part in the debate, because I wish to enter on the side of competition and of industrial costs. The demand-ciders have lost their case. My hon. Friend the Member for Thanet, East (Mr. Aitken) pointed out that there had been an increase in demand, but that it was being taken largely by imports. Perhaps the exchange rate has an element to play in that, and I shall deal with it later in remarks.

We need to respond to the pressure from our competitors abroad to provide the standard of living that we need. For our industry to become more competitive we must recognise that a great deal of the competitive environment in which it operates is established by the Government. I wish, therefore, to put forward what I call a competition policy. The Government are already doing many of the things that I wish to see, but I want to propose a package that they could present more easily and credibly and which would help resolve some of the discussions with the CBI.

First, I call for free competition inside Britain. My right hon. Friend the Secretary of State has already taken some steps to reduce the uneven distribution of the regional development grant by reducing the number of assisted areas, but there is still a great deal to be done before the discrimination against the West Midlands is ended. Could not a cash limit be put on regional development grants? Much more is spent in that way than is spent on the central policy of higher technology, which I favour. When firms succumb to the pressure of competition—perhaps in Scotland—they are rescued by the Scottish Development Agency and spared the results of the Government's competition policy. Examples are to be found in the carpet industry and in foundries.

Secondly, I should like to deal with competition with our trading partners. My hon. Friend the Member for Thanet, East referred to the Spanish tariff discrepancies which my right hon. Friend the Secretary of State described as grotesque. When will we see some action? Is it enough that, because the Spanish agreement was with the EEC, we should not be able to act to protect British interests? It is not certain that our EEC partners will help us in this matter, because many of their factories and companies have been set up on the basis of collaborating with and importing from Spain.

There are also other trading barriers and unfair practices, such as political prices from Comecon countries, quotas and other non-tariff barriers in Japan. We must see a robust defence of British interests by our Administration, which should take into account the competitive devaluations in which some of our EEC partners are now indulging, bolstered by price controls, that are affecting our opportunities.

Thirdly, there is a need for research and development. Profits have been so tight that companies have been forced to give up research and development. Much more is done by the Governments of our trading partners to finance their research and development. For example, in the motor industry we need only think of Volkswagen, Porsche and Renault. We must also ensure that skilled technological manpower is available so that we are able to take advantage of the Government's programme by moving into the new technologies. Many companies in the West Midlands are locked into an outdated structure.

In such a policy I would also include investment in infrastructure, such as roads, rail and sewerage, which do not involve additional manpower. I welcome the call to local authorities to spend their capital allocations. A great deal is now being done on the cost structure of our energy prices, rates, national insurance surcharge and the national insurance contribution. In short, I wish to see a competition policy spelt out, presented and enacted. I urge that on my right hon. Friends.

Mr. Douglas

On a point of order, Mr. Speaker. I do not want unnecessarily to take up the time of the House, but many hon. Members have sat throughout the debate without being called. I do not know what great mysterious events take place behind the Speaker's Chair, but there should be some procedure for looking at the length of speeches, particularly at the end of a debate, which have excluded other hon. Members from participating.

Mr. Dixon

Further to that point of order, Mr. Speaker. I have been in the Chamber since the beginning of the debate, and I wrote to you last week asking for an opportunity to take part because of the serious conseqences for the shipbuilding industry on the north-east coast. The Secretary of State for Industry did not even have the courtesy to give way when I tried to intervene to make a point about the shipbuilding industry. I doubt whether he has read the Patton report, the Geddes report, or the Booz-Allen report on private investment in the British shipbuilding industry. It is a damned disgrace, having listened to some of the waffle—

Mr. Speaker

Order. I am sorry for those hon. Members who have sat throughout the day and not been called. I noticed that three hon. Members took an hour between them. Therefore, some hon. Members have not been called because of the time taken by their colleagues.

Mr. Dixon

Further to that point of order, Mr. Speaker.

Mr. Speaker

Order. We should now get on with the debate.

Mr. Dixon

rose—

Mr. Speaker

I shall listen to the hon. Gentleman, because I know that he feels strongly about this matter, but he must realise that the House wants to get on with the debate.

Mr. Dixon

Will you explain, Mr. Speaker, how a Back Bencher can make points that are important to his constituency and his area? As I said, I wrote to you last week, but I have not—

Mr. Speaker

Order. I know that the hon. Gentleman wrote to me last week, but he was not alone in doing so. Some hon. Members have been extremely selfish in the amount of time they have taken, and that is unfair to their colleagues.

9.9 pm

Mr. Eric G. Varley (Chesterfield)

Every Opposition Member who has had a chance to speak—I strongly regret the fact that my hon. Friends who have raised points of order have not had that chance—has expressed the great anxiety that exists not only in his constituency but throughout the country about the state of unemployment and industrial decline.

I have never before heard my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) make such a penetrating analysis of the mismanagement of the economy and the disaster that confronts our steel industry. My hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) echoed his sentiments.

We are often told that Britain must maintain its position as a manufacturing and trading nation. I agree. A further rundown in the steel industry ought to be unthinkable. The country should be grateful for the intervention of the Secretary of State for Scotland in the debate when he threatened to resign with the whole of the Scottish Office to prevent the closure of Ravenscraig and other steel plants. My hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) mentioned the West Midlands. I hope to take up the points that she raised.

My hon. Friend the Member for Blaydon (Mr. McWilliam) knows a great deal about telecommunications, and he made his case well.

Criticism of the Government has not been confined to this side of the House. One of the most critical speeches came from the hon. Member for Bath (Mr. Patten), whose speech compared well with that made yesterday by the right hon. Member for Chesham and Amersham (Sir I. Gilmour). Those speeches reflected the genuine anxiety that exists in some quarters of the Conservative Party, but I am afraid that they will not get very far, because the Prime Minister is impervious to their pleas.

I have been reading an article in tonight's edition of The Standard by Mr. Anthony Shrimsley. He says that the political landscape is littered with the unmarked graves of those who were pushed, stumbled or retired more or less gracefully from high office … Gone are the apparently untouchable Lord Carrington, the last representative of the Magic Circle, Lord Soames, the languid Sir Ian Gilmour and the wet and witty Norman St. John-Stevas. Departed also are Mr. Mark Carlisle and those worthy Thatcher warhorses Lord Thorneycroft and Angus Maude. The Prime Minister is in complete control. Even the Secretary of State for Northern Ireland and the Minister of Agriculture, Fisheries and Food are prevented from speaking at the Tory Party conference and must address fringe meetings. If a Conservative Member has not at some stage embraced the mad incantations of Professor Milton Friedman he is not eligible to be a member of the present Administration.

Over the debate, the House and the country looms the bleak shadow of mass unemployment. The Government have the unenviable distinction of presiding over the highest number of registered unemployed in the history of the United Kingdom. That is a stain on the Government's record and on the Prime Minister's personal reputation that nothing ever can or will remove.

Our debates since last Wednesday have dealt with the contents of the fourth Queen's Speech in this Administration. It is instructive to look back at the three preceding Queen's Speeches to see how their promises have been fulfilled. The first was delivered on 15 May 1979, 12 days after the general election that brought the Government into power. It said that the Government would create a climate in which commerce and industry can flourish. In this way they will lay a secure basis for investment, productivity and increased employment in all parts of the United Kingdom. At that time there were 1,299,300 registered unemployed in the United Kingdom. It was a long Session.

The second Queen's Speech was delivered 18 months later, on 20 November 1980. What had become of the Government's promise to create a climate in which commerce and industry could flourish and employment increase in all parts of the country? Unemployment had increased to 2,162,900. That was an increase of 771,000, or 66.5 per cent., but the Prime Minister was not daunted. The Queen's Speech of 20 November 1980 spoke about recognising the hardships and worries of those suffering unemployment. It promised to recognise the need to bring down the rate of inflation and create conditions for sustainable growth of output and employment. Another year went by. A new Session of Parliament opened wih another Queen's Speech on 4 November 1981 stating: My Government share the nation's concern at the growth in unemployment. What happened in that year as a result of the Government's promise to bring about growth in employment? The answer is that unemployment went up once again. It rose from 2,162,000 to 2,988,600, an increase of 826,000, or 38.2 per cent.

The Prime Minister was impervious to her record of failure. The Gracious Speech in 1981 expressed concern over the growth of unemployment, although the needle was getting a bit stuck in the groove. Once again there was the same old promise to improve prospects. How has that promise, made a year ago, been fulfilled? Since the 1981 Queen's Speech, which expressed concern about the growth of unemployment, unemployment has gone up from 2,988,600 to 3,295,000, an increase of 307,000, or 10.3 per cent.

At this stage hon. Members should note an important statistical fact which the Prime Minister has misused to misrepresent and distort the record about what she claims to be a fall in unemployment. As the base figure of unemployment gets bigger, the percentage increase gets smaller, even though the absolute figure in human terms can be counted every time in hundreds of thousands.

These year-by-year figures of the mounting toll of unemployment nationwide conceal a catalogue of tragedies. Three and a half years ago the Tories stated in their manifesto that they wanted to reunite a divided and disillusioned people. They have certainly united the country. Every part of the United Kingdom shudders under the pall of mass unemployment. Areas of Britain that have always been prosperous now suffer unemployment percentages which, under a Labour Government, would have been unthinkable in areas that have, sadly, long suffered chronic unemployment.

When the Labour Government left office, unemployment in Wales and Scotland was 7.7 per cent. and in the Northern region 8.2 per cent. Unemployment now in the South-East, an area represented by, among others, the Secretary of State for Industry, the Secretary of State for Employment and the Minister for Industry and Information Technology, is up to 10.4 per cent. In Northern Ireland, for every 100 workers out of a job when Labour left office there are now 204. In Scotland the figure is 213, in the Northern region 214, in the South-West 221, in Wales 223, in the North-West 244 and in East Anglia 254.

In Yorkshire and Humberside, for every 100 out of work when the Tories came in there are now 268, in the East Midlands 274 and in the South-East 291. The West Midlands holds the record. For every 100 out of a job when the Prime Minister walked into Downing Street, there are now 323. It is a devastating fact that today there is a higher percentage of unemployment in the West Midlands than in Scotland.

The Prime Minister has truly united the country. For the first time young people are experiencing the trauma of mass unemployment. The number of teenagers out of a job is horrendous. Our young people are suffering from unprecedented levels of unemployment, and their prospects of worthwhile employment are shrivelling every day. My right hon. Friend the Member for Salford, West (Mr. Orme) spoke of the highest intake of apprentices ever known in the engineering industry under a Labour Government. It was in excess of 25,000. Last year that figure fell to 15,000—the worst figure since records began. This autumn, engineering companies have taken on 9,200 apprentices. Since that record Labour year, the intake of engineering apprentices has fallen by a devastating 63 per cent. Even worse, despite the pathetic increase in new apprentices, existing apprentices are being made redundant. Last month alone more than 200 were made redundant.

Now we have the new scourge of long-term unemployment. For the first time the number of workers who have been on the dole for more than a year has passed the 1 million mark. Today, the number of workers jobless for more than a year is almost as great as the total number of unemployed when the Prime Minister took office. A year ago, 22 per cent. of those on the dole had been out of work for more than a year. Today that proportion has risen to 32 per cent. Wherever one looks in industry, one sees that the Government's policies have cast a blight. [Interruption.] If the hon. Member for Hayes and Harlington (Mr. Sandelson) wants to intervene, why does he not do so instead of muttering? He has defected from the Labour Party and does not have the courage to force a by-election in his constituency. All that he does is lecture the Labour Party. If he has something to say, why does he not get on his feet and say it?

Mr. Neville Sandelson (Hayes and Harlington)

I am on my feet and have listened with great tolerance and patience to the right hon. Gentleman's endless repetition of familiar facts. However, I and the whole country want to know what the right hon. Gentleman and his party will do. He should tell the country, because it has no faith in them.

Mr. Varley

The hon. Gentleman has not been in the Chamber all day. At this time of night he has come to disrupt the debate. He should return to where he has been all day. He sounds as if he is ill.

Mr. Sandelson

rose—

Mr. Varley

I shall not give way.—[Interruption.]

Mr. Speaker

Order. The right hon. Gentleman must be allowed to continue his speech.

Mr. Michael Morris

rose—

Mr. Varley

I shall not give way.

Last week, in that hectoring speech of hers, the Prime Minister went on about small businesses and boasted about them in the following words: We introduced the best range of measures in the Western world. The Under-Secretary of State for Industry who is responsible for small businesses is in the Chamber. When hon. Members questioned that assertion, the Prime Minister said that the Opposition are not interested in good news."—[Official Report, 3 November 1982; Vol. 31, c. 20.] I shall tell the Prime Minister the news about small businesses, not as she represents it, but in the words of the Association of Independent Businesses. It has just sent me a letter, and has no doubt sent letters to the Secretaries of State for Industry and for Employment. It sums up the position of small businesses in its "Emergency Trade Survey", in which it says that we conclude that the business optimism apparent at the beginning of 1982 has gone. More worringly, it appears firms that have rationalised and shed labour in large numbers in 1980–81 are still in trading difficulties. As slow payments. bad debts and bankruptcies mount, for many business men their faith in the trading system is going into decline. That is what the Prime Minister regards as good news.

The right hon. Lady has more good news. She said in the debate on the Loyal Address last year: Today, we see British industry slowly but inexorably improving. When my hon. Friends asked about that improvement and where it was taking place the Prime Minister again said: Opposition Members do not like that. They love bad news and hate to hear good news."—[Official Report, 4 November 1981; Vol. 12, c. 22.] The Prime Minister may not score many marks for originality, but when she thinks that she has found an original phrase she is prepared to stick to it.

What are the signs of this inexorable improvement? What about company liquidations? They have not been "inexorably improving"; they have been inexorably increasing. In the first three quarters of 1980 there were 4,666 liquidations, and in the first three quarters of this year there were 8,662. The number of companies going bust has nearly doubled. Over the past year alone, the number is up by 39 per cent.

What about the inexorable improvement in production? In August last year the index of manufacturing production stood at 89.6. In August this year it was down to 88.6. What about the inexorable improvement in investment? The latest available figures show capital investment in manufacturing industry at £660 million for the second quarter of this year. A year ago it was £756 million. The inexorable improvement is a reduction of £96 million. Wherever we look in industry, the scene is bleak.

The inexorable improvement is described in Barclay's International survey, published 12 days ago. On engineering, it said that the industry remains fully entrenched in the recession with sales and output running for some time at levels between 15 to 20 per cent. below the average for 1979. Elsewhere, UK output of paper, printing and publishing materials continues to decline … The level of output of paper and board is now below that achieved in 1957. The survey reveals the same picture in textiles, chemicals and other industries.

The Prime Minister was wrong to choose the word "improvement" but I cannot fault her choice of "inexorable". The disasters befalling all our industries are a direct result of the Government's pitiless policies and the Prime Minister's stubbornness and arrogance.

The Gracious Speech in 1980 promised a sustainable growth in employment. When Labour left office in 1979, there were five unemployed for every declared vacancy. Today, there are 27 people fighting for every vacancy. Under this Government the number of workers in employment has fallen by 2.4 million. In manufacturing industry the Government's record is catastrophic. The number of workers in manufacturing industry between June 1979 and June 1982 fell from 7.2 million to 5.7 million. Of the jobs in manufacturing industry when Labour left office, more than 20 per cent. have been wiped out as a direct result of Government policies. What is there in the fourth and possibly final Queen's Speech of this Parliament to fight unemployment, apart from the usual collection of sanctimonious and insincere phrases? I have to admit that the Government are taking vigorous action to reduce not the number out of work, but the number listed as out of work. This month the new method of collecting figures will cut the numbers, while doing nothing about the problem. The Secretary of State for Employment is a quack doctor who applies plastic surgery to the problem while making no effort to cure the disease.

What has become of the Prime Minister's words from this Dispatch Box about the need for real jobs? When the Conservative Party was in opposition she would get up every other week and talk about real jobs. The Labour Party has given support to the youth opportunities programme and similar schemes, but according to the Prime Minister such schemes do not create real jobs, although there are now more young people in YOP jobs than ever before.

Not one paragraph, sentence or word of the Queen's Speech is aimed at fighting the horror of unemployment. Instead, we have the obscene irrelevance of selling public assets. Those assets were created by the taxpayer, but the taxpayer is now being deprived of the benefits. The revenues from the God-given windfall of North Sea oil should be used to create new industry and employment, not merely to finance unemployment.

The argument that apparently took place this weekend between the Prime Minister and the Secretary of State for Energy was not about how best to use Britoil for the benefit of the people. Instead, there was an unseemly squabble about what kind of rip-off would least damage the Government's image. The Secretary of State for Employment has a lot of experience of looting public assets. He lost £25 million for the taxpayer on the sale of Amersham International. If he were a local authority councillor, he would have been surcharged and disqualified from public office.

The Secretary of State for Industry, too, is getting ready for his turn, stoutly assisted by his Minister of State, provided that he can get a pair.

Mr. Michael Morris

rose—

Mr. Varley

The Government are getting ready to sell off British Shipbuilders. If the Secretary of State for Employment had his way there would be no British Shipbuilders to sell off, because without nationalisation the British shipbuilding industry would have sunk without trace long ago.

If Conservative Members are not prepared to accept my word, let them listen to the chairman of British Shipbuilders—a man appointed by the Conservative Party. When he was questioned by the Select Committee on Industry and Trade about the Polish deal, he said: I think the consequences to British shipbuilding would have been drastic if not final. I think that at the time the prospect of getting orders was so poor that our shipbuilding capability in significant parts might have had to be dispersed. What has been saved by nationalisation and the sacrifice of the industry's workers is to be put on the auction block for the highest bidder when, six years ago, no bidder would have looked at it.

The Secretary of State for Industry today talked continually about the "failure of public ownership." Occasionally the Prime Minister speaks in that vein, too, but it is not the failure of public ownership that makes these great industries appetising for the City sharks. It is the success of such industries in public ownership that makes them attractive to potential purchasers.

The financiers who turned their backs on Ferranti when it was in trouble could not wait to get their greedy hands on it when public ownership and public money had made a success of it. Public ownership made British Aerospace an attractive property, and public ownership saved Fairey Holdings so that it could be sold off. The Government are creating diversions instead of concentrating on the task of creating employment. Unable or unwilling to deal with the problems, the Prime Minister fiddles the figures.

Everything is now blamed on the world recession, as the right hon. Member for Chesham and Amersham said yesterday. Last week, the Prime Minister blamed it all on the world recession when she said: In the last 12 months for which figures are available, unemployment rose by 51 per cent. in Canada, 45 per cent. in Germany, 40 per cent. in the Netherlands, 17 per cent. in Italy, 15 per cent. in Belgium, and 10 per cent. in the United Kingdom."—[Official Report; 3 November 1982; Vol. 31, c. 19.] To choose a date just one year ago was a very strange thing to do, as the Prime Minister took office not one year but three and a half years ago. The figures for that period, standardised and adjusted on the same basis, are as follows. Unemployment rose by 20 per cent. in Italy, 35 per cent. in Canada, 51 per cent. in Belgium, 91 per cent. in Germany and 123 per cent. in the United Kingdom. The Prime Minister should not use phoney figures. That is the true international comparison.

Everything is now blamed on the world recession, but when the Hendon Young Conservatives formed that famous queue for the Conservative poster the caption did not read "Don't blame the Government—there's a world recession". It said "Labour Isn't Working". If Saatchi and Saatchi said that the Labour Government were 100 per cent. wrong, by their own standards the Conservative Government are 223 per cent. wrong.

Certainly that is how a woman in my constituency who came to see me a few days ago saw the situation. She said that she had voted for the Conservatives. Her son had undertaken an apprenticeship with a local firm four and a half years ago. In his final year, he had received the apprentice of the year award. He has now been made redundant because his employers calculated that after such a short period in full-time employment it would be cheap to get rid of him. That apprentice of the year, the son of a Thatcher supporter, is now on the scrap heap at 21 years of age.

The hon. Member for Thanet, East (Mr. Aitken), who is not in the Chamber, raised the subject of the Falklands. In the past few months the Prime Minister has been too ready to drape herself in the Union Jack. It is certainly true that brave young men there tried to show that they were ready to die for Britain. What young men and women in this country now want is the right to work for Britain. I shall not forgive the Prime Minister, and the country will not forgive her either.

9.38 pm

The Secretary of State for Employment (Mr. Norman Tebbit)

The right hon. Member for Chesterfield (Mr. Varley) began by reading an extract from The Standard newspaper. I admit that he read it quite well, but from then on his speech went downhill. As a one-time Minister now in opposition, it was certainly cheeky of him to go on about the delicate subject of redundancies in high places—a fate that he seems to have suffered. I, too, have read the papers recently. Only yesterday the Labour Party's house magazine, the Morning Star, declared—[Interruption.] The Leader of the Opposition may wish to shout me down when his right hon. Friend has already taken up too much of my time, but he will not succeed.

The Morning Star said: Certainly Mr. Varley is no man to lead a crusade or even to present the policy. Get a friend to read you pages from the local telephone directory out loud and there you have Mr. Varley's style. With support like that from his friends and his own newspaper, I shall not add to the right hon. Gentleman's woes by dwelling further on his speech. At best, the right hon. Gentleman was dealing in half truths, and the rest of the time he sank well below that.

This has been an interesting debate, particularly in the nature of some of the Back Bench speeches. My hon. Friend the Member for Arundel (Mr. Marshall) made an interesting speech, full of knowledge about the steel industry. My hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) spoke, as always, briefly, concisely and for Sheffield. I assure him that we are pursuing the European Community vigorously to try to get those redundancy payments paid by the Community. My right hon. Friend the Secretary of State for Industry will take up this matter, and so shall I.

I assure my hon. Friend the Member for Saffron Walden (Mr. Haselhurst) that we have not abandoned manufacturing industry, but it has to compete.

My hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) was well advised to make her point about the burden of rates on industry. Firm after firm has been moving out of London, driven out, or driven into bankruptcy, by the level of rates, and the same is true for the rest of the country.

My hon. Friends the Members for Bromsgrove and Redditch (Mr. Miller) and Thanet, East (Mr. Aitken) referred to the need for fair competition. My hon. Friend the Member for Bromsgrove and Redditch made an effective speech about the competition policy that he would like to see.

I assure the hon. Member for Motherwell and Wishaw (Dr. Bray) that we are as concerned about the future of Ravenscraig as he is, and my right hon. Friend the Secretary of State for Industry has already made that plain.

In the speech of the hon. Member for Preston, South (Mr. Thorne) I was glad to hear his warm support for the production of more fighter and bomber aircraft, particularly as I know that he is not too keen on the Royal Air Force having them. I look forward to his warm support for exporting such war planes to many countries all over the world.

The right hon. Member for Stockton (Mr. Rodgers) made a characteristically smug speech, posing as a sort of middle-aged boy scout. He deployed theological disputes about ownership and managed to keep a straight face as he did so. Who would have thought that he and his colleagues stood for election in 1979 on their proud record of nationalisation, promising more of the same? They supported the same programme as the right hon. Members for Bristol, South-East (Mr. Benn) and Chesterfield. If the Labour Party had won the last general election, the right hon. Member for Stockton would have been pleased to take office again. He would have been only too pleased to have stood on the party platform, holding hands with his chums and singing the Red Flag together as usual.

In many ways, this has been a curious debate in which the Labour Party expressed its firm attachment to the half-baked nineteenth century Marxism of clause four. It made it plain that it is still committed to the eternal extension of nationalisation. The amendment in the name of the official Opposition refers to what seems to be one of the three policies on renationalisation compensation held by the Labour Party.

There is the Labour Party policy reached at the Labour Party conference in 1982, that compensation should be given only on the basis of proven need. Then there is the policy enunciated in the amendment—[AN HON. MEMBER: "Not true ."] Does the hon. Member say "Not true"? I assure him that I have here my 6 October 1982 copy of Tribune. It even gives the figures for the vote. I do not suppose that we should believe the figures for the vote at the Labour Party conference, but they carried the day.

Then there is the policy on the Order Paper, which makes a commitment to re-acquire at the earliest opportunity the shares of denationalised concerns by paying exactly what the Government received for them. That is the official Opposition policy. It is not the party policy. The party policy is the conference party decision.

Then there is what might be called the alternative Opposition policy described by the right hon. Member for Bristol, South-East. He stated: Both at the TUC congress and the Labour Party conference … we called for the reacquisition of public assets without compensation."—[Official Report, 10 November 1981, Vol. 12, c. 499.]

Mr. Campbell-Savours

rose—

Mr. Tebbit

I suppose that that is the policy of the provisional as opposed to the official wing of the Opposition.

Mr. Campbell-Savours

rose—

Mr. Tebbit

As we know all too well, the more often the officials on the Front Bench witch hunt the provos on the Back Benches the more vigorously they take on the policies of those whom they witch hunt out of the party. We are still puzzled to know what policies they do support.

Mr. David Ennals (Norwich, North)

Deal with the subject!

Mr. Tebbit

Just for a laugh, let us look at the policy on which the Opposition are committing themselves tonight. They are committing themselves to a policy to reacquire shares at the price paid. Do they really mean that if the shares have fallen in value in the meantime they would pay more than the current market price? Do they really mean that where pension funds, including those of the nationalised industries or even trade unions, have bought above the issue price they would take them back?

Mr. Clinton Davis (Hackney, Central)

Deal with the amendment.

Mr. Tebbit

I am dealing with the amendment.

I do not know whether any trade unions have bought such shares, but trade union investment portfolios make interesting reading. For example, until recently the NUM was a substantial shareholder in Turner and Newall at the time when many people were saying that the company was dealing in dangerous materials without taking adequate safety precautions.

We should also interest ourselves in the Opposition's policy on the National Freight Corporation, which was bought out by its employees. Would those employees have their business taken away from them without compensation, with half compensation, if the right hon. Member for Salford, West (Mr. Orme)) had his way?

The Opposition want to talk about nationalised industries. They suggest that we have treated them badly. Far from starving them of resources, capital investment in the current year will be 26 per cent. higher than last year and 40 per cent. higher than in 1980–81. If that is bad treatment, they could do with more of it. I wonder for whom the Opposition thought they were speaking—the workers, who have lost so many jobs in nationalized industries under Labour Governments, the taxpayers, who have lost £40 billion in nationalised industries, or the consumers, who have lost faith in nationalised industries?

The right hon. Member for Salford, West waxed lyrical about the service offered by British Telecom. He should talk to the people who have been kept waiting month after month for telephones. Not long ago, under the protection of the British Telecom monopoly, it cost twice as much a year to hire a telephone answering machine as it now costs to buy one. Because of such monopoly protection, we did not develop answering machines, which are now almost all imported.

Mr. McWilliam

rose—

Mr. Tebbit

The right hon. Gentleman should go out into the world and find out what people think about the nationalised monopolies and about the private sector.

Do the Opposition believe that we should have put more money into British Leyland? Do they believe that we were wrong to back the Metro, the Jaguar XJ40 and the LM10? Do they approve the demanning and the increase in productivity? Do they believe that British Leyland can only succeed on the basis of producing vehicles competitively"? Do they believe that There's no way you can force people to buy Leyland cars. They will only do so if the products are equal to, or better than, the competition"? Are they still amazed that the Labour and trade union movement has not understood this"?. That is what the right hon. Member for Chesterfield wrote in The Sunday Times business section on 22 January 1978. He wants to forget what he wrote.

The right hon. Member for Salford, West talked about British Shipbuilders. When British Shipbuilders was being nationalised, we were assured by the then Minister of State, Department of Industry that it would never be allowed to go into loss. On 17 February 1976 the right hon. Member for Manchester, Ardwick (Mr. Kaufman) said: The words 'adequate return on capital employed'… require a return before charging interest which is positive and also adequate…An objective…could not envisage a loss-making situation".…[Official Report, Standing Committee D, 17 February 1976; c. 949.] That was what they said when they nationalised it.

Mr. Barry Sheerman (Huddersfield, East)

Even ICI makes a loss under this Government.

Mr. Tebbit

British Shipbuilders made a loss under the previous Government as well. Nationalisation has not been a success. It does not save jobs, except at the expense of customers. It has not held down prices, except at the expense of taxpayers, and never for long. It has led to a worse use of capital resources.

The official Opposition and some other groups have difficulty in understanding the Government's interest in dealing with inflation. That is not because we do not care about industry's problems or employment, but because we care about it. In 1978 the right hon. Member for Chesterfield said: Financial stability and low inflation are the first two necessary conditions for industrial regeneration. In my view, he was right. The fact is that for industry, as for everyone else, the overriding need is to reduce inflation. Only by slowing down the inexorable rise in prices in line with other countries and our international competitors can industry be made competitive.

To regain our international competitiveness we need also to improve our productivity. Does the right hon. Member for Chesterfield believe that competitiveness is any less important because unemployment is higher? I was as surprised as my right hon. Friend the Secretary of State for Industry to hear the right hon. Member for Chesterfield speaking in support of the miners' strike. He has said that people want the right to work. He did not say that when he was speaking in support of the miners' strike. He was running round the country like a puppy at the heels of Mr. Scargill. He was supporting the 31 per cent. pay claim. The Labour Party treasurer was reported as wanting a zero increase and redundancies for his party's employees.

Mrs. Renée Short

On a point of order, Mr. Speaker. That really is a load of rubbish.

Mr. Speaker

Order. The hon. Lady knows that is not a point of order for me to rule upon.

Mr. Tebbit

However, it is a revealing remark.

Mrs. Short

rose—

Mr. Speaker

Order. Has the hon. Lady a real point of order upon which I can rule?

Mrs. Short

Would you be good enough to ask the right hon. Gentleman to answer the debate, Mr. Speaker?

Mr. Speaker

Order. Mr. Tebbit.

Mr. Tebbit

I am in a better position than the hon. Member for Wolverhampton, North-East (Mrs. Short), because I heard more of it than she did. I am answering the amendment moved by the Opposition.

The right hon. Member for Chesterfield told the miners that they were facing a crucial battle. He said: If you do not win that battle, that would be a disaster for us. For which "us" would the miners voting be a disaster? Was it a disaster for the miners that there was no strike? Was it a disaster for British industry that there was no strike? Was it a disaster for the thousands of workers whose jobs would have been at risk if there had been a strike? Or was it just another disaster in a long line of disasters for the right hon. Member for Chesterfield? If there is one ability that the right hon. Member for Chesterfield has above everything else, it is to be on the losing side of every argument.

Mr. Varley

Is the right hon. Gentleman aware that he is a disgrace to the position of Secretary of State? When, in the time that remains, will the right hon. Gentleman tell the House what he intends to do about unemployment?

Mr. Tebbit

If the right hon. Gentleman had not wasted an extra 10 minutes I should have had 10 minutes longer to reply.

The tone of Opposition speeches today suggests that Opposition Members have forgotten anything that they learnt in office. The facts of life have not changed. Output per man in Britain's manufacturing industry had over many years fallen steadily in relation to that of our rivals overseas. We were substantially overmanned. That had nothing to do with the level of sterling, but it had everything to do with the efficiency of British industries. In many sectors we have been uncompetitive. It is relevant to the Opposition's amendment to compare the performance of the public and private sectors in that respect.

I have little time left, so I must be brief. Between 1971 and 1981 nationalised industry prices rose by 330 per cent. That decade covers both Labour and Conservative Governments. In that time the retail price index increased by 260 per cent. The nationalised industries were by far the worst performers in the country. The only reaction by the right hon. Member for Chesterfield and his friends is to demand the nationalisation of more industries and to prevent the liberation of nationalised industries into the private sector. That does not say much for clause four and its devotees.

Hon. Members

What about unemployment?

Mr. Speaker

Order. Constant shouting from a sedentary position is unparliamentary. We must watch our standards, at least to ensure that everyone has a hearing.

Mr. Tebbit

There is no need for me to apologise for speaking to the Opposition amendment.

Mr. Varley

But the right hon. Gentleman is not speaking to the amendment.

Mr. Tebbit

The right hon. Gentleman cannot have read the amendment. It reaffirms the next Labour Government's commitment to re-acquire at the earliest opportunity the shares of denationalised concerns by paying exactly what the Government received for them. The Opposition thought that important enough to put it on the Order Paper. I pay them the compliment of believing it important enough for me to deal with it.

In the spring of this year there were various calls for reflation by increasing Government expenditure—that is, reflation to add to inflation. The calls varied from a mere £1 billion or £2 billion by some of my hon. Friends to £4 billion or £5 billion from members of the SDP and to £8 billion, £9 billion or £10 billion by the official Opposition. There were calls to bring down inflation and interest rates. There were calls to increase demand, cut the national insurance surcharge and end the delay in the payment of regional development grants.

Demand, as measured by final retail sales, is firmly up. Interest rates are well down. They are far lower than they have been for many years. The national insurance surcharge—the Labour Government's tax on jobs—has been cut. The delay in the payment of regional development grant is ended. Inflation has come crashing down, to the bitter disappointment of the Opposition Front Bench. Industry's costs have been cut by Government measures by about £2 billion a year since the Budget. In addition, the CBI estimates that each 1 per cent. fall in interest rates means another £300 million cut in costs.

The Government have met almost every reasonable demand made at the time of the last Budget. They have done more than many of our critics asked of them. They have done it without piling inflation upon inflation, which would have been the consequence of following the demands of Opposition parties. Nationalisation and Government spending have been tried and they do not work. The problem was not the market economy not working, but that it was crippled by Government spending, taxing, borrowing and inflation—dirigiste policies for Ministers who had lost their way.

The foundations for a return to full employment have been laid. The amendment deserves to be thoroughly well rejected.

Question put, That the amendment be made:—

The House divided: Ayes 218, Noes 337.

Division No. 1]	[10 pm
AYES
Abse, Leo	Dormand, Jack
Adams, Allen	Douglas, Dick
Allaun, Frank	Dubs, Alfred
Anderson, Donald	Duffy, A. E. P.
Archer, Rt Hon Peter	Dunnett, Jack
Ashley, Rt Hon Jack	Dunwoody, Hon Mrs G.
Ashton, Joe	Eadie, Alex
Atkinson, N. (H'gey,)	Eastham, Ken
Bagier, Gordon A.T.	Ellis, R. (NE D'bysh're)
Barnett, Guy (Greenwich)	English, Michael
Barnett, Rt Hon Joel (H'wd)	Ennals, Rt Hon David
Benn, Rt Hon Tony	Evans, Ioan (Aberdare)
Bennett, Andrew (St'kp't N)	Evans, John (Newton)
Bidwell, Sydney	Faulds, Andrew
Booth, Rt Hon Albert	Field, Frank
Boothroyd, Miss Betty	Fitch, Alan
Bottomley, Rt Hon A. (M'b'ro)	Flannery, Martin
Bray, Dr Jeremy	Foot, Rt Hon Michael
Brown, Hugh D. (Provan)	Ford, Ben
Brown, R. C. (N'castle W)	Forrester, John
Brown, Ron (E'burgh, Leith)	Foulkes, George
Buchan, Norman	Fraser, J. (Lamb'th, N'w'd)
Callaghan, Rt Hon J.	Freeson, Rt Hon Reginald
Callaghan, Jim (Midd't'n & P)	Garrett, John (Norwich S)
Campbell, Ian	Garrett, W. E. (Wallsend)
Campbell-Savours, Dale	George, Bruce
Cant, R. B.	Gilbert, Rt Hon Dr John
Carmichael, Neil	Golding, John
Carter-Jones, Lewis	Graham, Ted
Clark, Dr David (S Shields)	Hamilton, James (Bothwell)
Clarke, Thomas (C'b'dge, A'rie)	Hamilton, W. W. (C'tral Fife)
Cocks, Rt Hon M. (B'stol S)	Harman, Harriet (Peckham)
Cohen, Stanley	Harrison, Rt Hon Walter
Coleman, Donald	Hart, Rt Hon Dame Judith
Concannon, Rt Hon J. D.	Hattersley, Rt Hon Roy
Conlan, Bernard	Healey, Rt Hon Denis
Cook, Robin F.	Hogg, N. (E Dunb't'nshire)
Cowans, Harry	Holland, S. (L'b'th, Vauxh'll)
Craigen, J. M. (G'gow, M'hill)	Home Robertson, John
Crowther, Stan	Homewood, William
Cryer, Bob	Hooley, Frank
Cunliffe, Lawrence	Howell, Rt Hon D.
Cunningham, Dr J. (W'h'n)	Hoyle, Douglas
Dalyell, Tam	Huckfield, Les
Davidson, Arthur	Hughes, Mark (Durham)
Davies, Rt Hon Denzil (L'lli)	Hughes, Robert (Aberdeen N)
Davis, Clinton (Hackney C)	Janner, Hon Greville
Davis, Terry (B'ham, Stechf'd)	Jay, Rt Hon Douglas
Deakins, Eric	John, Brynmor
Dean, Joseph (Leeds West)	Johnson, James (Hull West)
Dewar, Donald	Johnson, Walter (Derby S)
Dixon, Donald	Jones, Rt Hon Alec (Rh'dda)
Dobson, Frank	Jones, Barry (East Flint)

Jones, Dan (Burnley)	Robertson, George
Kaufman, Rt Hon Gerald	Robinson, G. (Coventry NW)
Kerr, Russell	Rooker, J. W.
Kilroy-Silk, Robert	Ross, Ernest (Dundee West)
Kinnock, Neil	Rowlands, Ted
Lambie, David	Ryman, John
Lamond, James	Sever, John
Leighton, Ronald	Sheerman, Barry
Lewis, Arthur (N'ham NW)	Sheldon, Rt Hon R.
Lewis, Ron (Carlisle)	Shore, Rt Hon Peter
Litherland, Robert	Short, Mrs Renée
Lofthouse, Geoffrey	Silkin, Rt Hon J. (Deptford)
Lyon, Alexander (York)	Silkin, Rt Hon S. C. (Dulwich)
McCartney, Hugh	Silverman, Julius
McDonald, Dr Oonagh	Skinner, Dennis
McKay, Allen (Penistone)	Smith, Rt Hon J. (N Lanark)
McKelvey, William	Snape, Peter
MacKenzie, Rt Hon Gregor	Soley, Clive
McMahon, Andrew	Spearing, Nigel
McNamara, Kevin	Spellar, John Francis (B'ham)
McTaggart, Robert	Spriggs, Leslie
McWilliam, John	Stallard, A. W.
Marks, Kenneth	Stoddart, David
Marshall, D (G'gow S'ton)	Stott, Roger
Marshall, Dr Edmund (Goole)	Strang, Gavin
Marshall, Jim (Leicester S)	Summerskill, Hon Dr Shirley
Martin, M (G'gow S'burn)	Taylor, Mrs Ann (Bolton W)
Mason, Rt Hon Roy	Thomas, Dafydd (Merioneth)
Maxton, John	Thomas, Dr R. (Carmarthen)
Maynard, Miss Joan	Thorne, Stan (Preston South)
Meacher, Michael	Tilley, John
Mikardo, Ian	Tinn, James
Milian, Rt Hon Bruce	Torney, Tom
Mitchell, Austin (Grimsby)	Varley, Rt Hon Eric G.
Morris, Rt Hon A. (W'shawe)	Wainwright, E. (Dearne V)
Morris, Rt Hon C. (O'shaw)	Walker, Rt Hon H. (D'caster)
Moyle, Rt Hon Roland	Wardell, Gareth
Mulley, Rt Hon Frederick	Watkins, David
Newens, Stanley	Weetch, Ken
Oakes, Rt Hon Gordon	Welsh, Michael
O'Neill, Martin	White, Frank R.
Orme, Rt Hon Stanley	White, J. (G'gow Pollok)
Palmer, Arthur	Whitehead, Phillip
Park, George	Whitlock, William
Parker, John	Willey, Rt Hon Frederick
Parry, Robert	Williams, Rt Hon A. (S'sea W)
Pendry, Tom	Wilson, Rt Hon Sir H. (H'ton)
Powell, Raymond (Ogmore)	Wilson, William (C'try SE)
Prescott, John	Winnick, David
Price, C. (Lewisham W)	Woodall, Alec
Race, Reg	Woolmer, Kenneth
Radice, Giles	Wright, Sheila
Rees, Rt Hon M (Leeds S)	Young, David (Bolton E)
Richardson, Jo
Roberts, Albert (Normanton)	Tellers for the Ayes:
Roberts, Allan (Bootle)	Mr. Derek Foster and
Roberts, Ernest (Hackney N)	Mr. Frank Haynes.
Roberts, Gwilym (Cannock)

NOES
Adley, Robert	Biggs-Davison, Sir John
Aitken, Jonathan	Blackburn, John
Alexander, Richard	Blaker, Peter
Alison, Rt Hon Michael	Body, Richard
Alton, David	Bonsor, Sir Nicholas
Amery, Rt Hon Julian	Boscawen, Hon Robert
Ancram, Michael	Bottomley, Peter (W'wich W)
Aspinwall, Jack	Bowden, Andrew
Atkins, Rt Hon H. (S'thorne)	Boyson, Dr Rhodes
Atkins, Robert (Preston N)	Bradley Tom
Atkinson, David (B'm'th,E)	Braine, Sir Bernard
Baker, Kenneth (St.M'bone)	Bright, Graham
Baker, Nicholas (N Dorset)	Brinton, Tim
Banks, Robert	Brittan, Rt. Hon. Leon
Beaumont-Dark, Anthony	Brooke, Hon Peter
Bendall, Vivian	Brotherton, Michael
Benyon, W. (Buckingham)	Brown, Michael (Brigg & Sc'n)
Best, Keith	Brown, Ronald W. (H'ckn'y S)
Bevan, David Gilroy	Browne, John (Winchester)
Biffen, Rt Hon John	Bruce-Gardyne, John

Bryan, Sir Paul	Gummer, John Selwyn
Buchanan-Smith, Rt. Hon. A.	Hamilton, Hon A.
Buck, Antony	Hamilton, Michael (Salisbury)
Budgen, Nick	Hampson, Dr Keith
Bulmer, Esmond	Hannam, John
Burden, Sir Frederick	Haselhurst, Alan
Butcher, John	Hastings, Stephen
Butler, Hon Adam	Havers, Rt Hon Sir Michael
Carlisle, John (Luton West)	Hawkins, Sir Paul
Carlisle, Kenneth (Lincoln)	Hawksley, Warren
Carlisle, Rt Hon M. (R'c'n )	Hayhoe, Barney
Cartwright, John	Heath, Rt Hon Edward
Chalker, Mrs. Lynda	Heddle, John
Channon, Rt. Hon. Paul	Henderson, Barry
Chapman, Sydney	Heseltine, Rt Hon Michael
Churchill, W. S.	Hicks, Robert
Clark, Hon A. (Plym'th, S'n)	Higgins, Rt Hon Terence L.
Clark, Sir W. (Croydon S)	Hogg, Hon Douglas (Gr'th'm)
Clarke, Kenneth (Rushcliffe)	Holland, Philip (Carlton)
Clegg, Sir Walter	Hooson, Tom
Cockeram, Eric	Hordern, Peter
Colvin, Michael	Howe, Rt Hon Sir Geoffrey
Cope, John	Howell, Rt Hon D. (G'ldf'd)
Cormack, Patrick	Howell, Ralph (N Norfolk)
Corrie, John	Howells, Geraint
Costain, Sir Albert	Hudson Davies, Gwilym E.
Cranborne, Viscount	Hunt, David (Wirral)
Crawshaw, Richard	Hunt, John (Ravensbourne)
Critchley, Julian	Irvine, Rt Hon Bryant Godman
Cunningham, G. (Islington S)	Irving, Charles (Cheltenham)
Dickens, Geoffrey	Jenkin, Rt Hon patrick
Dorrell, Stephen	Jenkins, Rt Hon Roy (Hillh'd)
Douglas-Hamilton, Lord J.	Johnson Smith, Sir Geoffrey
Dover, Denshore	Jopling, Rt Hon Michael
du Cann, Rt Hon Edward	Joseph, Rt Hon Sir Keith
Dunn, Robert (Dartford)	Kaberry, Sir Donald
Durant, Tony	Kellett-Bowman, Mrs Elaine
Dykes, Hugh	Kimball, Sir Marcus
Eden, Rt Hon Sir John	King, Rt Hon Tom
Edwards, Rt Hon N. (P'broke)	Kitson, Sir Timothy
Eggar, Tim	Knight, Mrs Jill
Elliott, Sir William	Knox, David
Emery, Sir Peter	Lamont, Norman
Eyre, Reginald	Lang, Ian
Fairbairn, Nicholas	Latham, Michael
Fairgrieve, Sir Russell	Lawrence, Ivan
Faith, Mrs Sheila	Lawson, Rt Hon Nigel
Farr, John	Lee, John
Fell, Sir Anthony	Le Marchant, Spencer
Fenner, Mrs Peggy	Lennox-Boyd, Hon Mark
Finsberg, Geoffrey	Lester, Jim (Beeston)
Fisher, Sir Nigel	Lewis, Kenneth (Rutland)
Fletcher, A. (Ed'nb'gh N)	Lloyd, Ian (Havant & W'loo)
Fletcher-Cooke, Sir Charles	Loveridge, John
Fookes, Miss Janet	Luce, Richard
Forman, Nigel	Lyell, Nicholas
Fowler, Rt Hon Norman	Lyons, Edward (Bradf'd W)
Fox, Marcus	Mabon, Rt Hon Dr J. Dickson
Fraser, Rt Hon Sir Hugh	McCrindle, Robert
Fraser, Peter (South Angus)	Macfarlane, Neil
Fry, Peter	MacGregor, John
Gardiner, George (Reigate)	MacKay, John (Argyll)
Gardner, Edward (S Fylde)	Maclennan, Robert
Garel-Jones, Tristan	Macmillan, Rt Hon M.
Gilmour, Rt Hon Sir Ian	McNair-Wilson, M. (N'bury)
Ginsburg, David	McNair-Wilson, P. (New F'st)
Glyn, Dr Alan	McNally, Thomas
Goodhart, Sir Philip	McQuarrie, Albert
Goodhew, Sir Victor	Madel, David
Goodlad, Alastair	Magee, Bryan
Gorst, John	Major, John
Gow, Ian	Marland, Paul
Gower, Sir Raymond	Marlow, Antony
Gray, Hamish	Marshall, Michael (Arundel)
Greenway, Harry	Marten, Rt Hon Neil
Griffiths, E. (B'y St. Edm'ds)	Mates, Michael
Griffiths, Peter Portsm'th N)	Maude, Rt Hon Sir Angus
Grimond, Rt Hon J.	Mawby, Ray
Grist, Ian	Mawhinney, Dr Brian
Grylls, Michael	Maxwell-Hyslop, Robin

Mayhew, Patrick	Rathbone, Tim
Mellor, David	Rees, Peter (Dover and Deal)
Meyer, Sir Anthony	Rees-Davies, W. R.
Miller, Hal (B'grove)	Renton, Tim
Mills, Iain (Meriden)	Rhodes James, Robert
Mills, Sir Peter (West Devon)	Rhys Williams, Sir Brandon
Miscampbell, Norman	Ridley, Hon Nicholas
Mitchell, R. C. (Soton Itchen)	Ridsdale, Sir Julian
Moate, Roger	Rifkind, Malcolm
Monro, Sir Hector	Rippon, Rt Hon Geoffrey
Montgomery, Fergus	Roberts, M. (Cardiff NW)
Morgan, Geraint	Roberts, Wyn (Conway)
Morris, M. (N'hampton S)	Rodgers, Rt Hon William
Morrison, Hon C. (Devizes)	Roper, John
Morrison, Hon P. (Chester)	Ross, Stephen (Isle of Wight)
Mudd, David	Rossi, Hugh
Murphy, Christopher	Rost, Peter
Myles, David	Rumbold, Mrs A. C. R.
Neale, Gerrard	Sainsbury, Hon Timothy
Needham, Richard	St. John-Stevas, Rt Hon N.
Nelson, Anthony	Sandelson, Neville
Neubert, Michael	Scott, Nicholas
Newton, Tony	Shaw, Sir Michael (Scarb')
Normanton, Tom	Shelton, William (Streatham)
Nott, Rt Hon John	Shepherd, Colin (Hereford)
Ogden, Eric	Shepherd, Richard
O'Halloran, Michael	Shersby, Michael
Oppenheim, Rt Hon Mrs S.	Silvester, Fred
Osborn, John	Sims, Roger
Owen, Rt Hon Dr David	Skeet, T. H. H.
Page, John (Harrow, West)	Smith, Cyril (Rochdale)
Page, Richard (SW Herts)	Smith, Tim (Beaconsfield)
Parkinson, Rt Hon Cecil	Speed, Keith
Parris, Matthew	Speller, Tony
Patten, Christopher (Bath)	Spence, John
Patten, John (Oxford)	Spicer, Jim (West Dorset)
Pattie, Geoffrey	Spicer, Michael (S Worcs)
Pawsey, James	Sproat, Iain
Penhaligon, David	Squire, Robin
Percival, Sir Ian	Stainton, Keith
Peyton, Rt Hon John	Stanbrook, Ivor
Pink, R. Bonner	Stanley, John
Prentice, Rt Hon Reg	Steel, Rt Hon David
Price, Sir David (Eastleigh)	Steen, Anthony
Prior, Rt Hon James	Stevens, Martin
Proctor, K. Harvey	Stewart, A. (E Renfrewshire)
Raison, Rt Hon Timothy	Stewart, Ian (Hitchin)

Stokes, John	Wall, Sir Patrick
Stradling Thomas, J.	Waller, Gary
Tapsell, Peter	Walters, Dennis
Taylor, Teddy (S'end E)	Ward, John
Tebbit, Rt Hon Norman	Warren, Kenneth
Temple-Morris, Peter	Watson, John
Thatcher, Rt Hon Mrs M.	Wellbeloved, James
Thomas, Jeffrey (Abertillery)	Wells, Bowen
Thomas, Mike (Newcastle E)	Wells, John (Maidstone)
Thomas, Rt Hon Peter	Wheeler, John
Thompson, Donald	Whitelaw, Rt Hon William
Thornton, Malcolm	Whitney, Raymond
Townend, John (Bridlington)	Wiggin, Jerry
Townsend, Cyril D, (B'heath)	Williams, Rt Hon Mrs (Crosby)
Trippier, David	Winterton, Nicholas
Trotter, Neville	Wolfson, Mark
van Straubenzee, Sir W.	Wrigglesworth, Ian
Viggers, Peter	Young, Sir George (Acton)
Waddington, David	Younger, Rt Hon George
Wainwright, R. (Colne V)
Wakeham, John	Tellers for the Noes:
Waldegrave, Hon William	Mr. Anthony Berry and
Walker, B. (Perth)	Mr. Carol Mather
Walker-Smith, Rt Hon Sir D.

Question accordingly negatived.

Main Question again proposed.

It being after Ten o'clock, the debate stood adjourned.

Debate to be resumed tomorrow.

c520
1. DIVORCE JURISDICTION, COURT FEES AND LEGAL AID (SCOTLAND) BILL 18 words
c520
2. SCOTTISH GRAND COMMITTEE 36 words