Manufacturing Industry

HC Deb 16 May 1989 vol 153 cc224-66

Mr. Speaker

I have selected the amendment in the name of the Prime Minister.

Many right hon. and hon. Members wish to participate. If it had been possible, I would have applied the 10-minute limit on speeches, but unhappily that would have caught the Front-Bench speakers as well, so I have not been able to do so. I hope, however, that Front-Bench Members will bear that limit in mind, and that Back Benchers will limit their speeches to 10 minutes or less.

7.15 pm

Mr. Bryan Gould (Dagenham)

I beg to move, That this House, alarmed at the huge deficit in trade in manufactures and at continued closures and job losses in industries as varied as textiles, electronics, shipbuilding and aircraft, reaffirms the vital importance of manufacturing to the country's economic future; and calls on Her Majesty's Government to abandon the policies which have done, and are doing, so much damage to manufacturing output, investment, employment and trade. The significance of manufacturing industry may be a matter for debate and the future of manufacturing industry may be open to question, but I hope that the facts about manufacturing industry and its present circumstances will not be disputed.

Let us first consider manufacturing output. Most people, I think, would accept that manufacturing industry was thrown over a precipice in the first couple of years of this Tory Government. As a consequence of quite avoidable mistakes in economic policy—which I believe in their more honest moments even Ministers would acknowledge—fully one fifth of British manufacturing industry was simply wiped out. No other industrial country has ever suffered such a sharp fall in output.

Since then, inch by inch, we have clawed our way painfully back up the cliff face over which we were thrown; and, as we reached the top—the point that we left in 1979 —the bands played, the drums were beaten and the flags were waved. It was proclaimed an economic miracle. Throughout the period of the present Government, however, manufacturing output has been no less than 6 per cent. lower than under the previous Labour Government. I think that it must be a record for any 20th-century Government to establish a level of manufacturing output lower than that established by their predecessor.

Mr. Phillip Oppenheim (Amber Valley)

rose—

Mr. Gould

I will not give way. I have already accepted from Mr. Speaker an injunction to be brief.

The pity of it is that the mistakes that led to that slump in output are now in danger of being repeated. At 1985 prices, manufacturing investment in 1988—the last full year—was £11.035 billion, still short of the level established in 1979 when the Government began their term of office. That has applied in every one of the 10 years of Tory government, despite—even in recent times—constant investment intention surveys showing an intention on the part of industry to increase investment. Throughout the period of the Thatcher Government, manufacturing investment has been 16 per cent. lower than it was under the preceding Government.

As for manufacturing employment, I hope that I need hardly remind the House that nearly 2 million jobs have been lost in industry since 1979. Every advanced industrial country has found that manufacturing has shown a declining proportion of employment because other sectors —services and so on—have tended to take up the slack. What has not happened in other countries is the huge and quite unnecessary slump that we have suffered, and from which we have still not fully recovered.

Perhaps the saddest story resides in the figures that tell us what has happened to our manufactured trade. We all know that this country once prided itself on being the great workshop of the world and the leader of the industrial revolution. For 200 or 300 years, we paid our way and built our living standards on the strength of what we could make and sell from our factories. That remained true until 1979, when the Government took office. In 1979, we enjoyed a surplus of almost £5 billion in today's prices. I hope that I need not remind the House that last year that surplus had not only already turned into a deficit—I believe that it turned into a deficit in 1984 for the first time in our history—but that deficit had grown to the staggering proportions of £14.5 billion. A turnround of £19 billion in our manufactured trade is so immense that it is difficult for the ordinary person to grasp what that represents. Perhaps I can help the House by saying that by my calculation—which would be the general calculation —if we were to set about producing £19 billion of manufactured goods, which we now import, in British factories, we would have to take on no fewer than 1.5 million extra full-time workers. That is the significance of the turnround in our trade in manufactures.

Not surprisingly, although the Government try to obfuscate our true position, our share of world trade in manufactures has also declined. The world trade in manufactures over the period has risen by 48.5 per cent., but our exports of manufactures have risen by only 36.6 per cent. I hope that I do not need to convince Ministers or Conservative Members that the market place is the test, as the Government constantly tell us, of how well our economy is doing. The answer that the market place gives is that Britain is no longer paying its way and that British industry cannot meet the competition.

At first sight, the trade figures may cause some puzzlement. The immensity of the trade deficit took even Ministers by surprise. They were, after all, forecasting only a year ago a deficit of £4 billion for 1988. There is an explanation, although it is not a full rationalisation. Unfortunately, it runs directly contrary to much of the propaganda that Ministers constantly put out. The House and the British public are always told by Ministers in every interview that whatever the pain, whatever the difficulties we have been through and however many problems British industry has faced over the past 10 years, at least British industry is now leaner, fitter and more competitive. Day after day I hear that phrase on the lips of Ministers.

Neither I nor the Labour party bother to keep the statistical series that measure the competitiveness of British industry but the Government and the Department of Trade and Industry do. There are at least five that are often used and two are especially widely used. It is astonishing that on each one of the five indices, British manufacturing industry today is not more but less competitive than it was in 1979, and that is true not only of today, but of every year throughout the period of Tory government. The indices that show the greatest loss of competitiveness are those which are the most widely used. Relative export prices for manufactures show that we are now 15 per cent. less competitive than we were in 1979.

The International Monetary Fund index of normalised relative unit labour costs shows that we are 24 per cent. less competitive than we were in 1979.

The mystery about why, despite the wonderful success story, we are running such a huge balance of payments deficit that we cannot hold on to our own markets or retain our export markets is now unravelled. The Government's own statistics show that British industry is less competitive than it was when they came to power. I could go on about that subject, in which I take a particular interest, but even those indices understate the loss of competitiveness of an economy whose competitiveness has declined over a period. First, the index on relative export prices for manufactures, for example, measures only what we try to charge at—id- the prices we actually obtain in the market place. It does not tell us about all the products that have become so uncompetitive in price terms that we have simply ceased to make them and offer them in the international market.

Secondly, the labour cost indices measure cost right across the economy. They take no account of the fact that in the really successful exporting economies, such as Japan and Germany, costs in export-oriented industries are razor sharp and the cost structure is more favourable than in the economy as a whole. Any index that measures costs across the economy simply understates the competition we face from the successful exporting nations.

I now offer the Government a little ray of light or a twig to hold on to. They will raise, rightly and understandably, the question of productivity and they will say that, despite this gloomy picture, productivity in manufacturing has risen extremely sharply. I am the first to concede that it is a good story to tell on that, but productivity is not as good as the Government would have us believe and it is not as good as in the much maligned 1960s, when manufacturing productivity was higher than it has been in recent years. One also has to take account of some of the statistical peculiarities of the figures and the fact that today much that used to be counted as manufacturing is now contracted out, including peripheral services such as cleaning and canteen facilities, which were low productivity areas so they do not affect manufacturing productivity figures. I would also point out that if one constantly eliminates one's weaker capacity, without anything else changing, there will be an improvement in productivity —or at least an apparent improvement in productivity—for what remains. It is rather like a cricket captain claiming that because he has shot his tail-end batsman he can congratulate himself on the fact that the batting average has risen, although he is ignoring the fact that the team is scoring fewer runs and has lost the match. That is what our productivity record largely shows.

Mr. Peter Thurnham (Bolt on, North-East)

Will the hon. Gentleman give way?

Mr. Gould

No. I would like to, but I am under a time constraint.

There is a more important point to explain another paradox. If the productivity figures are to be believed—and I am prepared to give them some credence—it is hard to see why the economy in the other respects I have mentioned has performed so badly. The reason is—and I admit that this is no more than a supposition, but it answers the paradox and is increasingly attracting the attention and support of many expert commentators— that in Britain a great deal of investment in manufacturing industry is designed to replace labour, rather than to improve and increase output. That is why in the bits of the economy that remain as a result of some new capital application, but have fewer jobs than previously, productivity has risen, whereas in those bits of the economy where that effort has not been made the capacity has simply disappeared. That means that we have the appearance of high productivity in the bits of the economy that survive, but the economy as a whole is producing less well, its output is sluggish, it is able to compete less effectively and we are having to import so many more manufactured goods.

I ask Conservative Members to agree with me in one respect. Surely there cannot be a single Member who has not had the experience of visiting factories in his or her constituency or further afield and noticing, if he or she has eyes to see, that all the modern machine tools are made abroad. If one asks the factory managers why a particular machine is made in Germany, Italy, Canada or the United States, they say sadly, with a shake of the head, "We would like to buy British, but there simply isn't a British manufacturer who can supply us". That gives some support to my contention that large parts of British industry have simply passed out of existence as a consequence of what has happened to manufacturing industry in recent years.

Productivity may have been a miracle in those parts of industry that have survived, but it has failed to produce a manufacturing economy which does what is essential—to compete, to increase output and to provide good, well-paid jobs for an increasing number of people. We cannot congratulate ourselves on a productivity achievement if the only end result is that we now produce about the same quantity of goods with far fewer people and that we are therefore able to compete much less comprehensively across the board.

As we face not only our present but our future, we are faced with an economy that is ill-equipped, badly trained and under invested. We face our future in that condition with the cushion of North sea oil much less comfortable and reliable than it was—I accept that North sea oil is not yet running out and that it will be with us for some time —with 1992 and the single European market, meaning much more intense competition in what will be our home market, with newly industrialised countries around the Pacific basin and south-east Asia coming on stream. We face our future in all those circumstances and, although the race will go to the technologically proficient, we have not made the effort. We have wasted the oil. We are under-invested and are woefully ill-prepared for that competitive future.

As is probably wearyingly familiar by now, we spend less on research and development than the West Germans, the Japanese, the Americans, the Swedes and the French. In terms of civil research and development, we spend less than the Italians. Uniquely, half of what we spend goes on defence. I was at a seminar this morning where I saw a breakdown of the way in which the West Germans spend their much greater total and the way in which we spend ours. The Germans said, apologetically, "Our R and D defence expenditure has been rising recently and we are worried about it. It is now as high as 20 per cent. of our total R and D expenditure." However, we spend 50 per cent. of our pitiful R and D expenditure on relatively unproductive defence spending.

The Germans have a much clearer answer—[Interruption.] I am talking about the spin-off for the rest of industry. The Germans have a much clearer idea of the correct priorities. While they spend on R and D, on industry, in the higher research institutions and the universities and on major issues such as the environment, we make mistakes by concentrating our puny efforts on unproductive defence. We spend less on basic science and pitifully less on training. We do not invest in our manufacturing industry. As I have pointed out, such expenditure has been 16 per cent. lower during the past 10 years than it was even when the Tories came into office. We do not spend on the infrastructure that we shall need if we are to compete technologically in the coming decade.

The pity of it all is that, having brought us to this position, where the North sea oil bonus has come and has largely gone, having left us with a legacy of ill-preparedness, we are now trying to re-establish the Chancellor's control of an economy of which he has lost control. We are in danger of repeating the same old mistakes which destroyed one fifth of British manufacturing between 1979 and 1981. They are again on the agenda, wreaking their damage, exercising their malign influence and doing damage by way of the closures, job losses and lost output with which we were so bitterly familiar in the early 1980s.

The evidence is there. Surveys by the Confederation of British Industry which for so long were held up as great proclamations of confidence now show a sharp fall in expectations for export orders and a sharp decline in the confidence felt by business men about the future course of the economy. Specialist manufacturing employers' organisations, such as the British Textile Confederation, express again, as they did in the early 1980s, their lively fears about what will happen to their industry as a consequence of the appreciation of the exchange rate against their major competitors.

That is why a programme of closures is already beginning in the constituencies of some of my hon. Friends, and it is not limited just to textiles; it applies across the board. I fear that unless we can persuade the Government to change their policy and to avoid those mistakes, we will again face a programme of closures and a lengthening total in the number of people unemployed. Indeed the mistakes are already there. High interest rates are a disincentive to investment. The CBI has complained but the Government take no notice because they do not believe that the voice of manufacturing industry really counts or should be heard. As a consequence of the high interest rates, not only is investment damaged, but the exchange rate is held at an uncompetitive level and is crippling competitiveness.

Only a few months ago and earlier last year, the Chancellor was telling us—at least by implication—that his preferred rate of exchange against the deutschmark was 3 deutschmarks to the pound. He then said specifically that, in his view, a rate of 3 deutschmarks 10 pfennigs would be unsustainable. However, for many months now, we have had a rate that is above 3 deutschmarks 18 pfennigs. Little wonder then that we are finding it increasingly difficult to meet the competition in Europe. Little wonder that we find it difficult in the wider markets around the world when our exchange rate has appreciated against the American dollar by 40 per cent. in the past four years. One cannot put up prices against major international competitors by 40 per cent.—or even by 10 per cent. as in the case of the West Germans—and expect the customer not to notice. Such rises have an immediate, direct and calamitous effect on investment, output, employment and manufacturing industry. Indeed, they show the Government's contempt for manufacturing industry that they believe that they can introduce such policies without causing the sort of damage that is now being so painfully felt across the country.

An over-valued exchange rate does many damaging things. It not only destroys our competitiveness; it does something perverse in respect of the Chancellor's stated objectives. It damages the competiveness of the corporate sector and it stimulates consumption because it means that every pound in the consumer's pocket will buy more imported goods than it should. That is why over-valuation not only stops us exporting, but sucks in the imports that are doing so much damage. [Interruption.] Of course, that does not cause concern to Ministers who can laugh if they wish, but such over-valuation sucks in the imports that put British workers in the dole queue and close British factories.

Does any of it matter? We have already had part of our answer from the guffaws of Ministers who clearly find it difficult to take the subject seriously. Indeed, that has betrayed their attitude to this matter throughout the 10 years of their period of office. They have treated the decline and difficulties of manufacturing industry with cavalier insouciance. They have simply maintained that it does not matter. When I taxed the Chancellor of the Exchequer some months ago about the turnround in our trade in manufactures, he remarked from a sedentary position that it was "neither here nor there." Let him try telling that to business men who are trying to keep their enterprises afloat. Let him try telling it to workers whose jobs are now threatened or being lost as a consequence of those foolish policies—

Mr. Frank Haynes (Ashfield)

What about small businesses?

Mr. Gould

My hon. Friend mentions small businesses, which in particular are suffering. The regions, which are so dependent on manufacturing, are where the burden will be felt most keenly. That is where the branch-plant economy that the Tories have allowed to develop during their period of office will come home with a vengeance because those branch plants will be closed first when the bite is felt. That is the problem with the Chancellor's current policies.—[Interruption.] Yes, of course manufacturing matters to us because we can no longer rely on North sea oil to keep us afloat.

Our wealth creation for the future depends on the strength of our manufacturing industry and it depends on that manufacturing industry being in the right condition, in the right areas, with the right equipment and the right skills. To use another of the Chancellor's notorious phrases, we cannot afford a "low-tech economy". If we are to compete, we must compete with new skills and with new technology. We must be clear that the new technology has a role to play, not just in new industries, but in old industries, too. It is in textiles, shipbuilding and car manufacture that the new technology has its most direct and important application. That new technology must be applied and we must invest in it. That is the important element of our future and of our capacity to earn our living in the future decade.

We were told that we need not rely on the old pejoratively described sunset industries, because it would be the sunrise industries that would take us forward. I wish that that were true. I wish that we could say that other industries may have suffered some difficulties, but, at least, the electronics and information communication industries have done well. However, again the facts are against such an argument. I believe that any attempt to scrutinise the trade figures would demonstrate clearly how fatuous has been the Government's claim. Last year our trade deficit in electronics was £3.9 billion. It has risen by 40 per cent. over the past four years. So much for preparing us for that technological future and so much for an economic miracle. We know the immense importance of manufacturing to wealth creation and to our national prosperity. It will need a Labour Government to put that right.

7.30 pm

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Anthony Newton)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: welcomes the renewed strength of manufacturing industry, reflected in major increases in productivity, record levels of output, increased exports, greatly improved profitability and a sustained high level of investment; and notes that the flow of inward investment testifies to the substantial improvement which the policies of Her Majesty's Government have brought about in the climate for doing business in the United Kingdom.". I suppose that I should not have been surprised—though I must confess that I was—that the Opposition should choose to debate a proposition so totally divorced from reality as one entitled the "Decline of Manufacturing Industry". So it was with some corresponding interest that I waited to see how the hon. Member for Dagenham (Mr. Gould) proposed to delineate this so-called decline. It was clear, despite his contorted efforts, that it could riot conceivably be by reference to production. Output in the manufacturing industries has risen in every single year since 1980, and in the past two years alone by more than 12 per cent. It is not only higher than in 1979, when the Government first took office; it is higher than in 1974, when the preceding Labour Government took office. That is, of course, another way of saying that, whereas that Labour Government departed unlamented with manufacturing output lower than when it arrived, under this Government it has reached a record level. I am certainly not surprised that we have heard little about that.

Equally clearly—and the hon. Member for Dagenham fairly acknowledged this—that alleged decline could riot be by reference to productivity. Productivity in manufacturing industry has so far improved in this decade by no less than 50 per cent. and, by comparison with our major competitors, that represents a quite astonishing improvement in our relative performance.

Mr. Gould

Where do we rank?

Mr. Newton

The hon. Gentleman asked me where we rank and I shall tell him.

In the 1960s our productivity growth was lower than any other of the seven major industrial countries, and only about two thirds of their average. In the 1970s, it was again lower than in any of them, and less than half of their average. So far in the 1980s—and my figures are for 1980–88—it has been far and away the highest of those self-same seven: substantially higher than in France and Japan and more than twice as much as in Germany.

Nor could the hon. Member for Dagenham justify his talk of decline by reference to the profitability in manufacturing industry. I do not think that he even sought to do so, because, of course, the profitability in manufacturing industry is at its highest level for 20 years. That in turn is reflected in the powerful revival in manufacturing investment, which has grown by not far short of half since 1983, by more than 9 per cent. last year alone, and is expected to show a further healthy increase in the present year. Moreover, that revival in manufacturing investment is an important contributor to one of the most important and significant changes for the better which has taken place in the British economy in recent years. That is the shift from a pattern in which we persistently tended year in year out to increase consumption faster than investment to one in which, over the past seven years, total investment—I want to make it clear that I am talking about total investment and not just in manufacturing—has grown at more than twice the rate at which consumption has grown, and more rapidly than in any other country in the European Community. In other words, after decades in which we persistently tended to let our consumption run ahead of our willingness to put money into developing industry in the future, that picture has changed and the growth in investment in manufacturing industry is a part of that change in the picture.

One thing that I did expect in this debate—I have not been disappointed—was that the hon. Member for Dagenham would make the most that he could of the fact that investment is still fractionally lower than in 1979. I will make two points about that. First, I think that events will take even that fig-leaf of argument away from the hon. Gentleman before too much more time has passed. Secondly, I hope that he will direct his attention not only to the total, but to the pattern within the total.

The pattern of the late 1970s in particular was one in which we put great quantities of investment into industries which manifestly were among those that the hon. Member for Dagenham described—it is not a phrase that I would have chosen—as sunset industries, usually in the form of massive taxpayer-financed subsidies of one kind or another and which in consequence made it difficult for the industries that were manifestly the growth industries of the future to find the resources that they needed to invest.

What is of more practical importance than just looking at the quantity of investment is the quality of manufacturing investment and the efficiency with which it is used. Undoubtedly, in that area there has been a large improvement. A good deal of industrial capacity was scrapped at the beginning of the decade. Much of it was technically and economically obsolete and, frankly, had been for some time. Most manufacturing investment since then has been for replacement purposes, but the standard of the new capacity for such things as operating costs, quality standards, its impact on the environment and energy use is far higher than that of the old equipment. That improvement in the quality of investment has made a major contribution to the improved productivity to which I have referred and to the greater competitiveness of British manufacturers.

The hon. Member for Dagenham made some play of competitiveness figures. I have in front of me those figures that the IMF produces, which are based on relative unit labour costs. I am not sure whether those were the ones to which the hon. Gentleman referred. Certainly, on the figures that I have, there was little change on that single statistical measure between 1979 and 1988. There are some fluctuations in between. However, the point that the hon. Gentleman misses, and, indeed, all his colleagues persistently miss, is that competitiveness in the real world is not something that can be measured in such statistics. It is a matter of people's confidence in whether British goods will be delivered, because of the bad industrial relations record during the late 1970s. It has to do with quality and reliability and all the things that have manifestly improved in British manufacturing industry in the past few years. Improvements in working practices, in maintenance standards and in the timely availability of material components cannot be so readily measured, but I have no doubt—nor do I believe does any serious observer of the scene—that improvements in those factors over the past decade have greatly increased both effective manufacturing capacity and British competitiveness on the world markets.

So we come then to the line of argument on which the hon. Member for Dagenham sought to build so much, which is the deficit on the balance of payments current account, and within it the deficit on manufactures.

Whatever else may be said about those figures, I do not believe that any serious analysis of them—alongside the figures that I have already given—could sustain the case that they show a decline of manufacturing industry in this country. If they could be shown to result from a failure of exports, perhaps that could be so, but they cannot. On the contrary, exports of manufactures have been rising strongly—by nearly 18 per cent. in value in the past three years and by over 5 per cent. last year alone. If the figures could be shown to be associated with a fall in our share of world trade in manufactures, perhaps that could be said. But that cannot be shown either. On the contrary, the signs are that that decline has been halted or even reversed.

Mr. Thurnham

Will my right hon. Friend give way?

Mr. Newton

If my hon. Friend will forgive me, in the light of what Mr. Speaker said at the beginning of the debate, it is right that I should press on.

The most important single factor in the deficit, far from being the weakness or decline of our manufacturing, arises from the growing output and the increasing investment to which I referred earlier. Some three quarters of it is the corresponding rise in imports of raw materials, of components and semi-manufactures and of capital equipment. In other words, it is associated with the recovery of our industries and the strengthening of their capacity to expand production and exports still further in the future.

Inevitably, it takes time for that to feed back on the other side of the account, but I see no reason to doubt that it will. Indeed, there are already some signs of that. If we take the first three months of this year against the last three months of 1988, the volume of manufactured exports rose faster than that of imports, and that is against the background of official and independent forecasts which suggest a greater improvement in the volume of manufactured exports in 1989 than in 1988, alongside a much smaller increase in the volume of manufactured imports than we experienced last year.

The other point on which the hon. Gentleman based a good part of his argument was the numbers employed in manufacturing industry. It is indisputable that there has been a substantial decline since 1979, but that is in part the consequence of tackling the overmanning and the under-productivity which nobody could seriously question the existence of up to that time. That improvement in productivity and removal of overmanning was essential if our industry was to restore its competitive position.

No less important, as the hon. Gentleman fairly acknowledged, is the fact that it is a feature of virtually all modern industrial economies that the balance of employment shifts away from the production of goods towards the supply of services. I think that the hon. Gentleman referred to an expectation that it should be possible to employ more people in manufacturing, but he put no particular period on that. However, I know of no major industrial country which has not seen employment in manufacturing decline as a proportion of total employment since the early 1970s. Since 1979, to take the period that is at issue in the debate, in most such countries the absolute number employed in manufacturing has fallen, as it has here.

Those facts are also reflected in the fact that in virtually all advanced industrial countries the percentage of GDP accounted for by manufacturing has fallen and that of services has risen. We are no exception to that, nor should we seek to be. The figure fell from just over 25 per cent. in 1979 to just under 22 per cent. in 1986, the most recent year for which comparative figures are available. The comparable figures in the United States were a fall from 23 per cent. to just under 20 per cent. and in Italy from just over 30 per cent. to just over 23 per cent. Only Japan is an exception to that general trend.

The hon. Gentleman referred to the Government being in some sense contemptuous of the CBI, or the CBI making remarks completely different from the picture that I have sought to set before the House this evening. As it happens, I was on the same platform as the Director General of the CBI in Sheffield barely two weeks ago and I have with me the text of the speech that he delivered on that occasion. He said: The last five years have seen a major turnaround in the UK manufacturing sector, and this has of course spun off into demand for services and jobs. Output, export volumes, productivity and business investment—in skill-training, plant and equipment and innovation—are all at record levels. So are profits, which makes investment possible and worthwhile. That is what the CBI was saying a fortnight ago. Mr. Banham went on to make the point that we export some 20 per cent. more per person than Japan. Opposition Members may like to reflect upon that.

Let me make one other point which will lead me to the conclusion of my speech in a moment or two. The most conspicuous omission from the hon. Gentleman's speech was any reference to inward investment. Whatever his view of manufacturing and the strength of the British economy may be, some of the best companies in the world are voting with their feet by coming to do business in Britain. In one week alone we heard recently of major cases of inward investment totalling well over £1 billion in various parts of the country. It is not just the Japanese who are coming, even though they have tended to make the biggest headlines. A third of all American investment in the Community comes to the United Kingdom. Over the past year investment from other European countries, particularly Germany, has also been particularly strong. I wonder how many German firms would have invested in Britain 10 years ago.

I want to make it clear tonight, as I have on other occasions, that we welcome that inward investment and will continue to do so, both for the balance of payments boost that it brings to the United Kingdom and for the added competitive spur that it provides to industry already here. Wherever such firms locate in the Community, and many of them will come anyway, the impact of the extra competition will be felt in Britain. But when they locate in Britain as so many of them are now doing, we have riot only the jobs and the economic activity but the stimulus of new manufacturing methods, quality standards and management techniques in our economy. We shall continue to try to attract as much of that mobile investment as we can.

Those firms are at times almost queueing up to come here as a direct result of the Government's policies which have given priority to curbing inflation, to restraining the weight of public expenditure and public borrowing, which have reduced the rates of taxation on companies and individuals, improved industrial relations and made Britain a country in which people, whether British or from abroad, want to invest and are investing.

The Opposition's motion invites us to abandon those policies in favour, as is increasingly clear, of returning to precisely the policies which made their time in office a period of overmanning and inefficiency, of misdirected investment, of roaring inflation and dismal industrial relations, when the only reason for business men from overseas to come here was not to take part in our economy but to try to learn how not to run an economy. Neither the House nor the country will want to go back down that path.

7.58 pm

Mr. Stanley Orme (Salford, East)

Listening to the Minister, I do not recognise the area that I represent in Greater Manchester which has lost tens of thousands of jobs in manufacturing. My city of Salford, which had a large engineering base, has virtually no engineering industry left. Just across the canal, Trafford Park has become a storehouse. Before the war it was a rival to the Ruhr as a major world industrial centre. That is the difference that the Minister fails to recognise.

I declare an interest in the debate as a Member sponsored by the Amalgamated Engineering Union. That union has 750,000 members in manufacturing industry and 2 million workers in the engineering industry, and it wants a share in Britain's prosperity and in manufacturing industry.

We cannot just dismiss the disappearance of 2 million jobs and say that the same thing is happening in Japan or West Germany. The same thing is not happening in those countries. I accept that there has been a reduction and an inevitable change in some of the older industries because of the decline in those industries. The Government have made the notion of small is beautiful one of the key factors in their approach, but it should be remembered—

Mr. Thurnham

rose—

Mr. Orme

I shall not give way to the hon. Gentleman.

It should be made known that 60 per cent. of Britain's gross national product is contributed by 150 of the large firms. Nobody denies that small firms are important, and we welcome them into our areas and constituencies. However, they do not replace the tens of thousands of jobs that have been removed from the basic industries.

The Minister said that Britain is booming, and investment and output are up. He made great play of productivity. Assuming that what he said was correct, the important factor is that we are starting from a much smaller base. The problem facing Britain is that its manufacturing base has shrunk. In terms of productivity we are, perhaps, equal to the Germans, Americans and even the Japanese, but our base is small. Therefore, we are faced with the problem of importing many goods. With that small base we cannot produce the products that our economy wishes to consume and, therefore, we have to import them.

The Minister made great play of inward investment. We must be careful when we consider that investment. At the moment, as everyone acknowledges, the balance of trade deficit is horrendous. The manufacturing industry is at the centre of that trade deficit. Last year, the deficit on manufactured goods was £14.4 billion compared with a £2.7 billion surplus in 1979. Imports jumped 127 per cent. between 1979 and 1988, and by 13 per cent. last year. During that period, exports increased by only 2 per cent.

Despite what the Minister says, part of the problem is the underinvestment in the manufacturing industry which is still below the 1979 levels and now forms only 2.7 per cent. of GDP, compared with 3.6 per cent. in 1979. That compares badly with our main competitors in Germany, Japan and the United States.

The opportunity to use oil revenues for such investment has been lost and, instead, they were used, as we know, to fund the increasing unemployment that was created by this Government. That is one of the crimes that the Government have committed. They have left us with a weak economy. The rundown in manufacturing industry is visible for all to see. We were a great manufacturing centre in which the industrial revolution started. However, the rundown that has taken place within that manufacturing centre is now evident for all to see. The new industries that have been introduced have not proved sufficient to prevent that rundown.

The motor car industry is one of the prime causes of our inflated imports. It is worth noting that the cost of our imports of road vehicles in 1987 was greater than the cost of our total imports of food and live animals. The Minister did not refer to that comparison. Japanese firms such as Nissan and Toyota have moved into Britain. Why are they doing so? They want to move inside the ring fence of the Europe of 1992. On the surface—[Interruption.] If hon. Members will allow me, I shall continue. On the surface, that looks a welcome development because it creates manufacturing jobs, which we all want. However, we should insist that those firms do not become screwdriver firms, mere assembly plants. The engines should be made in the United Kingdom. There should be a foundry content, and, above all, research and development should not rest solely in Japan. If we allow that to happen, we shall be at the mercy of foreign and inward investment.

Car imports form a major part of our trade deficit. In 1982, there was a deficit in the car industry of £1 billion, which rose to £6.1 billion in 1988. That forms a substantial part—about 40 per cent.—of our overall deficit.

The Engineering Employers Federation has estimated that mechanical engineering, which is one of the United Kingdom's consistent exporters, will move into deficit in 1989. That is another tragedy. One effect of Britain becoming an assembly plant is that we shall lose a skill which is so essential for modern industrial development. We are losing ground in new technology and computers.

As somebody who served an apprenticeship in industry and who is a skilled engineer, I think that it is an absolute tragedy that we have thrown away existing skill. Who closed the skillcentres and cut back training boards? If ever there was a short-sighted policy, it was that. At the moment, in the south-east, where there is a demand for labour, there is also a shortage of skilled workers. If we are to get the economy moving again and get people back to work, where are the skilled workers to come from? Training to obtain skills and apprenticeships are essential. While there may be high flyers in the City, in an area in which we need to expand in order to live, we are cutting our own throats, and the Government should take note of that.

People who work in the manufacturing industry are often seen as the poor relations in our society. That is not true in West Germany, the United States or Japan. In those countries, people who work in the manufacturing industry, both factory workers and management, are at the top of the tree. Here, they are hidden away and people seem to be ashamed of those who work in industry. That is one of this country's problems. How can that happen in the country in which the industrial revolution began?

The Minister referred to certain industries. I shall quote what Sir John Harvey-Jones, the previous chairman of ICI, said on 16 April: the huge areas of activities on which our industrial foundation was founded are being destroyed … where are the British Engineering firms to rival the Germans or the Japanese, where is our machine tool industry, our car industry, our electrical engineering and our electronic industries? The report by the House of Lords Select Committee, on which people such as Lord Weinstock served, asked the same question, and the Minister did not answer it tonight.

Manufacturing industry is a major priority and the Minister should have a policy for it which would include planning, investment, research and development and skills—they should all be brought together. The policy being pursued now of high interest rates and a balance of payments deficit should be recognised as wrong and destructive of our seed corn. The Government have got it wrong, and the only alternative is a Labour Government.

8.10 pm

Mrs. Maureen Hicks (Wolverhampton, North-East)

I welcome a debate on manufacturing, but I must confess to a certain disappointment at the negative response from the Opposition on this important subject. Where have they been all these years? Industrialists who read the Opposition motion tomorrow in Hansard will despair because Labour has learned nothing. They would panic at the thought of a Labour Government continuing blindly to advocate failed policies that so largely contributed to the weakening of British manufacturing industry in the 1970s. Secondary picketing and the thought of Labour threatening to undo all the good that has been done would distress them immensely.

I did not hear a single constructive policy on how to move forward and build for the future from the hon. Member for Dagenham (Mr. Gould). Everything he said was destructive. I suggest that we bring the Opposition back to the real world of the 1980s, in which manufacturing output is at its highest ever and manufacturing productivity has risen by more than 50 per cent. since 1980—faster than any other major industrial nation, including Japan. Those statistics floor the Opposition's motion. If we are the failure that Labour continues to suggest, why are foreign companies flocking to invest here? We are their favourite country in which to invest now, but under the Labour Government we were the laughing stock of Europe. Imagine trying to compete in 1992 under a Labour Government!

I do not ask the Opposition to believe me or the industrialists; I do not even ask them to believe the foreign investors. I ask them to join me on a tour of the west midlands and see for themselves what is commonly described as a manufacturing miracle. More than 20 per cent. of all foreign firms setting up here have chosen the west midlands, compared with only 6 per cent. in 1983. Manufacturing industry in the west midlands has made greater progress in the past 10 years than it did between the end of the second world war and 1979. Unlike Labour Members, I am proud to shout that success from the rooftops to future investors.

Business is booming and there is a renewed faith in the region and its huge investment, new jobs, new factories, full order books, record productivity, record profitability, investment in training and investment in research and development. Acres of derelict land have been turned around under this Government and put to good use. I welcome the Government's support for the heartland of the industrial United Kingdom in the shape of a black country urban development corporation which will produce 1 million sq ft of industrial premises, create 20,000 new jobs and attract £1 billion of new investment. One has only to go around the west midlands to hear the buzz of thriving industry in small and large companies and to feel the excitement. I feel it regularly as I mingle with workers who are now associated with success. It is wonderful to hear from one-time shop stewards—in private—that they are thankful for the trade union reforms that the Government had the guts to instigate.

I speak as a Member representing a black country constituency which, admittedly, was devastated during the recession. Not a week went by in those days without bankruptcies and redundancies and it was hard to imagine how a recovery could ever take place. But families who suffered first hand have had the honesty to recognise that good has come out of bad and that the Government have created the conditions in which industry can flourish. Many of them were longstanding Labour supporters, but they recognise that the country was crying out for strong leadership to deal with the decline of our traditional manufacturing industry and to create an atmosphere in which workers would care about the success of their companies and produce British goods that could compete successfully throughout the world.

In the black country, we used not to be able to give land away. Industrial land values in 1988 doubled because of the demand for sites. A few years ago jobs could not be found for love or money. Now, with the biggest reduction in unemployment in the west midlands, the vacancies cannot be filled. What is more, firms cannot keep up with the demand for skills to meet the demand for their goods. We continually hear of companies training their workers only to have them poached by other companies down the road. Industry and Government together must continue to tackle that problem and ensure that we provide the skills necessary to fill those vacancies.

Given the reduction in the number of school leavers, we must devote even greater efforts to forging links between schools and industry. I take the point made by the right hon. Member for Salford, East (Mr. Orme) about the anti-industrial culture that has grown up; we must ensure that industry gets its fair share of the declining market of school leavers.

I am happy to report that in the manufacturing industries we still employ 33—2 per cent. of the working population of the west midlands, which is more than any other region. It will be a great tragedy for our region if excessive wage demands and days lost through industrial action are allowed to hamper our remarkable progress. Against a background of success and falling unemployment it is often too easy to forget the way things used to be. It is worth quoting an industrial analyst of the early 1970s in this connection. He said that 90 per cent. of a manufacturing manager's time here was spent in industrial relations, as opposed to his Japanese counterpart, who used to spend 10 per cent. The Government have redressed the balance, and that can nowhere be seen more clearly than in the major industries in my constituency.

I shall not quote the sort of hollow statistics that we heard from the Opposition tonight: I shall cite living, breathing industry. Goodyear, a flagship industry producing tyres in my constituency, struggled for survival in the 1970s, when the local Labour council did not want industry and was pushing Goodyear out of the region by setting high rates. Then, in the 1970s, Goodyear's labour force was more than half as big again as it is now and its manufacturing costs were well above those of its competitors and sister Goodyear companies. In the 1980s, the company has embarked on a major modernisation, in the form of a multi-million pound investment and rationalisation programme which has led to reduced manufacturing costs and a realistic attitude to success among the work force.

I can report in 1989 that that company is now so successful that it has switched from a five to a seven-day a week operation, 24 hours a day, which has resulted in an extra 1,000 jobs, taking the work force to well over 4,000. Similarly, another company, employing 750, Marston Palmer in the aerospace industry, whose markets in the 1960s and early 1970s centred in the United Kingdom, is today a leading company. It is well known and respected both in Europe and the United States for its technical excellence and is well prepared to compete favourably with the opportunities to be provided in 1992.

These are just two success stories from hundreds I could quote. They are examples of the manufacturing progress we are now witnessing under this Government, and long may it last. I say to the gloom and doom merchants on the Opposition Benches, "Open your eyes and see the success story once considered impossible." In the words of John Banham, the Director General of the Confederation of British Industry: We have made a quantum leap from our dismal performance in the 1970s.

8.20 pm

Mr. Stan Crowther (Rotherham)

I do not claim to know very much about economics. I used to think I knew a little about it until I learnt from experts such as the Chancellor of the Exchequer and the Chancellor of the Duchy of Lancaster that a record trade deficit, massive unemployment, rising inflation and very high interest rates are actually indicators of a strong economy. I always thought it was the other way around; now I realise that I got it all wrong.

However, no one needs to be an economist in an area like mine to see the appalling social cost of the decline of our manufacturing industries, because the ghastly physical evidence is there for all to see. The hon. Member for Wolverhampton, North-East (Mrs. Hicks) is inviting us to go and see for ourselves. Perhaps she would like to come and see for herself what I am talking about, because between Rotherham and Sheffield there are great areas of dereliction and desolation where once stood wonderful steel-making and engineering plants, which were in the old days the very backbone of the British economy. They have largely gone, and up to now at least they have not been replaced.

Of course, we are still making steel in Rotherham, but nothing like as much as we did. About 3,000 people are still working in the steel industry at a very high rate of productivity, but in steel alone my area has lost 10,000 jobs in the last 10 years, plus many thousands of other jobs in the coal industry and other industries—some manufacturing industries, but all directly related to manufacturing, whether in the manufacturing sector itself or in the energy-creating sector on which manufacturing depends. This collapse of manufacturing has led to a massive loss of jobs in my part of the world.

Some new jobs have been created, of course, many of them in a very unsightly, out-of-town retail development in the enterprise zone, where people are employed largely part time on very low wages in monstrous blue boxes pretending to be buildings, and they contribute precious little to the local economy. I am very pleased to say that there are a number of new small businesses in manufacturing and, like my right hon. Friend the Member for Salford, East (Mr. Orme), I strongly support small business. I am very much in favour of helping small companies to get established. However, it would take literally 300 new small firms, each employing 40 to 50 people, to create the jobs we need in the Rotherham area not in five years, not next year, but now; that is the measure of the problem. Quite clearly, with the best will in the world, these new small firms, which I strongly support, will not be able to solve that.

Everyone knew a long time ago, and we do not need to be told, that the traditional manufacturing industries would not be able to continue employing the number of people they once did. We all knew technology would take care of that because, of course, the whole purpose of technology is to reduce the need for labour. No one disputes that. Even if manufacturing were booming in Britain today, which it certainly is not, we would still be shedding jobs. However, the tragedy is that the benefits of technology and the potential wealth that technology can create have been dissipated, just like the wealth from North sea oil. That wealth ought to have been harnessed and used to develop new industries and create new jobs, but that has not happened. That is the great tragedy of the last 10 years. Where are the sunrise industries that we ought to be developing with the benefit of the wealth we have produced? They are not here, or not many of them are.

Mr. Richard Holt (Langbaurgh)

They are in Cleveland.

Mr. Crowther

The hon. Gentleman says they are in Cleveland. He is extremely fortunate if they are in Cleveland, but there are not very many or we would not be running this massive trade deficit in information technology, electronics and telecommunications, the very industries on which any advanced country has to depend in the future to be able to revive the manufacturing base. It is an appalling tragedy that the country which led the first industrial revolution is now trailing so far behind many other countries in the world in the second industrial revolution.

Much of the problem stems from the fact that successive Secretaries of State for Trade and Industry—and, my goodness, we have had an awful lot in the last 10 years—have all failed to take the slightest interest in manufacturing. The Minister shakes his head, but it is a fact. We have met them all in the Select Committee on Trade and Industry. We have never managed to persuade any of them that manufacturing really matters. We have drawn attention to this problem time after time.

Lack of time will not allow me to quote very much, and I draw the attention of the House to only one of our reports, produced in May 1984, when we were very concerned about the great imbalance in trade in manufactures between this country and the rest of the EEC. It was already running at £8 billion a year, and our Select Committee, in its unanimous report, found it necessary to describe the attitude of the then Secretary of State, the right hon. Member for Chingford (Mr. Tebbit), as short-sighted and complacent, which indeed it was.

The essence of what we were saying in that report five years ago was that if we did not do something urgently to revive our manufacturing industries, we would be in very serious trouble in a few years' time. The question we were putting to the House and to the Government was: what do we live on when the North sea oil starts to run out? Of course, the chickens have come home to roost in this record and still rising trade deficit.

I had always understood that this country was a trading nation—Nye were all told that at school—and I cannot, for the life of me, understand how it can be argued that a trading nation which spends enormously more buying goods than it receives for the goods it sells can be regarded as successful. I may be taking a very simplistic view, but that is certainly a simple concept, which I should have thought would be easily understood by the grocer's daughter who leads the Conservative party and has the benefit of being Prime Minister for another couple of years or so. I do not think that Alderman Roberts of Grantham would have stayed in business very long if he had operated on the basis of developing a huge and increasing deficit year by year. Traders do not stay in business that way, and I do not think that the Government can pretend that we are doing nicely on that basis.

I greatly admire the companies that are exporting manufactured goods and struggling against the enormous difficulties created by high interest rates, for example, and the quite unrealistic exchange rate, to increase those exports, but they cannot compensate for the fact that we have an absolute flood of imports coming into the country, largely because our manufacturing industries in many important sectors have been completely wiped out; they are just not there any more. In other fields they are being run down to the point at which they can no longer even meet the demands of the home market. When we relate all that to the profligacy of the Chancellor of the Exchequer's taxation policy, no one should be surprised at this huge inrush of imports.

Ministers frequently proclaim the virtues of private enterprise. If the Government had been managing any ordinary private sector company in the way that they manage the country, they would have been sacked years ago.

8.30 pm

Mr. Lewis Stevens (Nuneaton)

The hon. Members for Dagenham (Mr. Gould) and for Rotherham (Mr. Crowther) may have given to our competitors in Europe and elsewhere a picture of the British economy which they will be delighted to see. All the gloom that they portrayed was such that no one could believe that we now have a manufacturing industry that is likely to be able to compete with any worthwhile economy in the world. As my hon. Friend the Member for Wolverhampton, North-East (Mrs. Hicks) said, the picture of doom and gloom is completely false.

The pessimism of the Opposition about manufacturing industry is that it has not over the past 10 years come out of the shadows of the trade union domination in which it suffered for 20 years. In the last 10 years, improved technology, productivity and industrial relations have brought British industry to the position where it is able to engage in genuine competition better than at any time since the last war.

The impression that we do not want to invest in industry, that people do not want to know about engineering and that manufacturing is always the poor relation has perhaps an element of truth in it. Many things said by the Opposition often have. However, it is the emphasis on that which is so wrong. Companies such as Rolls-Royce have not only developing technology but are able to compete in world markets much more successfully than one would have envisaged even 10 years ago. The orders won by Rolls-Royce in the last few months are some of the most substantial that the company has ever had. We must congratulate the company, the workers on the shop floor and those in design and development and in other departments on their success.

I have a Rolls-Royce company in my constituency. It manufactures marine engines, but in the near future it will move to other products. The Opposition tried to talk down the privatisation of Rolls-Royce. They said that it would not be able to do its job in the private sector, but it has proved that it can do a very good job indeed. The Opposition talk about the loss of manufacturing jobs, and the right hon. Member for Salford, East (Mr. Orme) mentioned textiles. Certainly the textile industry went through a rough time during the major recession. It is interesting to note that in my constituency some of the developing industries are textile companies that are competing and exporting.

The second largest employer in my constituency is a textile company. It has built a new factory, is bringing in new techniques and is able to employ more staff than i t did a few years ago. Not only are existing companies developing because of the better climate, but new companis are coming into an industry that was always in decline. Many companies, including those in textiles, have developed in the last 10 years because the Government have provided a framework that has encouraged large and small companies to develop and take part in the necessary development of our total economy.

Manufacturing has many more problems than most other types of industry, and it is necessary for Government to be conscious of the importance of an industrial base to the total economy. The wealth-creating aspect of manufacturing is fundamental to a country's development in terms of jobs and the balance of payments and in the general wealth of people. We can ensure that wealth creation only by continuing the attitude to development that we have adopted in recent years.

Some years ago we had a machine tool industry, in which, among others, I worked, but it largely disappeared. However, there should not be too much gloom about that, because anyone who attended the machine tool exhibition at the National Exhibition Centre will have seen that independent British manufacturers and British manufacturers in collaboration with other companies have developed British machine tools. Those tools have started to appear again on the market and to compete. From the ashes of the former machine tool industry there is now a growing industry. It is not as big as it was before, but it is growing.

We must also recognise that in order to develop as fast as we should like manufacturing industry may sometimes need special Government measures. The Government have provided such measures to help manufacturers, especially small companies to which they have given various grants, particularly to those involved in high technology projects. However, we may have to look at other measures to encourage some of the smaller companies. Measures that will assist cash flow and perhaps tax delays or even VAT delays may be necessary to allow some of those companies to develop rather faster.

At one time, old-style apprenticeships were the best that we had, but that is no longer true. Some of the apprenticeships were superb, but others were weak, and that also applied to many of Britain's other training schemes. The Government have now developed a range of training that is wider than we have ever had, and it is available for people from the age of 16. That should greatly help manufacturers, because it brings together industry and education within the orbit of Government training. Such co-operation did not exist before, and that was why we had weak training systems in the 1950s, 1960s and 1970s.

We have also encouraged the higher education available at polytechnics and universities where courses are geared more to the needs of individuals and industry than they were in the past. They are not purely academic courses. That is the kind of development that we want. Local polytechnics are now running courses which 10 years ago could not have been envisaged, but yet they are necessary because they provide engineering courses that are directly relevant to local companies. The picture is not gloomy. We can look forward to making all our industries competitive in Europe and in wider markets. If we adopt an attitude of, "Oh dear, we have problems, perhaps we had better stop", we will get nowhere. That often happened in the 1960s and when a company came up against a problem about introducing new technology or faced difficulty in finding workers projects were sometimes put off. I do not say that that was due to trade unions being awkward. It was a mixture of difficulties created by unions and management.

Today there is an acceptance by unions of flexibility within companies and an acceptance by management of the need to generate a movement that keeps going forward. The Opposition skipped over productivity, but it is one of the most fundamental aspects of competition. Productivity is not a static concept. One does not improve productivity, sit back and say, "We have done it. We are better now." It is an ongoing process, and manufacturing and all industries must recognise the need for continual productivity improvements as part of their businesses. That must be a major priority if business of all sorts is genuinely to compete in the markets.

We have a future in manufacturing. That is not to overlook the need for help and a drive on training and education. Much remains to be done, but a good start has been made under Conservative rule. The whole issue was ignored by the last Labour Government and the fact that a problem existed was not even realised by some Governments before that.

The Conservatives in recent years have appreciated the need for manufacturing to develop, and help has been provided in many ways and in various areas. By recognising the needs of manufacturers, we have already come a long way. There is still a long way to go before we are truly competitive, but the path which the Government have set will prove to be the path to a more successful and reliable manufacturing base.

8.41 pm

Mr. Charles Kennedy (Ross, Cromarty and Skye)

Despite some of the optimistic tones that predictably have been emanating from Conservative Members, I cannot but feel that an initial comment on those tones is to ask why, if things are so good, things are so bad, certainly in the part of the country from where I come.

I cannot claim to speak with knowledge of the part of the country represented by the hon. Member for Wolverhampton, North-East (Mrs. Hicks), but it sounds as though the manna from the Government is falling weakly from heaven there. The extremely encouraging picture she painted of her constituency is not mirrored in many other constituencies, particularly the further north one goes in Britain. Apart from being extremely supportive of Government policy, her remarks represented an eloquent underlining of the extent to which Britain has become a deeply divided nation, socially and politically, under Conservative rule.

The nation and its industrial base has been hit twice by the Government. It was hit first between 1979 and 1981 when they pursued massive deflationary Budget strategies which resulted in the wholesale rundown and closure of large sections of manufacturing industry. That was bad enough. But as a result, any figures that are now cited in support of the apparent manufacturing recovery begin at such a low base, as a result of the 1979–81 collapse, that it is easier to make any recovery look better than it is.

The economy has been, and is being, hit for a second time—and all the harder from the point of view of our economic base—by the tax-cutting strategies of the last two Budgets and by the consumer boom sucking in consumer imports. The Government have always displayed a tendency to change the basis of calculation when the figures show an unhealthy story. That has happened with unemployment; there have been a series of changes in the method of calculating the totals. The Chancellor now wants mortgage interest costs to be removed from the inflation index because it puts up the index too high for his liking.

Casting one's mind back to the previous debate today and the willingness of the Government to indulge in propaganda at the taxpayers' expense, one wonders whether, if the balance of trade continues to decline, they will try to withdraw imports from the equation, so making our balance of trade position look not nearly so bad.

Mr. Crowther

The hon. Gentleman may be giving the Government ideas.

Mr. Kennedy

If I get a 10 per cent. return for feeding in that idea to the propaganda machine that Saatchi and Saatchi has developed in recent years, I shall be able to retire happy almost immediately.

What can we do to improve our industrial performance and manufacturing base? There are three key problems to which I wish to refer—low productivity, high unemployment and high inflation, which is linked to poor competitiveness.

In 1960 we were the equals of France and Germany in productivity. We have now slipped way behind. Our productivity has a real impact on our people's standard of living, so we have by far the lowest pensions, we spend less on health and we have the smallest proportion of young people in full-time education. Our closest competitors in Europe are leaving us standing in all those respects.

Four main factors cause low productivity: shortages of skills and basic education, poor industrial relations at times, inadequate research and development and inadequate competition. Given our skill shortages and low levels of basic education, we should be moving towards a right to numeracy in our education system. In other words, it should become increasingly unacceptable for the teaching of maths in schools and colleges without ultimately a certificate of competency.

There should be training incentives. Employers who train less than the average for their industry—the Government should start thinking in these terms—should pay a tax equivalent to the extent of the under-training. Employers who train more than the average should be reimbursed to the extent of that extra training. The amount of training should be measured in terms of expenditure as certified by a company's auditors.

The Companies Bill began its Committee stage this morning. The Government displayed their open-mindedness in the first two and half hours of the Committee's deliberations by removing an amendment on political donations which was inserted in another place. I hope that the Government use some of the remaining time that the Bill has for its passage through Parliament by pursuing some of the ideas that I am putting forward.

Next, there should be a right to training. Anybody employing a person under 18 years of age should be encouraged to release that youngster for at least one day a week for education and training at the employer's expense. In the past, the Government have hesitated to introduce such a concept for fear of causing youth unemployment. Under the training incentive proposal that I have outlined, using the tax system based on a company's audited accounts, employers would no longer have an incentive to avoid employing young people with whom they had to enter into training commitments.

Those are some proposals by which the Government could begin to shake up the industrial base and contribute towards industrial, and particularly manufacturing, recovery. They should also look to civil research and development. Our education structures, compared with those of our main industrial competitors, are such that we are failing woefully to provide anything like the tertiary and skill education that, for example, Japan and north America manage to provide in competition with us.

It is attitudinal, and I agree with what hon. Members on both sides have said about education. About a year ago I spoke before a high school audience in Edinburgh, most of whom were going on to some form of tertiary education. One thinks of the proud and distinguished engineering traditions of Scotland. When I asked that audience how many would be going into law, medicine, the arts and so on, it was clear that the number going into engineering was a minute fraction of the total. In Japan, "engineer" is a social handle. It is a position in society in the way "doctor of medicine" is in this country. Our attitude must change.

High unemployment, high rates of inflation and poor competitiveness have dogged this country throughout the period of Conservative rule. We should be looking to full United Kingdom membership of the European monetary system.

There is a very interesting debate developing within the Conservative party, although I do not think that I can dignify it with the description "debate". There is a full stand-up, drag-'em-out fight going on in the Conservative party. There is no doubt that the SLD had the good sense to get our little skirmish behind us in the first half of this Parliament and we will spend the second half being constructive. The Government look as if they are going to spend the second half of this Parliament involved in their own internal punch-up and I welcome that because it will help the Opposition parties generally.

We should be working towards full EMS entry because that would help our industrial base, help our exporters and create far better conditions for them to operate. Conservatives advocating that approach will, I suspect, by the time of the next election or not long after it be proved to be on the correct side in that argument. That, on an international basis in terms of the ability of this country to compete better internationally, would be a major attainment. It is well within the grasp of the Government.

It now seems to be fashionable to assume that a move back towards something much closer to full employment is not attainable whatever economic system one adopts or whatever political goals one sets. But we should look at countries such as Sweden, where unemployment is close to being under 1.5 per cent., which is effectively zero unemployment given the flexibility of the labour market.

I hope that, despite all the fiddling and fixing of the figures and the misplaced economic optimism of the Government about the economy, they will not lose sight of their tremendous, overriding social obligations to the millions who have lost gainful productive employment during their decade in office and of how important a priority it must remain to bring down unemployment by the production and creation of real jobs in the future.

I have one constituency appeal to make to the Minister. The greatest single manufacturing setback in my constituency was the closure of the Invergordon aluminium smelter. I will not rehearse the history now, but it closed because of a world slump in the price of aluminium and the inability to achieve—[Interruption.] That plant went there with Conservative support in the 1960s. If the hon. Member for Langbaurgh (Mr. Holt) was not so woefully ignorant of recent political history he might know that.

It also failed because of the inadequacy, or ineffectiveness, of the power supply contract that had been negotiated. World aluminium prices have now substantially increased and British Alcan has commented publicly that electricity privatisation may create flexibility for a more favourable power contract to be negotiated. That being the case, I should be glad if the Minister would at least promise to keep his eye on that developing situation, because he will appreciate that any move towards reopening that plant in my constituency would be a major psychological and financial shot in the arm.

8.53 pm

Mr. Charles Wardle (Bexhill and Battle)

It seems to have become inevitable that whenever the House debates the state of British manufacturing industry an internecine clash follows about the correct interpretation of what has happened to manufacturing in the recent past. Today has been no exception. Opposition Members have made some strident claims about what they describe as the disintegration of our industrial base, the dramatic fall-off in manufacturing employment and the trade deficit in manufactured goods. My right hon. and hon. Friends point with much justification to a freer labour market, vigorous growth in output, greater productivity, higher profits and increased capital investment.

On both sides of the House, to my way of thinking, a rather too euphoric gloss is sometimes placed on industry's short-term prospects in Europe without what I would regard as sufficient concern for the devastating speed with which changes in technology will shortly be consigning even some of our more enterprising companies to iron-age-style obsolescence, and without enough awareness of what it will take to acquire a greater market share in the single European market ahead.

The trouble with a debate about what has already taken place is that it distracts attention from the important issues for industry's future and particularly the opportunities and challenges over the next decade. Nevertheless, any realistic assessment of where manufacturing industry's best strategy lies in the 1990s has to spring from an analysis of the key factors in our past performance. I shall try to keep my comments about that analysis as brief as possible.

There can be no doubt on either side of the House that captive markets in post-war Europe and the Commonwealth left British manufacturers complacent about order books in the 1950s and 1960s. That meant that they were later into new technology than our German and Japanese competitors. That had disastrous consequences for this country in the microchip revolution. But the real killer was inflation from 1972 or 1973 onwards because too many companies simply made for stock and watched paper profits accumulating on the shelf. Products remained unsold and simply rose in value, and that in turn encouraged poor cash-flow management, soft wage settlements and overmanning—a situation that was exploited with mindless shortsightedness and selfishness by many trade unions.

Ironically, one of the first people to signal the impending crisis was a trade union leader, Clive Jenkins of ASTMS—the Association of Scientific, Technical and Managerial Staffs. In a book that he published in 1979, before the winter of discontent—I think its title was "The Collapse of Work"—he predicted unemployment of 5 million or 6 million in the 1980s because he recognised the problems of overmanning. So, when the world recession began in 1980, British companies with too much stock, tight liquidity and bloated payrolls fell like ninepins and only the better managed companies managed to come through and survive.

No matter what Opposition Members may claim, from that time on the future of many traditional, steel-based, smoke-stack industries suddenly lay in the far east and the Third world, because even with automated production plant and efficient materials handling Europe could no longer compete with the direct and indirect labour costs of the developing world. So manufacturing in the west midlands and elsewhere was reduced to a rump eight or nine years ago. But, since then, with trade union legislation that has liberated individual workers, deregulation, lower inflation and more individual incentives, growth has accelerated, particularly in the defence field and in the hitherto sluggish state-run companies now in private hands.

The Government have skilfully created a more positive business climate, with record output now being achieved from a much truncated manufacturing base. We have a leaner and fitter industry, better equipped and tightly controlled, but is it geared to win a greater market share in Europe, to ease the balance-of-payments gap and to make up the leeway on product innovation and manufacturing technology?

With continued realism and determination, it is certainly possible, but it will not happen if inflation is allowed to rise and recent hard-won progress is squandered. Nor shall we succeed unless industry and Government come to a clear understanding about several vital areas in which both have a part to play. I am talking not about collectivist nostrums or central planning but about the harsh realities of a highly competitive market place and the ability to create wealth.

First—with no disrespect to our excellent civil servants—Government have to take into account the importance of including in their official ranks people who understand markets, money-making and line management to add to Government's understanding of the realities of the task of running industry. Not that Government should run industry, but they need to understand how it is done and all too often there is a gap in that understanding.

Secondly, industry must grasp the significance of research and development if our future is to be anything but that of a neo-colonialist subcontractor and national assembly plant in the medium-term future. Companies are making profits and they have to put a large share of those profits into research and development if we are to have businesses in the future. It is the companies' responsibility.

Thirdly, Government have to shed their dirigiste inhibitions in at least one respect. They simply have to understand that the creation of new standards for the European single market must be achieved in a way that helps British competitiveness. That cannot be ignored.

Fourthly, excellent recent advances in training must be accelerated by employers, not by the Government. Employers must go to schools and colleges and participate in training programmes to woo the industrial workers of tomorrow. Fifthly, vast investment is required in our hopelessly inadequate transport infrastructure. We must emulate the efforts of our EC partners, and the swiftest and cheapest means of doing that is to give the job to the private sector and to private finance wherever it is practicable.

Finally, the City—and banks and institutional investors in particular—must grasp the fact that, while takeovers can be strategically important and worthwhile, the companies meriting the highest esteem are those which successfully invest in in-house product development and marketing strategies of their own. Too many companies in our highly sophisticated stock market look for next year's growth in earnings per share from the issue of additional equity for acquisitions, whereas the real glamour should attach to the businesses that ruthlessly seek internal growth and expansion. That is the way to create market winners and perhaps even to win back our European market share of consumer goods.

If those challenges—which are management challenges for private industry and Government alike—are met, we have a realistic chance of taking the lead in Europe by means of our own competitiveness before the turn of the century. If we do not do so, this country, which led the way to the first industrial revolution, will be relegated to the second division of manufacturing in the second industrial revolution in the next century. We have the opportunity to succeed. It is up to us.

9.1 pm

Mrs. Alice Mahon (Halifax)

Try as I might, I cannot find an economic miracle in manufacturing, but some extraordinary claims have been made tonight and, with a first name like mine, I am reluctant to talk about wonderland, white rabbits and mad hatters. However, listening to the contributions of some Conservative Members, I feel that I am in that kind of world.

I will not tolerate the Minister or anyone else saying that the fine industries that were lost to my constituency in the earlier years of the Government's reign were lost simply because they were overmanned or obsolete. We made the finest machine tools in the world and could be doing so still had there been a decent economic policy and a Government committed to industry. Nevertheless, tonight I will settle for a reassurance that the Government will at least take manufacturing's next period of crisis seriously. Sadly, I do not think that they will. Everyone else seems to be doing so. A report from the British Textile Confederation published this week states: It is staggering to realise just how much of trade in textiles is distorted, often by interventionist policies by governments world-wide rather than being carried out on the basis of normal commercial principles. There is a message for the Government that has nothing to do with competitiveness but has everything to do with British business saying to the Government, "Will you help and stop unfair practices?

Mr. Peter Booth of the Transport and General Workers Union textile group reports that 15,000 jobs were lost in the textile industry last year and predicts that another 20,000 will he lost this year. In a very good debate on manufacturing in another place recently, Lord Ezra commented that: unless we have a very strong manufacturing industrial base we shall not be able to balance our trade and our payments with the rest of the world. In order to achieve that, we have to build up that base."—[Official Report, House of Lords, 26 April 1989; Vol. 506, c. 1313.] Those who took part in that debate, almost without exception, expressed the same sentiments. Concern was also expressed about Britain's £15 billion trade deficit. I add my voice to their warnings. I am pleased that we are having this debate. I asked my party to arrange it.

In the travel-to-work area of the district council that covers both my constituency and Calder Valley, 1,000 jobs have been lost since Christmas across various manufacturing industries, including engineering, machine tools, a new brush company that opened with high hopes, bedding, furniture, and textiles.

One of the saddest cases is that of Crosrol, specialists in textile machinery, which lost hundreds of jobs in the early 1980s but fought back. As my hon. Friend the Member for Dagenham (Mr. Gould) might say, it became leaner, fitter and more competitive. Last year it won the Queen's award for industry, but is now again announcing job losses. All those firms attribute their situation to some of the Government's economic policies.

In 1987–88, we were already feeling the chill wind of the need to be more profitable in the run-up to 1992. In my constituency, there was a major closure with the loss of 1,000 jobs at KP Foods. Even though that company was profitable, it was not profitable enough to cope with the competition it anticipates that 1992 will bring. A further 500 jobs are still to go at that company. The Government know full well that their one-club economic policy of high interest rates seriously damages industry, particularly small companies.

A town such as Halifax relies on the success of small companies. A large carpet mill, Dean Clough, closed, but was reopened, housing a number of small businesses. However, the Government's policy of high interest rates and high energy and water charges is harming those small businesses, which are finding it very difficult to compete. Towns such as Halifax suffer because the Government have no regional policy. The Government view local unemployment statistics as reliable indicators of the local economy but conveniently ignore the army of invisible unemployed, whose identity in the labour market disappeared down a departmental black hole of statistics as the need to get people off the unemployment register became paramount.

The Government do not allow councils such as Halifax capital budgets sufficiently large to help industry through infrastructure. No money is available except to inner cities or urban development areas. We have pleaded with the Minister for objective 2 status as a town surrounded by others having assisted areas status, and we suffer greatly from that situation. The economy is overheating in the south-east, with companies looking to relocate, but the Government's response is yet another local government Bill that will curtail the power of local authorities even further. They will not be allowed to help with infrastructure or assist industry to relocate.

As to manufacturing, the market has failed people miserably—[Interruption.] I am glad that the hon. Member for Wolverhampton, North-East (Mrs. Hicks) has such a happy story to tell. Sadly, I have not. I am sorry that Conservative Members see fit to laugh. If they had seen 1,000 jobs lost in three months in their constituencies they would not find it very funny. Another 500 jobs are still to be lost, and the economic indicators are against further employment.

We face a skills shortage in the run-up to 1992 in many of the industries that are doing well, which must raise questions about the Government's much-publicised training schemes, especially YTS and ET. We have not invested in research and development. Two years ago, the Prime Minister boasted that £210 million would be spent on the Link scheme, but only £60 million has been spent. I suspect that it is because the Government are not really interested in research and development or training for the manufacturing industry. The Government have to face up to the seriousness of the situation. Perhaps the very short debate this evening will enable them to do that but quite frankly, given the attitude of some Conservative Members, I seriously doubt it.

9.9 pm

Mr. Alistair Burt (Bury, North)

This evening we have had a good debate, sharpening up attitudes on both sides of the House, but with a good deal of moderation and acceptance of the basic ills in the manufacturing sector over the years.

As the House will know, my constituency is in a traditional manufacturing area, south-east Lancashire, the cotton workshop of the world, but no longer are Bury, Ramsbottom and Tottington exclusively manufacturing towns. We have not talked very much about the development of a more mixed pattern of employment in traditional manufacturing areas. In my constituency the index of manufacturing and service industries reveals that there are more than 1,000 firms in my constituency and the area immediately surrounding it. That represents a large number of companies of a wide variety of natures. The fact that manufacturing is becoming less important is balanced by developments in other sectors.

In a traditional manufacturing area there are bound to be mixed views about the changing nature of the towns. Tradition dies hard and industrial closures have hurt the area. When I first became a Member of Parliament unemployment in my constituency was something like 13 per cent. and rising. Now it is down to something like 6 per cent., but recently there has been one closure and some jobs have been lost in another firm. Unemployment hurts and is still hurting. In the past few years unemployment has fallen, but the Government must maintain their goal of reducing unemployment as much as possible.

There has been nothing sudden about the changing nature of my constituency. It has not happened post-1979. That is why I feel that the central thrust of the Opposition motion is misguided. The true damage to manufacturing industry occurred in the years of decline this century when the golden age of British manufacturing came to an end, either through no fault—as the closed markets of empire were opened up to other nations or as developing nations improved their economies—or through fault—learning late the post-war lessons about proper management, and failing to get industrial relations right on both sides of the industry. If the Opposition are genuinely looking for a Government to make a scapegoat, they should look nearer home, at the Labour Government between 1974 and 1979. The hon. Member for Dagenham (Mr. Gould) was talking about competitiveness and productivity. How did the appalling trade union legislation of 1974–79 improve our productivity? How much did secondary picketing do to improve British competitiveness and what part did double-digit inflation play in industrial regeneration? All those factors did enormous damage to manufacturing industry but have been neatly passed over by Opposition Members.

Since then areas such as mine have changed and have moved away from manufacturing. We should remember that some 200 years ago manufacturing businesses and companies were new. When John Kay's flying shuttle was invented in Bury, Bury had something like 2,089 inhabitants. There have been many changes. We look back nostalgically to that great industry. But at that time it was new. Therefore, we should welcome the new industries and the new employment into our areas. It may not be as romantic to look back at the creation of an Asda superstore or the construction of a Warner Brothers' multi-cinema complex, but they represent jobs and investment and will exist for a long time to come.

There has been nothing short of a reconstruction of the manufacturing industry in the north-west in the past 10 years. Of course the bulk orders to easy markets have gone, but in the wake of the protection that existed in the past we now have new technology, innovation, and improved attitudes towards design and customer relations. There have been improvements in quality and an increase in the manufacture of value added products.

Some firms in my constituency illustrate that change. In the textile industry, Bury is no longer involved in bulk textile manufacture, but it produces high value-added goods and companies such as Elton-Cop, part of the Coates-Viyella group, have followed the practice of good long-term investments that are now paying dividends. In the paper industry, Bury no longer manufactures paper in bulk, but specialises. A company called Cromptons specialises in teabags and sausage skins. The sausage skins are exported to Germany. If my right hon. Friend the Prime Minister ever does anything as indelicate as eating a sausage with Chancellor Kohl in Germany, I would bet a pound to a penny that the sausage skin was made in my constituency. In the paper-making industry, companies such as Holder-Pamac have developed their own market over the past 10 years because the quality of design and innovation are better than many of their competitors. In the ventilation and ducting industry, Henry Hargreaves has a world wide reputation because it is the best in its field.

In areas such as my constituency and other parts of the north-west, the manufacturing industry has survived because it has learned the basic lessons of good management, good labour relations, and a better attitude to success from the shop floor to the boardroom and an understanding that they are all in it together. I do not believe that there are two sides of industry any longer. Those that believe in two sides believe in conflict and division which bring industry to a halt. But more often people feel that they are all in it together. Politicians may talk, but those in the industry do not want to see division and know how important it is to fight the world markets together. Lastly, companies in the north-west have learnt the value of good decent investment over a long period of time.

I should like to flag up some vital issues to make sure that the Government get it absolutely right in future. There is no doubt that the reconstruction of the north-west has been helped immeasurably by Government policies. But in the short term the Government must address some vital issues. First, there is no doubt that the high value of the pound causes difficulty to our exporters. Secondly, our manufacturers need stability in the exchange rates. Thirdly, interest rates should be lower, but we already know that. Fourthly, the Government should take a more aggressive attitude to unfair foreign competition. The textile industry has been through a miserable time recently, particularly with Turkey. It has taken time to order an EC investigation, which is now taking place. But the Government must be more tough when they are confronted with unfair opposition from abroad.

Finally, I should like to refer to something that has been mentioned by other hon. Members—education and training. Last year, the Bow Group commissioned a survey among 160 major industrialists. We asked a range of questions about a variety of issues, but we were surprised at the emphasis that employers placed on education. We are surprised that the emphasis given to the role of education outstripped the more obvious targets for attention. We felt that it showed an acute grasp of a depressingly old problem—how to stimulate and prepare the young for an interest in industry in a nation whose culture has too often been seen as anti-industry". We were impressed that of all the policies discussed, education was considered most important for the future.

The lesson is very clear. We have to prepare our children better for the manufacturing industry of the future. It is a disgrace that the British manufacturing industry is held in such poor esteem. The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) referred to that. It is true that for some reason, in a world which has been built by industry and in a region such as the north-west which has been built on the back of manufacturing industry, engineers are still despised as men in blue cotton overalls with oily hands wiping away the cotton waste. That is not the reality, nor will it be the reality in future. We must all get our attitude right towards education and towards industry.

In that same summary by the Bow Group 160 industrialists who were questioned said that the Government's performance was highly rated and was considered to have been better in the second term of Government than in the first. There is no doubt that the policies on which manufacturing industry is based are sound and will provide a good base for the future. If the Government take note of short-term concerns, manufacturing industry will have a strong and secure base, providing, solid employment in the future.

9.19 pm

Mr. James Lamond (Oldham, Central and Royton)

Government Back-Bench Members have tried to support their Minister's speech by painting a rosy picture of what is happening in their constituencies. It is not difficult to pick out one or two firms where productivity, efficiency and profitability have improved and investment has increased. But one or two such firms do not mean that the whole of manufacturing industry is doing well.

The unfortunate and important fact that spoils the rosy picture is what is known as the bottom line—the manufacturing industry deficit of over £14 billion a year. That cannot be ignored by any hon. Member. I remember great play being made in the 1970s by the Tory party and the press of a monthly deficit of £35 million that was to bring the country to its knees. No doubt the publicity given to that fact cost us many votes. It was important then and it is much more important now when £14 billion worth of manufactured goods are coming into the country each year. If all those firms are expanding so well, why must people go abroad to buy the things that they want?

I am glad that the hon. Member for Bury, North (Mr. Burt) came at last in his speech to criticism of the Government. I had begun to think that he had forgotten that he represents an area where textiles are still important. Employment in textiles represents 9 per cent. of manufacturing employment. Hon. Members do not need to believe me when I tell them that things are bad in the textile industry; they have only to read the annual statement of the British Textile Confederation that was issued this week. The president, Mr. Spencer, put his finger fairly and squarely on two matters that are causing problems—high interest rates and the over-valued pound. Both those are the direct responsibility of the Government. If they want manufacturing industry, and in particular textiles, to expand and provide employment, they have to revise their economic policy. It is the policy of the Chancellor to maintain high interest rates and to threaten us with even higher interest rates unless inflation comes down.

Tory Back Benchers have attempted to demonstrate that the trade union movement was responsible for all the difficulties in the past. Let me draw attention to the record of the trade unions in textiles. I admit immediately that there has been a small labour problem in the textile industry recently. Very unusually, the textile industry had its first strike for decades. What did the workers achieve? What were they determined to obtain that would bring the industry to its knees? At the end of their struggle and all the trouble they caused, they had to accept an increase in minimum earnings from £85 to £95 for a 39-hour week. I want anyone who says that the industry is being bled by the workers employed in it to tell me what his salary is and whether he could live on £95 a week.

The hon. Member for Bury, North mentioned other matters that concern the textile industry. The hon. Member for Macclesfield (Mr. Winterton), the employers in the industry and I are to see the Minister responsible for textiles at the end of the week to draw his attention to the inaction of the Government in protecting the industry against Turkish imports. In the opinion of Mr. Spencer and myself, Turkey's behaviour has been outrageous. The increased imports that we can expect in the EEC from China will kill the textile trade in this country and will end the manufacturing industry which employs 9 per cent. of our people. I hope that the Minister, in whom I still have some faith, will get some action. Now and again he shows a little independence and determination to stand up for the country. I look to him to do something when we come to see him on Thursday.

9.25 pm

Mr. Richard Holt (Langbaurgh)

It is my privilege to be the only Member from the north-east of England to speak in the debate. I suppose that that in itself is significant. The Labour party in the north-east has abandoned debates on this subject because it does not wish to cross swords. We have not had a debate but rather a series of well-read, or in some cases not so well-read, speeches. That disappoints me when we are supposed to be a debating Chamber, with the cut and thrust of debate. The tone of the debate was set by the hon. Member for Dagenham (Mr. Gould) who opened for the Opposition. He did not wish to be interrupted because he did not want to have to answer any of the questions that would have been put to him by Government Back Benchers.

Last week there was a television programme on Tyne Tees produced by the Northern development corporation. It was a debate in the north-east about the north-east, dealing with why we are not projected nationally as well as we should be. It must have been an important debate because Brian Redhead was imported to compere the programme. The cat was let out of the bag during the debate when the regional organiser of the Transport and General Workers Union, Joe Mills, said: Of course things are better in the north-east now. It hurts me to have to say so but begrudgingly I have to say that Margaret Thatcher has been responsible for this."—(Points of order, col. 958, 24 May 1989.) Up to 1980, a total of 47,000 people worked in British Steel and ICI on Teesside. After 1980 the numbers went down. Now only 12,000 work in those two industries. I was interested to hear John Harvey-Jones' virtue being extolled by the Opposition. He did a magnificent job for ICI. He saved the company and made it into the great world leader that it is today, but he did it at the expense of putting 18,000 to 20,000 people on the dole in two years. If we consider the history of British Steel, we see that overmanning continued in that industry until we grasped the nettle in 1979 and 1980. The result is that the figures for British Steel today show that it is producing 110, 115 and 120 per cent. of what was being produced when the labour force was four times greater. That is a measure of the improvement in productivity that we have seen over the past 10 years.

I hear Opposition Members say, "They are speaking for their own little patch." I can speak for the entire area of Cleveland, and I am not quoting from the Conservative piece of literature. The headline reads: "Teesside economy still booming". It is booming, as hon. Members will see if they go up there and have a look. The trouble is that very few Opposition Members bother to go and see for themselves.

Only last week it was announced that a new American company, Millecom, was coming to Darlington and bringing with it 1,000 jobs. That is on top of all the other investment that has come into the north-east over the past six years. The area still has high unemployment—judged, perhaps, according to different yardsticks from one day to another—but, if I may speak parochially, unemployment in my constituency has fallen by 41.66 per cent. in the past five years, and that is quite a reduction.

Opposition Members may say that we are talking only about small areas. The pharmaceutical industry in the north-east now receives 50 per cent. of all the fixed investment in the region. More than 200 new electronics firms have been established, along with more than 300 companies associated with offshore technology. We have 60 companies working on advanced materials. Investment is coming in all the time: £300 million of investment and 4,000 jobs. Fujitsu is said to be the latest, but it has been superseded by Millecom, and I believe that British Telecom itself will be making a similar announcement in the not too distant future.

What is new and remarkable about what has happened in the north-east is that self-employment has become an option that people take up. Historically, people in the north-east have left school, gone to work, taken their apprenticeships and worked for one company all their lives until they retired. Those days, however, are no longer with us; that type of industry is gone. [Interruption.]

Mr. Patrick McLoughlin (Derbyshire, West)

Opposition Members are not interested.

Mr. Holt

I know that. I was more interested in the fact that Mr. Speaker was looking at me, because I was told that I could speak until 9.35 pm. As I am now receiving different indications, I apologise. I accept your stricture, Mr. Speaker, and I will stop speaking if another hon. Member wishes to speak.

Let me say merely that the message from the north-east is not gloom and doom; it shows a future built on new industries. Our old, overmanned heavy industries have gone. The future is ours, and that is why the Conservative party will sweep the north-east of England from now on.

9.31 pm

Mr. Michael J. Martin (Glasgow, Springburn)

I am interested in the rosy employment pictures painted by Conservative Members when they talk about their areas. I do not think that anyone would deny that Glaswegians are triers: they have tried immensely hard to improve their city, and have succeeded in many respects. But hon. Member should not kid themselves by painting such rosy pictures. Unemployment in my constituency is more than 24 per cent., which is a national disgrace.

My hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond) spoke of the decline of industry. I served my apprenticeship as a young sheet metal worker in my constituency. It was a small company employing 70 people, surrounded by others employing 300 or 400—foundries and heavy engineering firms. The only company left now is the one in which I served my apprenticeship. All the others have gone, partly because of the decline caused by the present Government.

An interesting fact of which I have been told by the secretary of the sheet metal workers branch of my union is that there is a shortage of skilled sheet metal workers in the Glasgow area. As my hon. Friend said, we have not invested in training, and as a result firms are desperate for skilled workers. When I arrived here 10 years ago as a new Member, I said that if the economy improved we would need skilled people, and that we should already be investing.

It is nonsense to say that the training schemes that we have are the best that the Government can offer. We cannot obtain good apprenticeships unless people are working with the materials and tools of the trade, and rubbing shoulders with skilled workers. This Chamber would not have been built if it had not been for the traditions passed on by craftsmen, and the same is true of industry. We would be failing in our duty if we did not think more carefully about adult apprenticeships. Australia, New Zealand, Canada and America are interested in adult apprenticeships, yet we have people who have been without a proper job for five or six years and who are not getting the opportunity to serve an apprenticeship, which would be the least we could do for them.

It is nonsense to say that industrial relations improved only when we had a Tory Government. The Government should tell that to the people who work in the shipyards, to the women and the contract cleaners who have been exploited. Tory legislation has done away with the rights of the low paid, who had few rights to start with. Let no one fool anyone that Tory legislation brought about good industrial relations. In my constituency, factories have closed despite excellent industrial relations and increases in productivity. The companies wanted to centralise and so closed down their Glasgow offices. It is nonsense that factories that were profitable and had increased productivity were closed.

I hope that the Minister will take on board the views that we have expressed in this debate.

9.36 pm

Mr. John Garrett (Norwich, South)

This has been a brief but important debate. I do not think that anyone could deny that there has been a decline in manufacturing industry. One fifth of it disappeared between 1980 and 1982 and the growth thereafter has not replaced that loss. We have had examples from my right hon. and hon. Friends of the continuing loss in manufacturing. My right Friend the Member for Salford, East (Mr. Orme) talked about engineering and car manufacturing, my hon. Friend the Member for Rotherham (Mr. Crowther) spoke about the steel industry, my hon. Friend the Member for Halifax (Mrs. Mahon) spoke about the textile and other industries, my hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond) spoke about textiles and my hon. Friend the Member for Glasgow, Springburn (Mr. Martin) spoke about engineering.

The decline in manufacturing industry derives from major structural changes in our industrial base for which the Government appear to have no remedy. In addition to adverse structural changes, we have wholly inadequate management and vocational training systems, which are required to support a modern manufacturing country. Clearly, that is the Government's responsibility. The immediate problem is the remarkable deterioration in the United Kingdom trade balance last year, which was caused primarily by a massive increase in the import of consumer goods such as cars, clothing, textiles and household electronic goods. The Government's claim that rising imports are largely capital goods to re-equip British industry simply is not true. Even if it were, it would simply illustrate the collapse in our capital goods and equipment industries and our inability to supply. I have never understood why the Government feel that that is something to boast about.

This country now has to import machinery to equip our industries and we pay for those imports of equipment in oil exports. In other words, we import equipment and export commodities—a trade pattern far more common in an underdeveloped country than a modern manufacturing country. The late Austen Albu, who some may remember as a Labour Member of Parliament, said some years ago that we export bulk and import refinement. The problem he identified then is much worse today when we import equipment and export oil.

The three large sectors of manufacturing in which we are weakest are cars and parts, where the deficit was £5 billion last year, clothing and textiles, in which the deficit was nearly £2 billion, and consumer electronics, in which the deficit was £1.5 billion. Twenty years ago those were staple industries in Britain and a decade ago we still had a substantial international presence in all of them. We no longer have a major international volume car manufacturer. The French have two and produce twice as many cars, trucks and other vehicles as we do. The penetration of imported cars into the domestic market reached 56 per cent. last year and commercial vehicle imports reached 40 per cent. As a percentage of the domestic market, imports of buses and coaches rose in the past decade from 3 per cent. to 38 per cent. When I worked in the motor industry, we used to be the suppliers of trucks and buses to the world. The standard truck throughout the world was the Bedford truck, made by Vauxhall. Today we import most of our vehicles. It is remarkable that our vehicle manufacturing industry has declined so much that we now have only a minor share of our home market.

Domestic market penetration of imported textiles and of footwear has reached 50 per cent. Footwear used to be the basic manufacturing industry in my constituency but it is now reduced to one tenth of its former size. We are still losing jobs because of the exchange value of the pound and because of interest rates. That is what my local footwear manufacturers tell me.

All that could have been judged as a necessary or natural adjustment as we got out of industries for which we were no longer suited and moved into new industries. One could understand that, but our performance is no better in the new technically advanced industries. Let us take as an example information technology, in which we were pioneers. We now have an adverse balance of payments in information technology equipment and services of £2 billion per year. That is now the basic industry of a modern manufacturing country. That growing deficit occurs in a number of other high-tech R and D sectors, such as medical equipment in which, again, we used to be pioneers but where 60 per cent. of the home market is now accounted for by imports. Import penetration in chemicals, in which we have one of the world's leading companies, is now 41 per cent., up from 28 per cent. 10 years ago.

The Government make other claims about the health of our manufacturing industry. The recent increase in manufacturing investment, which appears now to have petered out, and about which we hear so much, has taken investment to barely the 1979 level. Manufacturing investment today is still well below its 1979 level as a percentage of GDP. The Government boast of the rapid growth in manufacturing productivity, but the fact is that at absolute levels our manufacturing productivity is still the lowest of any of the Group of Seven countries.

The Government clearly consider that our manufacturing trade balance, our manufacturing investment, our productivity, and our R and D should be left to the free play of market forces and that they have no duty to produce an industrial strategy, objectives or programmes of action. They may feel that they have no responsibility in those areas, but surely they have a responsibility in providing the education and training infrastructure for manufacturing. Indeed, from time to time, the Government appear to recognise their responsibilities for creating the skills that we need. I am deluged by press releases from the DTI and only the other day I noticed that the Government are giving their full backing to management training and to what is called the "management charter initiative". It is in that area that our weaknesses are most obvious.

The Confederation of British Industry recently carried out a comparative study of British and West German industrial performance. The reasons for our markedly inferior productivity compared with the Germans were not the traditional ones of older machinery, higher overheads, bad industrial relations, higher tax burden, less spending on R and D. The main reason was that West Germany's work force is better educated and better trained and is led by a management boasting a higher percentage of university-trained managers and using more advanced information technology. Germany has three times our percentage of workers with post-school qualifications, double our percentage of supervisors with post-school qualifications and double our percentage of managers with degrees. In Britain, only one in three managers has ever had any training and 70 per cent. of that was for less than five days a year.

A British Institute of Management survey in 1987 showed that half our managers started work at the age of 17 or younger and received no subsequent education. Professor Handy's report for the National Economic Development Office on management education said: much of executive education is the teaching of sixth form subjects to middle aged executives; it is remedial education instead of executive education. At all levels British managers and workers have inferior education and training than our competitors. We no longer have the education and training to meet the needs of a manufacturing nation.

In autumn 1988, the Oxford Review of Economic Policy summed it up when it stated that Britain is trapped in a low-skills equilibrium in which the majority of enterprises, staffed by poorly trained managers and workers, produce low quality goods and services". With 1992 on the horizon, those weaknesses will become more apparent. I am sure that hon. Members of all parties will have received complaints that West Germany's industrial interests are dominating the engineering product standard-setting processes. Apparently representatives of the French chambers of commerce and of the West German trade associations turn up to the committees that set standards where, more often than not, we are not represented. We shall find our engineering industry dominated by German product quality standards.

Another worry about 1992 is the susceptibility of British firms to takeover, because of the relatively strong reliance of British companies on equity finance. There is a strong possibility of takeovers of British companies in areas of strong comparative advantage by predators from Europe, the United States and Japan, who want to establish themselves within the boundaries of the EEC in order to launch their attack on western Europe. That will be of no great advantages to our manufacturers, especially if the research and development and design is done back in the home countries of those predators.

Once the barriers are removed in 1992, price will become more important. The Government's cost burdens on industry—water, gas, the unified business rate and interest rates—will continue to be a massive handicap. Without any strategy for our manufacturing industry, and with a complete disregard of the need for industrial training and management education, the Government are leaving British manufacturing industry grossly under-prepared for 1992.

If we lurch along as we are at present, underinvested, under-researched and under-trained, British manufacturing industry's future is clear. We shall be an EEC bridgehead for the Japanese. We shall be assembling cars and electronics imported as kits from Japan. In addition, what is most valuable in British manufacturing industry will be under German or American control in joint ventures or in merged corporations in which Britain has a nominal share. Control—what the Germans call mind and management, of which they rarely let go—will be in foreign hands. It is our contention that the Government are presiding over the end of Britain as a manufacturing nation.

9.46 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Robert Atkins)

We have had a fascinating debate, albeit that one would not have guessed from the number of Opposition Members present that there was a three-line Whip for Opposition Members. None the less, many interesting points have come out of the debate, not least those contained in the speeches of my hon. Friends the Members for Wolverhampton, North-East (Mrs. Hicks), for Nuneaton (Mr. Stevens), for Bexhill and Battle (Mr. Wardle), for Bury, North (Mr. Burt) and for Langbaurgh (Mr. Holt). They all spoke with a considerable knowledge of the real world as they see it and of the industrial achievements in their constituencies.

One point that I suspect would be agreed across the party divide is the need to get across to young people the importance and the attraction of manufacturing industry. Perhaps if we were to get them a little younger—for example, in the primary schools—to realise that manufacturing industry and things that are made by hand are important to the future of our country—

Mr. Dobson

The hon. Gentleman should teach the Chancellor of the Exchequer first.

Mr. Atkins

The hon. Member for Holborn and St. Pancras (Mr. Dobson), who has just walked in, missed the part of the debate in which his hon. Friends also made that point. The hon. Gentleman would be wise to consider the position before making interventions from a sedentary position.

Unlike my hon. Friends, the Opposition have sought to paint a picture of unrelieved gloom. As one who is in daily contact with industry and who travels the country every week talking to those involved in manufacturing industry, that is a picture that I do not recognise.

I want to turn my attention to one or two touchstones of economic success which highlight the achievements of the Government and which perhaps have not had the attention that they deserve. Hon. Members may not be surprised to learn that my first example is that of the aerospace industry. The Opposition's motion suggests that there is something wrong with the aerospace industry. The British aerospace industry is by any standards among the world leaders. The picture here is anything but gloomy.

The output of our aerospace companies has been growing at about 10 per cent. a year since 1983. In the 1960s our share of world trade in aerospace products was about 10 per cent. It is now 17 per cent. More than 60 per cent. of the industry's output is exported. In 1987 the industry had a balance of trade surplus of £2 billion.

This year, as with last year, will see record orders for civil aircraft. British industry will receive a large share of that business. [Interruption.] Opposition Members should listen to the facts about some of the successes instead of muttering and ignoring what is in front of their faces. British Aerospace will share in the success of the A320, the A330 and the A340.

Mr. Rhodri Morgan (Cardiff, West)

Will the hon. Gentleman give way?

Mr. Atkins

I do not have time. At least I have provoked the hon. Gentleman into listening.

Rolls-Royce is now supplying engines to all three major airframe manufacturers and a wide range of equipment companies are consolidating—

Mr. Morgan

What about launch aid?

Mr. Atkins

The hon. Gentleman is wrong. He should do his investigations.

The industry is also investing in the future—[Interruption.] Opposition Members should listen. It is no good ignoring the facts. I am telling them about a success story and they do not want to hear it.

Let us compare the aerospace industry in 1979 with 1988. In 1979 it had a turnover of £3.1 billion and exports of only £1.2 billion. Now it has a turnover of £10.3 billion and exports of £6 billion, the highest of all time. We did not hear much mention of that from Opposition Members. There has been no decline in the aerospace industry and the House—at least, Conservative Members—will want to join me in congratulating the aerospace industry on its excellent record and to spur it on to even greater efforts in the future.

The steel industry illustrates more clearly than almost any other the transformation of Britain's industrial climate and its prospects. There were no great days here in the late 1970s and early 1980s. Steel production has grown by almost 30 per cent. over the past two years. In 1980 British Steel achieved notoriety with an entry in "The Guinness Book of Records" for the largest ever company deficit—£1.8 billion over the year. No one could have seriously believed that that position could be reversed, but the company is now making a profit and 500,000 private investors have bought a stake in it. It has gone from being Europe's least successful company to being one which others envy—another success story to which Opposition Members do not want to listen.

There has been much mention of vehicles. The vehicles industry is another barometer of change for the better. Since 1980, productivity has risen by 70 per cent. and all the United Kingdom's industries in that sector have been in profit since 1986. The production of cars has been rising strongly in recent years and the performance of the commercial vehicles sector has been particularly encouraging. [Interruption.] I suggest that Opposition Members consider one company that I know well and which featured large in their considerations in years gone by. Leyland is the name of the company, with its headquarters in my constituency. Following the merger between Leyland Trucks and DAF in 1987 the output of trucks has increased from 8,000 in 1986 to 15,500 in 1988—an 83 per cent. increase in productivity. That is another success story that Opposition Members will not accept.

Not all our manufacturing successes have been stories of recovery. The chemical industry has been successful throughout, with an annual trade surplus of over £2 billion since 1985.

In 1979 production in the telecommunications industry was about £800 million, with exports of about £81 million. Last year production was £1.839 billion and exports £266 million—another success story. There is success story after success story, and the Opposition do not like it.

But the proof of the pudding is in inward investment. In 1979, inward investment in the United Kingdom was running at about 183 companies a year. It is now up to 330 companies a year. More than 2,500 companies from abroad have invested in the United Kingdom, and in so doing they have protected or created about 300,000 jobs.

I have recently returned from the United States where I conducted an inward investment tour on behalf of this country. Some of the companies that I saw—[Interruption.] Why is it that when Ministers tell the truth as they see it and give the success stories the Opposition do not want to listen? I would remind the House that this is an Opposition Supply day debate, on which they have a three-line Whip, but they cannot even be bothered to turn up and if they do they do not listen. I am telling the House about inward investment.

The companies that I saw in the United States wanted to provide about 10,000 or more jobs in the course of the year. I heard comments from the chairmen of the Ford Motor Company, Chrysler and General Motors. They told me that attitudes amongst the work force had been transformed in the past 10 years. The hon. Member for Glasgow, Springburn (Mr. Martin) referred to our concerns about industrial relations. In 1979, 29.4 million working days were lost in strikes. In 1988, the figure was only 3.7 million. That demonstrates what Americans think of this country.

The chairmen of those major companies also said that Britain was the best location in Europe for siting manufacturing plants in terms of cost and good labour. Ford has invested £1.1 billion in Bridgend. Nissan, Toyota, Bosch, Fujitsu and Millecom are just a few of the companies which, in recent months, have recognised that Britain is the place to come to because of what the Government have achieved in manufacturing industry over the past 10 years.

There has been a depressing familiarity about the Opposition's contributions to this debate. We might have hoped for some constructive comments about areas in which manufacturing industry still has scope for improvement, as it always must have. Instead, we have been treated to selective statistics and misinformation—[Interruption.] Oh, yes. We have been given misinformation about aspects of manufacturing industry which my hon. Friends have demonstrated to be facile and to have avoided the point.

Opposition Members' comments belittle the achievements of British industry rather than help it. They should recognise that they will not serve their country or industry well by continuing with that approach. My hon. Friends from the north, west, east and south of the country have all spoken with authority about what has been achieved by industry throughout the country.

The Opposition's interventions have spoken volumes about their ignorance of what is happening in manufacturing industry. They have not been prepared to listen to the facts that they know demonstrate all too clearly the sterility of their arguments. When it comes to industry, the Labour party is still living in the late sixties and seventies.

The hon. Member for Dagenham (Mr. Gould) represents a south-east constituency. Those of us who represent the north-west and Lancashire wear the red rose of Lancashire with the pride that it deserves. If the hon. Member for Dagenham and his hon. Friends have anything to say to the electorate, they should open their eyes and realise the transformation in performance and morale that has taken place in manufacturing in recent years and understand the reasons for it. Until they realise what has been achieved, and until they speak with the authority that is needed on the subject, they will not: be taken seriously and will not, in any circumstances—[Interruption.] Opposition Members may intervene, but the fact is that they are ignoring what I have said and ignoring the success stories throughout the country of the past 10 years. The Opposition's motion is such that we can vote against it with every confidence that our story will demonstrate the success achieved by this Government over the past 10 years.

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

The House divided: Ayes 201, Noes 274.

Division No. 202]	[9.59 pm
AYES
Abbott, Ms Diane	Campbell, Ron (Blyth Valley)
Allen, Graham	Campbell-Savours, D. N.
Archer, Rt Hon Peter	Canavan, Dennis
Armstrong, Hilary	Carlile, Alex (Mont'g)
Ashley, Rt Hon Jack	Clark, Dr David (S Shields)
Ashton, Joe	Clarke, Tom (Monklands W)
Barnes, Harry (Derbyshire NE)	Clay, Bob
Barnes, Mrs Rosie (Greenwich)	Clelland, David
Barron, Kevin	Clwyd, Mrs Ann
Battle, John	Cohen, Harry
Beckett, Margaret	Coleman, Donald
Benn, Rt Hon Tony	Cook, Frank (Stockton N)
Bennett, A. F. (D'nt'n & R'dish)	Cook, Robin (Livingston)
Bermingham, Gerald	Corbett, Robin
Bidwell, Sydney	Cousins, Jim
Blair, Tony	Cryer, Bob
Blunkett, David	Cummings, John
Boateng, Paul	Cunliffe, Lawrence
Boyes, Roland	Dalyell, Tam
Bradley, Keith	Davies, Rt Hon Denzil (Llanelli)
Bray, Dr Jeremy	Davies, Ron (Caerphilly)
Brown, Gordon (D'mline E)	Davis, Terry (B'ham Hodge H'I)
Brown, Nicholas (Newcastle E)	Dewar, Donald
Buckley, George J.	Dixon, Don
Caborn, Richard	Dobson, Frank
Callaghan, Jim	Doran, Frank
Campbell, Menzies (Fife NE)	Douglas, Dick

Duffy, A. E. P.q	Marek, Dr John
Dunnachie, Jimmy	Marshall, David (Shettleston)
Dunwoody, Hon Mrs Gwyneth	Marshall, Jim (Leicester S)
Eadie, Alexander	Martin, Michael J. (Springburn)
Eastham, Ken	Maxton, John
Evans, John (St Helens N)	Meacher, Michael
Ewing, Harry (Falkirk E)	Meale, Alan
Ewing, Mrs Margaret (Moray)	Michael, Alun
Fatchett, Derek	Michie, Bill (Sheffield Heeley)
Faulds, Andrew	Mitchell, Austin (G't Grimsby)
Fearn, Ronald	Morgan, Rhodri
Field, Frank (Birkenhead)	Morris, Rt Hon A. (W'shawe)
Fisher, Mark	Mullin, Chris
Flannery, Martin	Murphy, Paul
Flynn, Paul	Oakes, Rt Hon Gordon
Foot, Rt Hon Michael	O'Brien, William
Foster, Derek	O'Neill, Martin
Foulkes, George	Orme, Rt Hon Stanley
Fraser, John	Parry, Robert
Fyfe, Maria	Pendry, Tom
Galbraith, Sam	Pike, Peter L.
Garrett, John (Norwich South)	Powell, Ray (Ogmore)
Garrett, Ted (Wallsend)	Primarolo, Dawn
George, Bruce	Radice, Giles
Golding, Mrs Llin	Randall, Stuart
Gordon, Mildred	Redmond, Martin
Gould, Bryan	Rees, Rt Hon Merlyn
Graham, Thomas	Reid, Dr John
Grant, Bernie (Tottenham)	Richardson, Jo
Grocott, Bruce	Roberts, Allan (Bootle)
Hardy, Peter	Robinson, Geoffrey
Harman, Ms Harriet	Rogers, Allan
Hattersley, Rt Hon Roy	Rooker, Jeff
Healey, Rt Hon Denis	Ross, Ernie (Dundee W)
Hinchliffe, David	Rowlands, Ted
Hogg, N. (C'nauld & Kilsyth)	Ruddock, Joan
Home Robertson, John	Salmond, Alex
Hood, Jimmy	Sedgemore, Brian
Howarth, George (Knowsley N)	Sheerman, Barry
Howell, Rt Hon D. (S'heath)	Sheldon, Rt Hon Robert
Howells, Geraint	Shore, Rt Hon Peter
Howells, Dr. Kim (Pontypridd)	Short, Clare
Hughes, John (Coventry NE)	Skinner, Dennis
Hughes, Robert (Aberdeen N)	Smith, Andrew (Oxford E)
Hughes, Roy (Newport E)	Smith, C. (Isl'ton & F'bury)
Ilisley, Eric	Smith, Rt Hon J. (Monk'ds E)
Ingram, Adam	Smith, J. P. (Vale of Glam)
Janner, Greville	Snape, Peter
Johnston, Sir Russell	Soley, Clive
Jones, Barry (Alyn & Deeside)	Spearing, Nigel
Kaufman, Rt Hon Gerald	Steinberg, Gerry
Kennedy, Charles	Stott, Roger
Kinnock, Rt Hon Neil	Strang, Gavin
Kirkwood, Archy	Straw, Jack
Lamond, James	Taylor, Matthew (Truro)
Leadbitter, Ted	Turner, Dennis
Leighton, Ron	Vaz, Keith
Lestor, Joan (Eccles)	Wall, Pat
Lewis, Terry	Wallace, James
Litherland, Robert	Walley, Joan
Livingstone, Ken	Wardell, Gareth (Gower)
Livsey, Richard	Wareing, Robert N.
Lloyd, Tony (Stretford)	Welsh, Andrew (Angus E)
Lofthouse, Geoffrey	Welsh, Michael (Doncaster N)
Loyden, Eddie	Wigley, Dafydd
McAllion, John	Williams, Rt Hon Alan
McAvoy, Thomas	Williams, Alan W. (Carm'then)
McCartney, Ian	Wilson, Brian
McFall, John	Wise, Mrs Audrey
McKay, Allen (Barnsley West)	Worthington, Tony
McKelvey, William	Wray, Jimmy
McLeish, Henry
McNamara, Kevin	Tellers for the Ayes:
McWilliam, John	Mr. Frank Haynes and
Madden, Max	Mr. Allen Adams.
Mahon, Mrs Alice
NOES
Aitken, Jonathan	Amery, Rt Hon Julian
Allason, Rupert	Arbuthnot, James

Arnold, Tom (Hazel Grove)	Gorman, Mrs Teresa
Atkins, Robert	Gow, Ian
Baker, Nicholas (Dorset N)	Greenway, Harry (Ealing N)
Baldry, Tony	Greenway, John (Ryedale)
Beaumont-Dark, Anthony	Gregory, Conal
Bennett, Nicholas (Pembroke)	Griffiths, Peter (Portsmouth N)
Blaker, Rt Hon Sir Peter	Grist, Ian
Body, Sir Richard	Gummer, Rt Hon John Selwyn
Bottomley, Mrs Virginia	Hague, William
Bowden, Gerald (Dulwich)	Hamilton, Hon Archie (Epsom)
Bowis, John	Hamilton, Neil (Tatton)
Braine, Rt Hon Sir Bernard	Hanley, Jeremy
Brandon-Bravo, Martin	Hargreaves, A. (B'ham H'll Gr')
Brazier, Julian	Hargreaves, Ken (Hyndburn)
Brooke, Rt Hon Peter	Harris, David
Brown, Michael (Brigg & Cl't's)	Haselhurst, Alan
Bruce, Ian (Dorset South)	Hawkins, Christopher
Buchanan-Smith, Rt Hon Alick	Hayes, Jerry
Buck, Sir Antony	Heathcoat-Amory, David
Budgen, Nicholas	Heddle, John
Burns, Simon	Heseltine, Rt Hon Michael
Burt, Alistair	Hicks, Mrs Maureen (Wolv' NE)
Butcher, John	Hicks, Robert (Cornwall SE)
Butler, Chris	Higgins, Rt Hon Terence L.
Butterfill, John	Hill, James
Carlisle, John, (Luton N)	Hind, Kenneth
Carlisle, Kenneth (Lincoln)	Hogg, Hon Douglas (Gr'th'm)
Carrington, Matthew	Holt, Richard
Carttiss, Michael	Hordern, Sir Peter
Cash, William	Howard, Michael
Channon, Rt Hon Paul	Howarth, Alan (Strat'd-on-A)
Chapman, Sydney	Howarth, G. (Cannock & B'wd)
Chope, Christopher	Howell, Rt Hon David (G'dford)
Churchill, Mr	Hughes, Robert G. (Harrow W)
Clark, Hon Alan (Plym'th S'n)	Hunt, David (Wirral W)
Clark, Sir W. (Croydon S)	Hunt, John (Ravensbourne)
Colvin, Michael	Hunter, Andrew
Conway, Derek	Irvine, Michael
Coombs, Anthony (Wyre F'rest)	Irving, Charles
Coombs, Simon (Swindon)	Jack, Michael
Cope, Rt Hon John	Jackson, Robert
Cormack, Patrick	Janman, Tim
Couchman, James	Jessel, Toby
Cran, James	Johnson Smith, Sir Geoffrey
Currie, Mrs Edwina	Jones, Gwilym (Cardiff N)
Curry, David	Jones, Robert B (Herts W)
Davies, Q. (Stamf'd & Spald'g)	Jopling, Rt Hon Michael
Davis, David (Boothferry)	Kellett-Bowman, Dame Elaine
Day, Stephen	Key, Robert
Devlin, Tim	King, Roger (B'ham N'thfield)
Dorrell, Stephen	Kirkhope, Timothy
Douglas-Hamilton, Lord James	Knight, Greg (Derby North)
Dover, Den	Knight, Dame Jill (Edgbaston)
Dunn, Bob	Knowles, Michael
Durant, Tony	Knox, David
Eggar, Tim	Lamont, Rt Hon Norman
Emery, Sir Peter	Latham, Michael
Evans, David (Welwyn Hatf'd)	Lawson, Rt Hon Nigel
Evennett, David	Leigh, Edward (Gainsbor'gh)
Fairbairn, Sir Nicholas	Lennox-Boyd, Hon Mark
Fallon, Michael	Lester, Jim (Broxtowe)
Favell, Tony	Lilley, Peter
Fenner, Dame Peggy	Lloyd, Sir Ian (Havant)
Field, Barry (Isle of Wight)	Lloyd, Peter (Fareham)
Finsberg, Sir Geoffrey	Lord, Michael
Fishburn, John Dudley	Luce, Rt Hon Richard
Fookes, Dame Janet	McCrindle, Robert
Forman, Nigel	Macfarlane, Sir Neil
Forsyth, Michael (Stirling)	MacKay, Andrew (E Berkshire)
Forth, Eric	McLoughlin, Patrick
Franks, Cecil	McNair-Wilson, Sir Michael
Freeman, Roger	McNair-Wilson, P. (New Forest)
Gale, Roger	Madel, David
Gardiner, George	Major, Rt Hon John
Garel-Jones, Tristan	Malins, Humfrey
Gill, Christopher	Mans, Keith
Glyn, Dr Alan	Maples, John
Goodhart, Sir Philip	Marlow, Tony
Goodlad, Alastair	Marshall, John (Hendon S)
Goodson-Wickes, Dr Charles	Marshall, Michael (Arundel)

Martin, David (Portsmouth S)	Raison, Rt Hon Timothy
Mates, Michael	Rathbone, Tim
Maude, Hon Francis	Redwood, John
Mawhinney, Dr Brian	Rhodes James, Robert
Meyer, Sir Anthony	Riddick, Graham
Miller, Sir Hal	Ridley, Rt Hon Nicholas
Mills, Iain	Ridsdale, Sir Julian
Miscampbell, Norman	Rifkind, Rt Hon Malcolm
Mitchell, Andrew (Gedling)	Roberts, Wyn (Conwy)
Mitchell, Sir David	Roe, Mrs Marion
Moate, Roger	Rossi, Sir Hugh
Monro, Sir Hector	Rost, Peter
Moore, Rt Hon John	Sackville, Hon Tom
Morrison, Sir Charles	Sainsbury, Hon Tim
Morrison, Rt Hon P (Chester)	Sayeed, Jonathan
Moynihan, Hon Colin	Scott, Nicholas
Mudd, David	Shaw, David (Dover)
Neale, Gerrard	Shaw, Sir Giles (Pudsey)
Nelson, Anthony	Shaw, Sir Michael (Scarb')
Newton, Rt Hon Tony	Shelton, Sir William
Nicholls, Patrick	Shephard, Mrs G. (Norfolk SW)
Nicholson, David (Taunton)	Shepherd, Colin (Hereford)
Nicholson, Emma (Devon West)	Sims, Roger
Norris, Steve	Skeet, Sir Trevor
Onslow, Rt Hon Cranley	Smith, Tim (Beaconsfield)
Oppenheim, Phillip	Speller, Tony
Page, Richard	Spicer, Michael (S Worcs)
Paice, James	Squire, Robin
Parkinson, Rt Hon Cecil	Stanbrook, Ivor
Patnick, Irvine	Stanley, Rt Hon Sir John
Patten, John (Oxford W)	Steen, Anthony
Pawsey, James	Stern, Michael
Peacock, Mrs Elizabeth	Stevens, Lewis
Porter, David (Waveney)	Stewart, Allan (Eastwood)
Powell, William (Corby)	Stewart, Andy (Sherwood)
Price, Sir David	Stewart, Rt Hon Ian (Herts N)
Raffan, Keith	Stradling Thomas, Sir John

Sumberg, David	Walden, George
Summerson, Hugo	Walker, Bill (T'side North)
Taylor, Ian (Esher)	Waller, Gary
Taylor, John M (Solihull)	Ward, John
Taylor, Teddy (S'end E)	Wardle, Charles (Bexhill)
Temple-Morris, Peter	Watts, John
Thatcher, Rt Hon Margaret	Wheeler, John
Thompson, D. (Calder Valley)	Whitney, Ray
Thompson, Patrick (Norwich N)	Widdecombe, Ann
Thorne, Neil	Winterton, Nicholas
Thornton, Malcolm	Wolfson, Mark
Thurnham, Peter	Wood, Timothy
Townsend, Cyril D. (B'heath)	Woodcock, Dr. Mike
Tracey, Richard	Yeo, Tim
Tredinnick, David	Young, Sir George (Acton)
Trippier, David	Younger, Rt Hon George
Trotter, Neville
Twinn, Dr Ian	Tellers for the Noes:
Vaughan, Sir Gerard	Mr. David Lightbown, and
Waddington, Rt Hon David	Mr. David Maclean.

Question accordingly negatived.

Question, That the proposed words be there added. put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

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

Resolved, That this House welcomes the renewed strength of manufacturing industry, reflected in major increases in productivity, record levels of output, increased exports, greatly improved profitability and a sustained high level of investment; and notes that the flow of inward investment testifies to the substantial improvement which the policies of Her Majesty's Government have brought about in the climate for doing business in the United Kingdom.