§ Mr. Speaker
I must announce to the House that I have selected the amendment in the name of the Prime Minister.
§ Mr. Gordon Brown (Dunfermline, East)
I beg to move,That this House is concerned about the deepening recession which is bringing rising bankruptcies and closures, falling output and investment and fast rising unemployment hitting all regions and all industries; notes that Britain has the biggest trade gap, the highest interest rates and worst inflation of its major European competitors; condemns the Government for the economic mismanagement that has created a recession that is happening nowhere else in Western Europe; and calls for an immediate reduction in interest rates, a Budget for investment in industry, and a modern industrial policy to improve Britain's training and technological capabilities and to promote regional economic development.The motion states that urgent measures are needed to tackle the recession, British industry needs a long-term policy, as an immediate measure interest rates should be cut, we need the Chancellor to plan a Budget giving investment incentives for the future, and the new industry policy for the 1990s—similar to that practised by our successful competitors overseas—must ensure a proper commitment to training, technology and regional economic development.
The motion is urgent because, as right hon. and hon. Members in all parts of the House know, 100 companies throughout Britain will go bankrupt today alone. This week, at least 5,000 men and women will lose their jobs in manufacturing industry alone. Yesterday's Confederation of British Industry survey reported that only 4 per cent. of British firms are in any way optimistic about the future. No other western European country is losing so many jobs, and so many companies, at such a fast rate as the United Kingdom. The tragedy is that that is occurring in every area, region, occupation and profession. It is also tragic that the Government's response to our motion does not make one mention of their concern about the loss of businesses, closures and bankruptcies, and the rising unemployment that confronts all parts of the country.
Eleven and a half years ago, the Government set out to eliminate assistance to industry. They not only eliminated assistance but much of industry as well. First, we were told by Ministers that there was to be no recession. As the Prime Minister said to us on 6 December 1989 in his previous office as Chancellor of the Exchequer:I do not think that a recession is either likely or necessary.He remarked that those who predicted recession were "professional pessimists".
Next, we were told that there would be no recession, but that there would be a pause—a turn of phrase which is in the style of the earlier prediction about an inflationary blip. As recently as 30 October 1990, we were told that if there were to be a recession, it would be short; then that it would be small; then that it would be shallow; then that it would be modest. When it was proved that the recession would not be short, small, shallow or modest, the present 947 Chancellor agreed in a radio interview on 1 January that there was a recession, but that there would be a prize at the end of it.
The Secretary of State for Trade and Industry, not to be outdone in that battle of euphemisms, made one visit to a House of Lords Select Committee just before Christmas, and told it:When I go north to Scotland, if you mention the word recession, then they think you are referring to some dim and distant time in 1981, and you have to explain that you are referring to the south-east of England.Note that the Secretary of State responsible for managing this country's industrial policy thinks that recession is taking place only in the south-east. He told the Committee also that that meant there was "some silver lining".
Are the closure of Howdens, the rundown of Andersons, the rundown of Plessey, the rundown of Clydesdale, and the rundown of Cummins in Scotland—all those firms have announced redundancies within the past few days with a total loss in one day yesterday of 1,000 jobs—all part of the same "silver lining"?
Will the Minister stand outside the jobcentre today in my constituency or those of my hon. Friends—indeed, those in many Conservative Members' constituencies—and tell hundreds of workers who are having to sign on for the first time that there is no recession in Scotland and the north-east?
Will the Secretary of State come to my constituency or to others to say that our recessionary problems refer tosome dim and distant time in 1981"?Is he really saying that people are being made redundant throughout the country—in the north, north-west, Yorkshire, Wales and Scotland—because we are still enjoying that economic miracle?
Ministers told us that there was an economic miracle when there was not. Now they insist on telling us that there is no recession in much of the country, when we know there is. How can we trust them with the future, when they deny the problems of the present and of the past?
I thought that the Secretary of State for Trade and Industry had no policies for the recession because he was ideologically inclined against any Government action at all. Now I know that he has no such policies because he does not believe that in much of the country there is a recession. The last Trade and Industry Secretary but one was praised because it was said that he did not bring problems, but solutions. This Trade and Industry Secretary cannot bring solutions, because he cannot even admit that there are problems.
§ Mr. Peter Thurnham (Bolton, North-East)
The hon. Gentleman is talking about denying the policies of the past, but why is it that, in the past, when the Labour party was in power, this country's share of world trade went down year after year, whereas now, with the present Government in power, we have maintained our share of world trade?
§ Mr. Brown
I think that the hon. Gentleman must have the wrong briefing note from Conservative central office. Whatever the hon. Gentleman says, the fact of the matter is that, under Labour, our share of manufacturing in world trade went up and under this Conservative Government that share has gone down substantially. If the Secretary of State or any other Conservative Member wants to correct me, I shall be happy to give way at this point.
§ Mr. Keith Mans (Wyre)
If the hon. Gentleman is saying that that is the case, will he quote the figures to the House?
§ Mr. Brown
In 1979, our share of manufacturing world trade was roughly 10 per cent., and now it is about 8 per cent. I shall give the hon. Gentleman the figures during the debate if he asks me again.
Let me tell the Secretary of State about the severity of the recession that he has for so long attempted to deny. When factories up and down the country are already producing less than in 1979—5 per cent. less in chemical engineering, 9 per cent. less in metal products, 26 per cent. less in textiles, 33 per cent. less in man-made fibres; when manufacturing investment has barely increased overall since 1979; when we have lost 2 million jobs in manufacturing, and manufacturing employment is set to fall below 5 million for the first time this century; when, for thousands of factories and companies this is not a downturn on the road to an upturn but a downturn on the road to closure for ever; and when the interest rate bill, as Conservative Members know from their own constituents, was £6 billion in 1979 and is now an astonishing £30 billion for small and large industry throughout the country, this is not, as the Confederation of British Industry confirmed yesterday, merely a recession which is deepening faster than ever, but a recession which is unique to Britain and is happening nowhere else in western Europe.
§ Sir William Clark (Croydon, South)
Does the hon. Gentleman agree that manufacturing output since 1979 is about 12 per cent. higher than it was, whereas under the previous Labour Government manufacturing output fell by 2.5 per cent?
§ Mr. Brown
I shall tell the right hon. Gentleman the correct figure. Manufacturing output, according to the latest account, is up by only 7 per cent. since 1979. In that time it has risen by 18 per cent. in Germany and by nearly 50 per cent. in Japan. That is the real position—we have had the slowest rise in manufacturing output of almost all our major competitors.
This is not a recession for which world conditions, OPEC, the Gulf crisis or the European Community can be blamed. This recession has been designed, fashioned and made in Downing street. We are not in the sixth month of a Europewide recession. Investment is not falling in the European Community; output has not slumped by £5 billion in six months in any other major European country. No other country in western Europe has experienced the same combination of falling orders, falling employment, falling investment and now falling exports.
§ Mr. Nicholas Budgen (Wolverhampton, South-West)
Does the hon. Gentleman now regret his commitment to the pound's entry into the exchange rate mechanism, which has resulted in interest rates remaining high?
§ Mr. Brown
Not at all. I think that many Conservative Members were unhappy about the party-political advantage that the Chancellor tried to extract from entry at the time; but what Labour said before, during and after the event was that ERM entry must be accompanied by a proper policy for industry, so that we can make the commitment to training, technology and regional economic development that has been made by all our competitors that are also in the ERM.
§ Mr. James Paice (Cambridgeshire, South-East)
May I remind the hon. Gentleman of what my hon. Friend said? The Opposition motion refers to the need for animmediate reduction in interest rates".I assume that the hon. Gentleman believes in that; but, given his and my support for the exchange rate mechanism, how will that be possible unless—as the right hon. and learned Member for Monklands, East (Mr. Smith) pointed out—the pound is allowed to fall outside the ERM brackets?
§ Mr. Brown
I do not know whether the hon. Gentleman is advancing the proposition that interest rates can never be reduced within the exchange rate mechanism, but let me tell him that the question whether they should fall now is a matter of judgment; and I prefer the judgment of my right hon. and learned Friend the shadow Chancellor and my right hon. Friend the Leader of the Opposition to that of the Conservative Ministers who have failed the country over the past few years.
§ The Secretary of State for Trade and Industry (Mr. Peter Lilley)
The hon. Gentleman said that he preferred the judgment of his right hon. and learned Friend the Member for Monklands, East (Mr. Smith). Can he name any occasion on which his right hon. and learned Friend has not believed that interest rates should be cut?
§ Mr. Brown
I will tell the right hon. Gentleman what happened in 1988, if that is what he is referring to. In 1988, we advocated a cut in interest rates, but what we did not advocate was a Budget that put money into the economy in a way that was geared disproportionately towards the higher income earners.
§ Mr. Brown
I must make some progress. I shall give way to the right hon. Gentleman later.
All over Europe, employment in the manufacturing industries is rising. It is rising by nearly 1 per cent. in France, and by 3.5 per cent. in Germany; it is falling, uniquely, in Britain by 1.4 per cent. This from the party that told us that it had brought an employment miracle. Unemployment is now rising faster here than in any of our major European competitors.
In western Europe, manufacturing output is moving ahead. It is moving ahead by 4 per cent. in Germany, by 3 per cent. in France and by 3 per cent. in Europe as a whole; but it is falling, uniquely, in Britain. It is rising in almost every country except Conservative Britain. This from the party that promised not an economic recession, but an economic miracle.
Let us look at investment for the future. In Europe, business investment is rising by 4.9 per cent. in both Germany and France, by 4 per cent. in Italy and by 3 per cent. in Europe as a whole, and by 6 per cent. in Japan. It 950 is falling, uniquely, in Britain—by 3 per cent. according to the latest OECD estimate. This from the party that said that it was presiding over an investment miracle, rather than the investment collapse that we are now experiencing.
We are the only European country where investment is falling in the run-up to 1992—the only country which faces the harsher conditions of the single European market with less investment this year than last, and less investment last year than the year before. This is not a Europewide recession but a British recession, made in Britain by the mistakes of Conservative Ministers.
§ Mrs. Maureen Hicks (Wolverhampton, North-East)
The hon. Gentleman seems to take great delight from talking down this country. If our record is so disastrous, as he likes to suggest, why have 700 foreign companies decided to invest in the west midlands, the heart of the United Kingdom? Why did not they go elsewhere?
§ Mr. Brown
Of course we welcome foreign investment in Britain. It is unfortunate that the Department of Trade and Industry is selling Britain abroad as a low-wage country. We welcome foreign investment in Britain, but what worries me is that jobs are being lost not only in foreign companies but in domestic companies right, left and centre up and down the country. If we are to keep jobs in foreign and domestic firms, we shall have to tackle the problems that they face. That is precisely what we propose to do.
§ Mr. Brown
I have given way many times.
What do the Government propose to do? When the Prime Minister was Chancellor of the Exchequer, he gave an interview to the Financial Times on how the problem could be solved, what way out he saw and how difficult it would be to change things. His perhaps inadvertent use of a marine metaphor was revealing. He said that sorting out the problem waslike turning the Titanic round, as you know.He will agree that the choice of the Titanic was an unfortunate simile in more ways than one. As every schoolboy knows, the Titanic was not for turning. It hit an iceberg at 20 knots and sank. By the time they tried to turn it, it was too late.
This recession, as the Prime Minister surely knows, did not happen by accident. Its origins are neither remote nor mysterious. To understand it and how it began, we must ask who were the most influential economic Ministers when, in 1987 and 1988, the policies about which we warned were being developed and implemented. There is much talk of the part played by the right hon. Member for Blaby (Mr. Lawson), who is now the scapegoat in the wilderness and is punished for his sins with his three directorships, one non-executive chairmanship and a reputed income of £5,000 a day from his part-time employment.
Are we seriously being asked to believe that even he could undermine a whole economy single handed? Even the most cursory investigation of the events leading up to the remarkable Budget of 1988, the consequences of which still haunt us, reveal the identity of the principal collaborators. Where were the Chancellor of the Exchequer, the Prime Minister and the Secretary of State for Trade and Industry at the time of the events that led up to the recession? Can they account for their movements in the second week of January 1988? Were not they at that 951 great Budget weekend when the 1988 Budget was being planned? Did not they support the then Chancellor, who is now the scapegoat? Were not they persuaded at the time? Did not they enthusiastically defend that Budget?
Who was Economic Secretary to the Treasury in the early spring of 1988? None other than the Secretary of State for Trade and Industry. Who was Financial Secretary to the Treasury? None other than the Chancellor of the Exchequer, who is now at No. 11 Downing street. Who was the Chief Secretary to the Treasury? None other than the Prime Minister, who is now at No. 10.
Did that gang of three have no influence? Are they entirely blameless for what went wrong? Did not they bask in the brief glory of that giddy post-Budget spring, telling us that they had created an economic miracle? Do they seriously ask us to believe that the departure of the right hon. Member for Blaby somehow exonerates them from responsibility? Let there be no doubt about it: they are, as the poll tax legislation puts it, "jointly and severally responsible" before, during and after the fact.
§ Mr. Brown
I have given way to the hon. Member for Amber Valley (Mr. Oppenheim) in every debate in which we have discussed this matter and I have tried to remind him of the Conservative party manifesto commitment that inflation would be reduced substantially under a Conservative Government.
The great tragedy for Britain is that the Treasury Ministers who failed in the past now comprise the Prime Minister's economic team which is supposed to lead us into the future. Those people told us that they had created an economic miracle, that Britain had achieved a dramatic economic transformation and that manufacturing industry was a Labour obsession. They told us that an industry policy was not necessary and that the trade deficit was of no consequence and had nothing to do with competitiveness.
Those were the people who, with the Prime Minister, told us that, while Britain had envied Germany during the 1960s and 1970s, the position was now entirely reversed. Do those people have any credibility now when they come to us and say that they have solutions to the problems that they have caused? They denied that there was a recession, but there is one; they said that it was not severe, but it is; and they claimed that it was happening elsewhere, but it is not. Try as they might to blame external events and to find scapegoats, they cannot blame anyone but themselves.
The failures are not just failures of economic mismanagement over the past three years. There has been a complete failure of industry policy over the past eleven and a half years. The problem is one not just of the mismanagement of demand in the short term, but of the failure to bring adequate industrial capacity over the long term.
Our complaint is that a short-term consumer boom was bound to be unsustainable and lead to higher imports, 952 higher interest rates and pressures on inflation simply because that consumer boom was not underpinned by long-term adequate investment.
The real problem is not just that demand grew too fast because of the sins of commission such as the 1988 Budget, but that our capacity has grown too slowly because of the sins of omission—the absence of a policy for industry. How else do we explain the fact that, in Britain, industrial production has increased by only 12 per cent. and manufacturing output by only 7 per cent.? However, with demand increasing by 40 per cent. over the past eleven and a half years, imports have increased by 65 per cent. and manufacturing imports by 236 per cent.
No wonder Britain now has a manufacturing economy that has fallen behind France and Italy and is falling to the size of Brazil. No wonder Germany now exports three times as many manufactured goods as Britain. No wonder the production of electric motors, transformers, tractors, ships and lorries has halved over the past 10 years. No wonder Britain now imports 3 million computers a year and 2 billion microchips.
§ Mr. Alan Williams (Swansea, West)
On a point of order, Mr. Speaker. Is it in order for officials to be briefing a Conservative Back Bencher?
§ Mr. Speaker
I do not know whether the hon. Gentleman is being briefed, but he is not on my list to be called.
§ Mr. Brown
I do not know how many Parliamentary Private Secretaries the Secretary of State for Trade and Industry possesses.
No wonder we face this position after 11 years. I was asked earlier about our share of world trade. In 1974, our share of world trade was 8.5 per cent. By 1979, our manufacturing share had risen to 9.1 per cent. and the latest figure available shows that it is back to 8.2 per cent. That is an appalling record of performance in world trade. No wonder we have a massive manufacturing deficit.
The tragedy is that, without a policy for industry, this recession, which has been caused by Ministers, is merely the interval between making mistakes in one short-terns consumer boom and repeating them in another.
It is Labour's case—a case which the Government resist —that we cannot solve industry's deep-seated problems unless we have an industry policy with the Government and industry working in partnership to secure specific objectives in training, in technology and in securing balanced economic development.
The key feature of Government policy is that, even as the gap with our competitors widens, they ignore the problem, do very little, and almost always too late. In every case, the barrier to their acting is their crude free market ideology. Let use consider what needs to be done.
§ Mr. Brown
I have given way on numerous occasions. We must make some progress. The right hon. Gentleman will have plenty of time to make his contribution later.
Let us consider what needs to be done when more young people leave school early; when more young people are without qualifications, when there are fewer people in the workplace with qualifications; when we have fewer college and university students than Korea and the number is falling to the level of Taiwan; when the Government's own head of training admitted that, at every 953 level, we are towards the bottom of the training league table, whether in education, youth training, higher level skills training or management training; when Lord Tombs, who advises the Prime Minister on economic matters, said that normal market forces cannot solve the problem; and when we are in the unique situation of having the fastest rising unemployment of our major competitors and yet skill shortages in our labour force, underpinned by cuts in the training budget over the next three years—
§ Mr. Brown
I am not giving way. I have made that absolutely clear. I want to make some progress. I have given way on many occasions.
We need to implement Labour's policy—a national training strategy, clear targets set by industry working with Government and locally delivered, a guarantee of high-quality training for every young person and a working environment in which all employers are obliged to train so that the good firms are not undercut by the bad firms and the firms that train do not lose out to those who poach. What do the Government do? They insist on continuing the crude free market approach that has clearly failed, instead of pursuing the successful policy for change that exists elsewhere in our competitor countries.
It makes absolutely no sense to have a situation in our national economy in which some regions are growing at half the rate of others. It makes no sense to have congestion, pollution and pressure on the green belt in one part of the country and forced emigration from the other. Germany and Italy recognise that they need to spend more on regional policy and that the task is to modernise it, not to abandon it. It is absolutely clear that Labour's policy—the creation of regional development agencies, the targeting of regional investment incentives on training and technology, the encouragement to banks and venture capital funds to work in the regions with those development agencies to build and strengthen them—is not only successfully pursued elsewhere but is right for Britain.
When that is the case, what does the Department of Trade and Industry, which is charged with responsibility for regional policy, actually do? The Secretary of State went along to the famous House of Lords Select Committee. When he was asked whether he was doing all that he practically could in regional policy, was his answer that more resources might be provided if the cash was available and that, if the problem was greater, he would provide more? Would more resources be available if the need could be proven? No. He said that the Government were doing everything that they could—no turning back from the regional aid cuts that have characterised the Government. He will do absolutely nothing.
It is worse than that. When we had the 1988 regional review, we were promised that DTI spending on the regions would increase and that the replacement for regional development grants and regional enterprise grants would lead to the expenditure of considerable sums of money. Of the £42 million that was budgeted for the 954 new grants, only £9 million has actually been spent after two years. That is less than £1 in every £4 promised. Yet the Secretary of State says that he is doing all that he can.
Is it not the case that the Department of Trade and Industry is now dominated by three Ministers who are all members of the No Turning Back group? I refer to the Secretary of State, the Minister of State and the Minister with responsibility for regional policy. Not for them that the Government should do what they can as a matter of practical help; for them, the Government should do as little as possible as a matter of dogma. Is it not the case that, at every point at which the Government should be enabling industry to succeed, the Department of Trade and Industry is doing absolutely nothing? We should consider the programmes.
§ Mr. Brown
I am not giving way.
When we need incentives to invest in civil research, when we need technology transfer within our regions, when we need more small firms to be encouraged to undertake research and development, and when we need the market research schemes that the Government abandoned, what do the Government do? Over the past four years, they have abandoned almost every successful initiative, not because they have failed but because it is not in the Government's interests to prove that schemes that can help industry should work.
When we now have the recommendations from the CBI for a technology policy to help small firms; when we have the recommendation of the Advisory Committee on Science and Technology—the scientific advisers to the Government—that biotechnology and opto-electronics need Government support; when we have the view of the Trade and Industry Select Committee that information technology should be accorded some priority; and when the DTI's own innovation advisory board advises the Minister about the chronic short-termism of the City, is it not the case that, even during a recession, even as we face the challenges of 1992, the Secretary of State is presiding over some of the severest cuts in the industry budget to have taken place for a decade? We have had an 18 per cent. cut this year—27 per cent. cumulatively over two years, 36 per cent. over the three-year planning period.
The Government are not cutting administrative fat; indeed, they are spending millions moving into some of the most expensive office space in London. They are not cutting bureaucracy; even as responsibilities are abandoned, the amount spent on administration has risen to 23 per cent. of the budget. Given that the Secretary of State's right hon. Friend the Secretary of State for Health wants to intervene against the health service, whose administrative costs are 5 per cent., what does he say now that the budget costs for administration have been allowed to rise to 23 per cent?
What the Government are actually cutting is technology transfer—by 22 per cent.—expenditure on research and development and support for innovation. All these things have been considered by all-party Committees, and, in my view, the House of Lords Select Committee, with the evidence that it now has, will make certain recommendations. These cuts are being made not 955 because industry does not need help during a recession —it does—but because, as a matter of dogma, the Government have decided that nothing should be done.
Apparently the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley), when he went through the doors of the DTI, asked what the place was for. The right hon. Member for Southend West, (Mr. Channon), one of his predecessors, said that he did not know what an industry policy was. Of course, Lord Young put his view on record as he departed. In 1988 he said that in the DTI the drive to improve industrial enterprise was over. The DTI, Lord Young said, had become a bore; there was nothing left to be done—a "do nothing" Department, as defined by Lord Young. Yet, even as we approach 1992, what we are seeing under the new Secretary of State is not a modification of the reductions in support but an intensification of them. I can think of no other country in Europe where the budgets for training and for industry are being simultaneously cut, yet it is Britain where industry, because of the recession, is doing worst of all.
What is the reality? Ministers have responsibility for the regions, but they are cutting the budgets for the regions; Ministers in the Department of Employment have responsibility for training, but they are able to cut back on support for training; Ministers have responsibility for technology, but their policy is to cut back on support for technology; Ministers accept the responsibility for industrial research and development, but their policy is to run down support for such research and development. Whereas, in other countries, industrial policy is about Governments working in partnership with industry—taking practical measures to build industrial performance —in this country industrial policy is about the Government withdrawing support for industry as a matter for ideology, no matter what the consequences for businesses up and down the country.
In eleven and a half years the Department of Industry has had nine leaders, but no leadership at all. Does anybody believe that, if the Department of Industry had not existed, the present Government would have created it? The message of the last few weeks—since the change of Prime Minister—is that one can change the leadership at the top, and one can change even the style and the rhetoric, but one cannot persuade people that one has changed unless one changes policy. Doing nothing, even with a new face at the top of the DTI, is still doing nothing; inactivity, even with expensive public relations, is still inactivity; dogma, even under new management, is still dogma.
We have had eleven and a half years, at the end of which inflation is more than 9 per cent., whereas the Government promised that it would be zero; eleven and a half years, at the end of which it seems a matter for self-congratulation to Ministers that the trade deficit is £16 billion, a figure unparalleled before the present Government came to power; eleven and a half years, at the end of which the Government have consistently failed to address the long-term problems that they claim to have solved in their first few years; eleven and a half years of squandering £100 billion of North Sea oil revenues, with no thought of tomorrow; eleven and a half years in which they have systematically denied industry the support and co-operation that our competitors give their industry. We have ended up with the worst interest rates, the highest inflation, the biggest trade gap, the slowest growth, the lowest investment and the fastest rising unemployment of our major European competitors.
956 The recession is the fault of the Government. The recession is unique to Britain in western Europe. It is the direct responsibility of Ministers. That is an unanswerable case. It is also an unanswerable case that Britain needs a long-term policy for industry which backs our people, our skills and our inventiveness and does so in every part of the country. That is the industry policy which the Conservative party cannot support because of dogma and therefore they will lose the election. It is the policy which Labour demands for Britain, and that is why we shall win.
§ The Secretary of State for Trade and Industry (Mr. Peter Lilley)
I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:'congratulates Her Majesty's Government on policies which have transformed economic performance and, over the last decade, achieved a faster rate of output and investment growth than in Germany, France and Italy, the largest increase in manufacturing productivity of any major industrial country, record levels of exports, a record number of businesses, the highest ever number of people in work and an unemployment rate below the average of the European Community; welcomes the threefold increase in shareholders since 1979; and commends the resolve of Her Majesty's Government to bear down on inflation and to continue with the supply side policies which have contributed to these achievements.'.As I have listened to the hon. Member for Dunfermline, East (Mr. Brown) at the Dispatch Box over the years, I have learnt respect for his considerable talents. Above all, I have recognised that his principal skill, which he deployed with effect today, is to depict gloom and predict doom. Unfortunately, for the bulk of the period during which he has been in Parliament, the British economy has outstripped even our strongest competitors in Europe and his skills have failed to carry conviction when he has attempted to paint a picture of gloom. Now that industry faces a severe slowdown in demand—I recognise that it does—the hon. Gentleman is in his element.
However, I do not propose to dispute in detail the picture that the hon. Gentleman painted of the current position. I want to concentrate on his attempt at a diagnosis, his attempt at a prognosis and his attempt at a prescription to cure the illness of which he complains. The hon. Gentleman scarcely spelled out a proper diagnosis of what is wrong with the British economy.
The real disease from which we suffer is inflation. Inflation is an evil not only in itself, because it penalises the weakest and poorest sections of society—the old, the sick and those on fixed incomes—but because it creates further evils by eroding competitiveness and destroying jobs, savings and the incentive to invest. In turn, inflation is the consequence of excessive demand—demand which grows faster than output. Its cure must inevitably involve a period of slower growth of demand. When monetary demand outstrips output, prices are bid up and costs are allowed to increase. When monetary demand is slowed down, prices and costs are put under intense pressure. That process is painful but essential, and it is what is happening at present.
On a previous occasion, I challenged the hon. Gentleman to say whether he believed that inflation could be curbed without a slowdown in demand. Has he yet found an answer to that question? Does Labour have a painless solution to the problem of inflation? 1 take it from his silence that it does not.
957 Although the hon. Gentleman's diagnosis was pretty hazy, not to say non-existent, his prediction of what would happen from now on was clear, but wrong. He believes that the economy is set to spiral downwards into a prolonged slump. But we should discount his predictions, for three reasons. First, he does not realise that the very severity of the slowdown in demand means that price inflation will be curbed more sharply than would otherwise be the case.
One inflation has slowed down, the Chancellor will be able to reduce interest rates, and non-inflationary growth will resume. Indeed, the reduction of inflation itself will provide the economy with a stimulus. What is more, the reforms that we have introduced to the labour market over the years, coupled with a pegged exchange rate, will result in a more rapid response of pay costs to this slowdown than we have seen in previous cycles.
The second reason why I found the hon. Gentleman's gloomy outlook and forecast unacceptable is that his forecasts have invariably proved wrong in the past.
§ Mr. Lilley
He is happy to quote other peoples' forecasts, but he is a little disturbed when people quote his forecasts back to him. In 1986, he wrote in The Guardian:In 1990 around 3.12 million of us will still be unemployed … The Government simply cannot reduce unemployment by present economic policies.The fact is that unemployment in this country is substantially lower than the average of our European partners; under the Labour Government, it was higher than the average of the European Community.
Earlier, in February 1974, the hon. Gentleman told the House:there is no evidence that economic recovery is in sight."—[Official Report, 15 February 1984, Vol. 54, c. 316.]We know that that was three years into the recovery from that recession.
§ Mr. Lilley
It was in 1984; I am so sorry.
Thirdly, the hon. Member for Dunfermline, East does not seem to recognise that although inflation is a nasty disease, the British economy is fundamentally much healthier than when it faced recessions in the early 1970s and early 1980s. It will continue to thrive once inflation has been curbed. Let me give the House a few indicators of how dramatically the economy has improved in strength and vigour over the last decade.
The hon. Gentleman always focuses on manufacturing. Manufacturing output fell under the Labour Government; it has risen substantially under this Government. Indeed, in the 1980s as a whole, it rose by about a quarter, which was faster than the rise in Germany, France and Italy.
§ Mr. Lilley
If the hon. Gentleman wants to know, previous economic slowdowns have always been led by manufacturing, and manufacturing has suffered the greatest fall in output. They have also been led by the regions and by Scotland. The difference between this slowdown and its predecessors is that manufacturing has 958 suffered less, the regions and Scotland have suffered less, and the concentration has been on areas of the economy which are most heavily borrowed—the housing market, the south-east and, compared with other slowdowns, the service industries.
§ Mr. Grocott
Can the Secretary of State tell us what the level of manufacturing output will be in six months' time, on present estimates, in comparison with what it was in 1979?
§ Mr. Lilley
As I have acknowledged, we are going through a severe slowdown in demand. However, the hon. Member is typical of his party in taking a short-term view. I am dealing with the performance of the economy and the improvement in its health over a decade.
§ Mr. Alex Salmond (Banff and Buchan)
The Secretary of State says that the Scottish economy is doing well in the recession. He knows the great concern that there is in Scotland about the fate of the steel industry. Can he and the Under-Secretary of State for Scotland, who is sitting beside him, confirm that they have the power, if they so choose, to refer the steel industry to the Monopolies and Mergers Commission? The Secretary of State need not be impeded by the view of the Director General of Fair Trading, any more than he was last month, when, against the advice of the director general, he referred the bid for AMOCO refining assets by Elf Aquitaine to the M MC.
§ Mr. Lilley
References can be made only on the basis of concrete complaints of specific infringements of competition rules. I am glad that the hon. Gentleman accepts that Scotland's economy is suffering relatively less than the rest of the economy, particularly compared with past slowdowns.
The other great change in manufacturing industry is that productivity, once our weakest spot, has increased enormously. It rose by 60 per cent. during the past decade, which is faster than any other major industrialised country, including Japan—a happy contrast to two decades when we were at the bottom of the league.
Let us also look at the performance of exports, which tells the same story of increasing strength over the decade. Manufacturing exports are at record levels with volume nearly 60 per cent. higher than in 1980.
§ Mr. Roger King (Birmingham, Northfield)
My right hon. Friend will know that, last year, the British motor industry increased its exports by 44.7 per cent. over the 1989 figure. Definite progress is being made. That is discounting the fact that the Ford motor company did not commence exporting cars until last December.
§ Mr. Lilley
My hon. Friend makes a good point, which illustrates a widespread phenomenon. Manufacturing industry is now both more competitive and more flexible. It is increasingly able to replace weak home demands by finding increased export sales abroad. The motor car industry has seen a reduction in domestic sales, but it has almost fully offset that by increasing exports by nearly a half. In December, exports were up 125 per cent. on the previous year. That reflects the return to exporting by Ford, the first exports from Ellesmere Port in 15 years and the arrival of Japanese manufacturers in this country.
Another source of strength in the past decade has been the take-off of the enterprise culture. There are now some 400,000 more firms in this country than there were in 1980. 959 Some are facing difficulties, which the hon. Member for Dunfermline, East highlighted. Despite the high interest rates of the past year, the number of new businesses created during that period has exceeded the number merging or closing down.
The biggest transformation in our economy in the past decade has been in industrial relations. During the whole post-war period, that was our greatest weakness. We were notorious for strikes, stoppages and industrial disputes. Last year saw the lowest number of industrial disputes for 50 years. That is a substantial improvement in the underlying strength of the British economy.
Perhaps the clearest indicator of the improved climate for manufacturing industry in particular, as my hon. Friend the Member for Birmingham, Northfield (Mr. King) said, is the willingness and eagerness of foreign industry to locate its plants here. It would not do so if the economic analysis of the hon. Member for Dunfermline, East were correct. The fact is that United States direct investment in the United Kingdom exceeds that in West Germany, France and Holland combined. It has grown by more than 70 per cent. in the past 5 years. Japan has nearly twice as much direct investment in the United Kingdom as in any other European Community state.
The investment has come not only in the car sector, with three major Japanese car firms choosing to place their European operations in Britain, but in consumer electronics, electronic components, bearings and machine tools.
§ Mr. Michael J. Martin (Glasgow, Springburn)
The Secretary of State must be concerned about the type of investment that takes place when money is put into companies only to buy them out. Despite good industrial relations and high productivity, some companies are closed down and sold off. That has happened in the whisky and tobacco industries. The Hanson organisation has a deplorable record on that. Surely the Secretary of State must recognise that some of the investment is involved in asset stripping. What will he do about that?
§ Mr. Lilley
The hon. Gentleman's example most certainly does not refer to foreign investment in this country. One cannot fossilise the distribution of a particular industrial capacity at any one moment. We must allow firms to expand by acquisition, subject to our competitive rules, if need be.
Foreign investment in this country is an indicator of our attraction for manufacturing and industry in general. It is true that even within the Community we are attracting investment from other Community countries. In recent years, West Germany has invested more in the United Kingdom than in any other country. Do Opposition Members, or any hon. Members, seriously believe that Nissan, Toyota, Bosch and many others would have come to this country to invest if we had suffered the policies advocated and pursued by the Labour Party and previous Labour Governments?
§ Mr. Ian McCartney (Makerfield)
Does the right hon. Gentleman accept that the foreign companies he has named have come to Britain because of the direct involvement of Labour local authorities? Those companies have invested in various regions of Britain and Scotland because of the direct efforts of Labour local authorities, which have redoubled their attempts to create new 960 employment opportunities. The truth is that Labour local authorities have brought foreign investment into the United Kingdom.
§ Mr. Lilley
When I went to Japan the week before last, I spoke to many representatives of Japanese companies that have invested or are thinking about investing in this country. Not one said that the principle attraction, or any attraction, was provided by Labour local authorities.
§ Mr. David Clelland (Tyne Bridge)
Does that mean that the right hon. Gentleman did not speak to anyone from Nissan or Komatsu who regularly acknowledge the contribution made by the former Tyne and Wear county council when reaching their decision to invest in that area?
§ Mr. Lilley
I spoke to people from those companies. I am not saying that they have not got on with local authorities, but they simply did not list them as one of the attractions of this country.
§ Mr. Michael Grylls (Surrey, North-West)
My right hon. Friend is right to quote the success of inward investment, but it is equally revealing to study one of the most important British firms, British Steel. Under the Labour Government, that company was losing £500 million a year and it employed three people for every job. Now, however, it is competitive and it is making nearly £500 million a year. Does my right hon. Friend agree that British Steel is almost the best example that one could quote to prove that, if one gets the conditions right, industry is able to prosper?
§ Mr. Lilley
My hon. Friend is absolutely right. It is a great strength of this country that we now have a steel industry that is one of the most profitable in the world, not excluding the steel industry of Japan. The Leader of the Opposition may want to interfere in the operations of British Steel, but we would prefer it to continue its healthy course since privatisation.
The diagnosis proffered by the hon. Member for Dunfermline, East was hazy, his prognosis wrong, and his prescription about as hard to decipher as that issued by the average doctor. I listened hard when he said, "Now I come to the measures we must take." I found it difficult to decipher the meaning of his message. Instead of a spot-the-ball competition, we are faced with a spot-the policy one—the hon. Gentleman's hand points in one: direction, but his eyes are looking in another. The one place one knows those policies will not be found is on firm ground. They will be somewhere up in the air, probably in the hot air, because those policies consist of phrases such as "encouragement for," "a regional policy" or "priority must be given"—there is no specification behind those words.
§ Mrs. Maureen Hicks (Wolverhampton, North-East)
My right hon. Friend will recall that, as part of his prescription for the future, the hon. Member for Dunfermline, East (Mr. Brown) spoke about the importance of training. Can my right hon. Friend recall any instance in the past few years when the Labour party has supported any training initiative? The theory does not match the practice. The hon. Gentleman talks about encouraging young people to get qualifications, but my right hon. Friend will recall the Labour party's total opposition to the youth training scheme and employment training. In my area, the Labour party is strongly opposed 961 to the training and enterprise council, where industry works with business and the Government. Can my right hon. Friend think of an occasion when the Labour party supported a training initiative?
§ Mr. Lilley
I am afraid that I cannot recall an occasion when the Labour party took a positive attitude towards any of the initiatives we have taken.
The hon. Member for Dunfermline, East also appeared to be unaware of some existing policies. He proudly proclaimed that he intended to introduce a guaranteed training programme for school leavers. Apparently he is unaware that it already exists, in the form of the youth training scheme and its successors.
§ Mr. Gordon Brown
Is the right hon. Gentleman saying that every school leaver is automatically guaranteed training? That is not true.
§ Mr. Lilley
We have guaranteed that school leavers who cannot find jobs will have access to training programmes—
§ Mr. Lilley
If the hon. Gentleman is saying that people will have to do a training course when they leave school instead of having the option, that represents an interesting reversal of Labour's previous opposition to the schemes that we have set up.
The Opposition had one solution to all our problems: entering the exchange rate mechanism. I thought that their policy was still to maintain our membership of the ERM, but it seems from what they are calling for now that they would abandon it—because that is what a devaluation of sterling would amount to, and devaluation would be the inevitable result of their calls for a premature cut in interest rates or for increases in public expenditure.
The Opposition claimed to recognise that the exchange rate mechanism had the virtue of encouraging stability and discipline, but they now seem willing to forgo that stability and abandon that discipline. Instead, they give us vague references to the need for training, research and development and regional support. I have scanned about 15 speeches by the hon. Member for Dunfermline, East; in each of them he said that he wants new policies for training, R and D and regional support—but those policies remain as elusive as ever. What is more, the hon. Gentleman has not spelt out whether the Opposition would increase public expenditure, and if they would, by how much and when.
§ Mr. Harry Cohen (Leyton)
The Secretary of State went off the exchange rate mechanism rather quickly. What is his assessment of the impact of entry into the ERM, at the crazy rate at which the Government entered, on industry and unemployment?
§ Mr. Lilley
The exchange rate of DM2.95 means that we remain roughly within the 6 per cent. band against the Deutschmark for the three years before entry. So the entry rate was exactly in line with what industy had been coping with for the previous three years, during which time it had greatly increased exports, thus showing that it was not uncompetitive. If the Labour party claims that we should 962 devalue after we have been in the EMS for a matter of a few months, that is interesting. I say that devaluation would be the inevitable consequence of the policies proposed by the hon. Member for Dunfermline, East and of his reckless disregard for the constraints that the exchange rate imposes on freedom of action in the matter of interest rates.
§ Mr. Kinnock
What is the main reason why the Government keep interest rates at the highest levels of any developed country? Is it that they fear that, if they were to reduce them, as industry needs, there would be a substantial fall in the value of the pound against the deutschmark?
§ Mr. Lilley
I accept the judgment of my right hon. Friend the Chancellor, just as the hon. Member for Dunfermline, East said that he would accept the judgment of his right hon. and learned Friend the shadow Chancellor, which was that we could cut interest rates now with no impact on the exchange rate. At no time has the right hon. and learned Gentleman advocated anything other than a reduction in interest rates. His advice is so one-sided as scarcely to constitute good judgment.
§ Mr. Budgen
My right hon. Friend says that he will accept the judgment of the Chancellor on when it is safe to reduce interest rates. Is it not inevitable that the people who really decide when it is safe to reduce them will be foreign holders of sterling; and that he will rely most of all on the judgment, first, of the Governor of the Bank of England and, more importantly perhaps, of other European central bankers, who will say, according to their knowledge of foreign speculators, when it is safe to reduce interest rates?
§ Mr. Lilley
My hon. Friend's concern about speculators, given his well-known desire to rely on an exchange rate in which speculation is allowed free rein, is interesting. The House decided, with the support of Members on the Opposition Front Bench, that we would enhance our anti-inflationary posture by pegging our exchange rate against those of the continent. In my judgment, that increases downward pressure on inflation, and as a result we shall more rapidly reduce inflation and thus in turn be able to reduce interest rates and return to non-inflationary growth. But a premature reduction of interest rates, in or out of the exchange rate mechanism, would not benefit the economy because it would mean that, far from our getting inflation down, it would take off again.
§ Mr. Kinnock
Will the right hon. Gentleman expand on this point, as it is critical? Is he saying that, because of the downward pressure on demand, as he delicately puts it, imposed by high interest rates, inflation will eventually fall roughly to German levels, and such will be the confidence in the international markets that the pound will stay at DM2.95 regardless of the fact that interest rates in Britain are much lower?
§ Mr. Lilley
I am not sure what the purpose of this little seminar is. The right hon. Gentleman may have forgotten that he has advocated our membership of the system—
§ Mr. Lilley
I have advocated it since I have been a member of the Government, since 1987.
The whole purpose of membership is to enable us to get inflation down and as a result have lower interest rates. I am not sure what the right hon. Gentleman is trying to elicit beyond that.
§ Mr. Oppenheim
Does not my right hon. Friend find it rather strange that, only a year ago, the Leader of the Opposition was saying that we had to have high interest rates because we were not in the ERM, but that now he is saying the opposite: because we are in it, we have to keep interest rates high?
§ Mr. Lilley
Like my hon. Friend, I find the position adopted by the Leader of the Opposition a little difficult to follow.
The hon. Member for Dunfermline, East offered increased spending on training as his magic solution to all our problems. He was prepared to contemplate that increased training even though it would come from a levy. He ignored the fact that the Government are spending two and a half times as much as the Labour Government did on vocational training—a clear sign that the last Labour Government did not attach the priority to the subject that this Government do. Industry is also spending a great deal more on training. It is estimated that it is spending £20 billion a year on it. That is made possible by the improvement in profitability of British industry, which is our key to improvement in the strength of British industry.
The Opposition have never spelt out, when challenged, whether and when they will provide more money for the policies that they advocate. When challenged directly on that point, Labour's spokesman admits that industrial support is not one of the key priorities to which the party is committed and on which it will immediately increase expenditure. Expenditure on training, research and development and regional policy, would, say the Opposition, be increased only as and when new resources become available.
The Opposition are in a logical bind. Are Labour policies necessary to generate faster growth, or is faster growth necessary to afford Labour's policies? They have to explain on which side of the dilemma they have come down.
§ Mr. Lilley
That is a relief to us all.
By contrast, the Government's policies and priorities are consistent and clear. Above all, we believe that it is essential to persist with the cure for the underlying problem of inflation, painful though that cure is in the short term, and to reinforce the supply side measures that will enhance the long-term health of our industry. These measures include further deregulation, taking forward the reforms that we have already introduced with such good effect into industries such as telecommunications. They include the encouragement of competition, to act as a stimulus to growth and improved performance.
They include privatisation, where our programme of setting businesses free from the shackle of state control will not stop at the 42 major businesses that have so far been liberated. The success of this programme, under which virtually every privatised company has increased its 964 revenue, its profitability and its investment and improved its investor relations, means that we should pursue that policy further.
Our measures also include reduction in taxes, whenever conditions permit, and this has been an important part of strengthening our industrial position. We shall continue with it as and when it is prudent to do so. Without lower taxes, we should not have had increased investment in enterprise, and without that there would not have been the new businesses and the reduction in unemployment that we have seen since 1983.
Wider share ownership is a key part of our programme, particularly employee share ownership, which, combined with our trade union reform, has brought about enormous improvements in our labour relations. Perhaps the most significant of all these is reducing the barriers to trade facing our industry, both within Europe and in the wider world, and maintaining a stable international trading system. That is why we attach high importance to the completion of the internal market—a factor not mentioned by the hon. Member for Dunfermline, East—and the opening up of eastern Europe, which will provide immense opportunities for British businesses.
GATT has served us well for the past 40 years. Industrial tariffs have come down from about 40 per cent. in 1947 to around 5 per cent. and, over the same period, world trade has increased by more than eight times.
§ Mr. Roger King
My right hon. Friend is saying that our industrial and commercial position is one of a world player, a necessary component of which is the ability to move capital about the world. Would he care to reflect on the effect that any Labour policy for reintroducing exchange control would have on company growth?
§ Mr. Lilley
I have heard the hon. Member for Dunfermline, East, say that he would try to stop speculative flows. That would not be possible under the capital liberalisation directive within Europe, let alone within our wider agreement. I imagine that the Labour party has abandoned any proposal for the restriction of trade and imports.
GATT is a key part of our strategy for increasing the opportunities for British industry. We have done all in our power to ensure the success of the Uraguay round because Britain, as a prime trading nation, stands to gain more from success and to lose more from failure than most other countries. Liberalisation of trade in services could boost world trade in services by 10 per cent. Rules on intellectual property would stem the huge losses from counterfeiting and piracy which cost United Kingdom drug and textile companies some £50 million a year and the record industry hundreds of millions of pounds.
The hon. Member for Dunfermline, East is wrong to say that economic slowdown is being experienced only in this country, because it is strong in the United States, in Canada and in Australasia, and it is beginning to be felt in France and Italy, although Germany and Japan remain buoyant. At a time of world economic slowdown, we need a non-inflationary stimulus. The only thing that can provide that is the opening of markets and the reduction in tariffs that a successful GATT round will bring about.
If we pursue our policies of deregulation, competition and privatisation, and of opening up markets, and if we persist in our policies to defeat inflation, our opportunities in the 1990s will be even greater than those we enjoyed in 965 the 1980s. The strength that this economy built up during the 1980s will be manifest, and rewards will be reaped during the 1990s. Therefore, I ask my right hon. and hon. Friends to support the amendment.
§ Mr. Biffen
On a point of order, Mr. Speaker, concerning the proceedings of the debate. My right hon. Friend the Secretary of State for Trade and Industry, with his customary courtesy, gave way to every hon. Gentleman who wished to intervene. The hon. Member for Dunfermline, East (Mr. Brown), by contrast, showed an understandable and virginal reluctance to enagage in parliamentary debate. Will our proceedings record that relevant fact?
§ Mr. Tom Pendry (Stalybridge and Hyde)
I am sure that I speak for my hon. Friends who represent the north-west when I say that few will begin to understand the speech made by the Secretary of State for Trade and Industry or the world in which he lives. Surely one of the saddest places in Britain is the north-west of England, the birthplace of the industrial revolution and the region that possibly has Britain's finest skilled work force. Many of these people find themselves languishing on the dole with a bleak outlook that gets bleaker by the weeks, thanks to the Government's disastrous economic policies.
The population of the north-west—some 7 million—is the second largest in Britain, after London and the south-east. Its work force, despite the difficulties, contributes to the national economy more than any other British region, except London and the south-east, accounting for around 10 per cent. of gross domestic product and one eighth of the nation's manufacturing output. The north-west is suffering along with the rest of the country but rather more severely than most in the manufacturing sector. I hope that the Secretary of State will listen to a voice from the north-west, because I know that he does not pay much attention to the problems of the region as he goes around.
In the 20-plus years that I have been a Member of Parliament, I have marvelled at the many business men, in my constituency and beyond, who have told me, when I have asked them how they have fared, that they have fared better under a Labour Government. However, when asked how they vote, they invariably say that they vote Tory, for some personal tax gain or other. That attitude is changing and changing fast. More and more, those same business men and women are listening to what my right hon. and hon. Friends are saying about the economic, industrial and employment fronts.
My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) and my hon. Friends the Members for Dunfermline, East (Mr. Brown) and for Sedgefield (Mr. Blair) are making a deep impression on these people by arguing the case for creating a strong and dynamic economy, for a commitment to training for our young people, our workers and our managers and for making sure that this economic and training strategy is carried out with the Government backing industry rather than getting on its back.
966 It is no surprise that support for the Government is ebbing, particularly that from small businesses and shopkeepers who mistakenly trusted the Government and were rewarded with the uniform business rate, high inflation and crippling interest rates. Any sane person knows that, given the crucial importance of manufacturing to our nation's future, the Government must do everything they can to give our industrial regions the backing and encouragement they will need if they are to meet the challenges of Europe and beyond. Yet, at the moment, that backing is singularly lacking.
For example, in my local area of Tameside, I hear from almost every quarter—employers, trade unions and local authorities—that the Government are failing us. I hear this message from the north-west chamber of commerce, which recently published a quarterly economic survey, the region's biggest and most comprehensive survey, covering 536 firms in the north-west employing over 87,000 people. That revealed that, for the first time, nearly half the firms surveyed reported that orders and deliveries were down —46 per cent. of firms reported a drop in home orders and 40 per cent. a drop in export orders. That is far from the world of which the Secretary of State has just painted a picture. It is not the result of Labour party research; it comes from those who are traditionally seen as the Conservatives' friends—the business organisations of the north-west.
In a letter that I received only yesterday, the north-west chamber of commerce says:Industry in the north-west ended the year in a pessimistic mood. Profits, investment and employment are predicted to fall further in 1991. However companies are still reporting skill shortages around the region, thus emphasising the need for training.
§ Mr. McCartney
Is it not also the case that the National Westminster bank's recent survey of the north-west forecasts an increase in unemployment of more than 50 per cent. between January this year and May next year as a direct result of interest rates and other Government policies?
§ Mr. Pendry
My hon. Friend is right. I could quote from other surveys of the area. I took a current one, and one to which I hoped Conservative Members would respond, as it consulted many of their former supporters.
What has been the Government's response to the region's needs? They have implemented cuts of £3£32 million—an horrific 25 per cent.—in employment training throughout the Manchester training and enterprise council area. On top of that, they have cut £3.29 million—19 per cent.—from youth training, thus betraying future generations as well as the present. No wonder more and more people are turning to Labour. They know that high-quality training is a vital ingredient of our economic strategy and will deliver the goods.
It is not just business men and women in the north-west who view the present situation and future prospects with alarm. Their pessimism is shared by PA Cambridge Economic Consultants which was commissioned by Manchester TEC early last year to undertake a labour market assessment of the region. It predicted that a startling 13,000 manufacturing jobs will be lost in the Manchester TEC area before 1995 and that 2,900 of those jobs will be lost in Tameside alone—9 per cent. of all its manufacturing employment. On top of that, it predicts a 967 further loss in the Manchester TEC area of nearly 5,000 jobs in the engineering sector and 3,500 in metals, minerals and chemicals.
My area needs actions not words. However, when I challenged the former Prime Minister to honour the promise made by her Secretary of State for the Environment during the campaign to bring the Olympics to Manchester that the Government would inject £3 billion of investment into the north-west's infrastructure, she could only flounder and say that the Duke of Westminster had great faith in the north-west's infrastructure. Then she went on to renege on that promise, clearly given by the current chairman of the Conservative party, and claimed that no such undertaking to provide investment had been given.
What sort of insult is that to my constituents and to others in the north-west? With the right hon. Member for Finchley (Mrs. Thatcher) happily now departed, I repeat that challenge to her successor. Will he back the north-west and give it the urgently needed and promised investment, or is he determined to carry on the same policies of industrial neglect at No. 10 that he pursued as Chancellor from the house next door?
§ Mr. Robert Litherland (Manchester, Central)
My hon. Friend puts the case well for the north-west. Does he agree that the recent report from the Building Employers Confederation, which says that the north-west is going into a deep bitter building recession, is an indictment of the Government when there are stockpiles of bricks and when we have unemployed construction workers and homeless people on our streets, particularly in Manchester?
§ Mr. Pendry
I am grateful to my hon. Friend for underlining my point. We all got that message last week from the confederation.
I hear strongly the message from my local council, Tameside, that the Government have failed us. It tells me that, during 1990, just under 1,000 redundancies in Tameside were notified to the Department of Employment, and that figure is itself only a small proportion of those which were not notified.
Using the Department of the Environment's own methods for analysing deprivation, the second largest major area of need in Greater Manchester is the old industrial area which runs from Oldham through the Tameside centres of Ashton, Dukinfield and Hyde. On the Department's own figures, 10 of the 18 wards in that large belt are inside Tameside, yet the Government refuse to grant the council access to urban programme funding to aid urban development. That is amazing. They give aid to smaller areas within Greater Manchester, such as Wigan, Bolton, Oldham and Rochdale—I am not arguing that they should have their funding cut; they need it too—but Tameside's case for aid is overwhelming when compared with those similar areas.
The average wage rate in Tameside is £3.42 per hour —more than 40 per cent. lower than the Greater Manchester average. One area of Tameside that has particular need for aid is the neighbourhood renewal area in Hyde. The council estimates that 600 businesses need to be regenerated within that area alone, yet it does not have access to city grant. Despite the obvious need for aid, the Government refuse to heed the pleas of Tameside council. That is a disgrace and I hope that the Secretary of State listens and changes that.
968 I hear the message from the trade union organisations and campaign groups in my area that the Government have failed us. They tell me that despite the Government's attempts to blame job losses and closures on high wage demands and restrictive practices, in reality industrial decline has gone hand in hand with the promotion of a "low pay, "low skill and no rights" economy.
The Greater Manchester low pay unit has highlighted the plight of homeworkers in my constituency. One worker in Tameside makes Christmas crackers for just over 2p each. That meant making 70 crackers an hour in the run-up to Christmas for the princely sum of £1.50. The north-west is painfully aware of the urgent need for a commitment to training, funding and urban regeneration. That awareness is spread right across the board. We want commitment to our area—commitment to investment, training and aid.
The Government must act now and give that commitment if they have any economic strategy at all for the north-west. If they do not act to aid the north-west and the rest of the country's manufacturers, they will continue to sow the seeds of their own destruction when election day comes. Let us hope that that day will come before our industries have to reap further the deadly harvest of neglect.
§ 5.7 pm
§ Mr. Kenneth Warren (Hastings and Rye)
I apologise to you, Mr. Deputy Speaker, and to the House because I have a throat infection. No doubt it will be welcomed on both sides of the House, as it means that my speech will be much shorter that it would otherwise be. If it is terminated abruptly, I am sure that my hon. Friends will, as usual, take up the threads of what I was saying.
As an industrialist, I declare an interest. Looking round the House I notice, somewhat wryly, that out of 650 Members, only about 20 are present to debate a subject a fundamental importance to Britain's future. The House never pays enough attention to the creation of wealth, yet no doubt it would be nearly full if we were debating the spending of it.
I pay particular tribute to British industry, which is working so well and efficiently in supporting our forces in the Gulf. It is particularly inspiring to see the way in which workers throughout Britain, without thought of their home time, are supporting our forces.
The core of today's debate must be how to increase our economy's competitiveness. Nowhere is that more important than within government itself, enhancing the Government's ability to be an efficient employer by increasing their productivity at all times. Neither the Government nor industry appear to appreciate that the number of school leavers who will be available for employment over the next five years will fall by 20 per cent. Nowhere will that be more significant than in Government Departments, which are the most labour-intensive employers in the country. Unless action is taken soon, the Departments of Health, Social Security, and Employment will all confront a crisis, with Government wages beginning to chase those in outside industry in order to attract scarce labour.
I should like to see an end to some of the in-fighting that occurs in Government agencies, which inhibits British industry's ability to compete throughout the world. In recent days, there has been much publicity about edicts 969 issued by the Civil Aviation Authority on the concept of open skies at Heathrow, which would involve handing over Tokyo airline routes from British Airways to Virgin Atlantic Airways. That may sound a commendable idea, but it does not recognise that our efficient airline industry will risk being damaged as a consequence of the CAA pursuing its own objectives. I hope that the Department of Trade and Industry will become involved in those negotiations, to ensure that the industry's potential and ability to operate are not harmed by fanciful theories from Kingsway.
I am also concerned about the way in which Oftel views the British telecomunications industry. The review currently before my right hon. Friend the Secretary of State for Trade and Industry reflects more the interest that Oftel has in cutting British Telecom down to size than the need to develop British Telecom and Mercury as players on the stage of world markets. If Oftel's proposals are allowed to progress, they will allow the entry into our own market of American bidders, without the reciprocity that would allow the United Kingdom to compete in the market across the Atlantic. I hope that my right hon. Friend the Secretary of State will also consider it a good idea to get moving with the sale of part of the Government's holding in British Telecom, which is far too large.
I draw attention also to the conflict between the national engineering laboratory, which is a field of seed corn for improving British industry's competitiveness. Its facility at East Kilbride has endured two years of uncertainty over whether it will be privatised, and in that time it has lost one third of its qualified scientists and engineers. Their numbers have fallen from 625 to 400 because the staff there do not know what will happen in the future.
My right hon. Friend and his colleagues in the Cabinet could also intervene in bringing the wages councils to heel and perhaps abolishing many of them. A 10 per cent. increase in wages from April has been proposed, which may be very nice for those who will receive it, but many small companies cannot afford to meet it. I know of examples in my own constituency of small firms of electricians that are going out of business because they cannot afford to pay higher wages. I hope that remedial action will be taken in that regard.
As to the Government's role as a customer, if Britain's industrial ability is to be enhanced, the quality of purchasing by the Government—as the largest single buyer in the country—must improve. That is true not only of the Ministry of Defence but of all Departments whose purchasing power dominates the market. The House frequently debates information technology, and I will not go over that ground again—but I remind right hon. and hon. Members that, of the £4 billion of data processing equipment purchased by the Government, about half is bought by the Ministry of Defence, but the other half is the subject of ad hoc purchases by different Departments, guided by no central policy on what form of data processing should be developed.
There was some acrimony in the Select Committee on Trade and Industry over why the Government do not encourage the development of wideband technology. That should be done not only because many banks, insurance 970 companies and mail order operations would like to invest in such a system rather than merely purchase time on one, but because the Government themselves could make substantial use of such a facility, as it would allow Departments to combat the fall in the number of people available for employment.
One questions the quality of purchasing leadership across Government Departments. It is worrying that, in terms of helping develop British industry and trade, not one of the country's top 42 civil servants has a degree in science, mathematics or engineering. In the countries that are our main competitors—America, Japan, Germany and France—such experts are part of their country's civil service establishment, and are encouraged to make a contribution to their domestic industries throughout their careers.
The improvement that Government could make through only a small increase in their investment in industry is epitomised by recent figures relating to the Science and Engineering Research Council. Each year, it considers the most highly rated—alpha-rated—research projects. Whereas, 10 years ago, 90 per cent. of the projects submitted received funding, the figure is only 60 per cent. today. Such projects represent the really glamorous seed corn from which British industry could prosper in five or 10 years' time.
I ask my right hon. Friend to consider the way in which the suggestions that I have made could be applied not only to his Department but many others. There should be more co-ordination between Government Departments, which should see themselves as sponsors of industry, buyers of industrial projects, and setters of pace in research.
Britain's eternal competitiveness is something from which no part of industry can escape. We have a propensity to offset cost-of-living increases by higher wages that are unmatched by higher sales in overseas markets. At no time is that more difficult to combat than when those overseas markets themselves are suffering the same world recession that is affecting this country. Conquering those markets will be an enormous task, but I am confident that the present Government are far more likely to help win that battle than a Labour Administration. When my right hon. Friend the Secretary of State challenged the hon. Member for Dunfermline, East (Mr. Brown) and other Opposition Members to say how they would reduce inflation, none of them could reply. The Opposition's rhetoric is as hollow as the debate that they have sought to promote today.
§ Mr. A. J. Beith (Berwick-upon-Tweed)
The recession is a reality, and the Secretary of State for Trade and Industry did not deny it. Nor did he pretend that it is simply a stage in an economic cycle that the Government had wholly anticipated. Yesterday's Confederation of British Industry's survey hammered home some of the manifestations of that recession. The proportion of companies preparing to cut employment is the largest since April 1981; over the next four months, output is set to fall at the fastest rate since October 1980; capital spending is being cut; and business confidence is now at its lowest since October 1980.
The Government have been in power for more than 10 years, so how could such a significant recession arise? Ten years ago, Ministers stressed that it would take a little time 971 to solve the fundamental economic problems that confronted them. Even as recently as 1982, the then Chancellor of the Exchequer, the right hon. and learned Member for Surrey, East (Sir G. Howe), said:We made it plain, too, that reversing this decline would require a major effort—an effort that would need to be sustained over the lifetime of more than one Parliament. And so it will be.How many Parliaments do they need—one, two or three? They have had three Parliaments in which to deal with these fundamental problems. I quote again the arguments advanced by the right hon. and learned Gentleman in 1982 when he said:The 1979 oil shock made the task of restoring our economy both more urgent and much more difficult. And it coincided with the surge in pay, and public spending, which the outgoing Government bequeathed to us."—[Official Report, 9 March 1982; Vol. 19 c. 727–28.]The outgoing Government argument has lost its currency. It is no longer available. It cannot be used of the Secretary of State's colleagues, because he shared with them the responsibility for government by the same party and according to the same policies.
So the hopes of those years have not been fulfilled. Let us look back to 1983 and the Conservative manifesto for the election year which stated:During the years of recession, now coming to an end, even the most successful of our competitors have faced increasingly serious problems and mounting unemployment. Despite all these difficulties, the Conservative Government has been overcoming Britain's fundamental problems … The foundations of recovery have been firmly laid. In the next Parliament, we shall build on this progress.That was two Parliaments ago, and we still have a recession.
Some things have been done and the Secretary of State sought to outline them in his speech. He referred to deregulation, privatisation, and competition—where I would take issue with him, if it were the subject of debate, because I do not think that the Government have done much to promote competition, certainly not in the electricity privatisation for example. He might wish to add to his list promotion of the concept of private enterprise and challenging monopolistic power of the trade unions. Let us put them all on the list as things which the Government have sought to do to tackle these fundamental problems.
Yet we still have a serious recession. Why is that so? First, it is because of incompetent economic management by the Government—the creation of boom conditions by the simultaneous imposition of tax cuts, credit liberalisation and the delayed ending of multiple mortgage tax relief. It was simply incompetent to do all those things at once, and not to recognise what the consequences would be.
The Secretary of State said earlier that further tax cuts would be carried out when it was prudent to do so. I wonder whether he thinks that it was prudent to carry out tax cuts in previous circumstances. They led to the boom which has led to the recession that we now face. They led to the boom which brought about the inflation to which present policies are geared.
The second reason was short-sightedness—for example, short-sightedness over Europe, when there was a long delay over Britain's entry to the exchange rate mechanism. Another example is the failure to invest in channel tunnel rail links. The French Government take a much more long-sighted view than the British Government, and do 972 not attempt, on ideological grounds, to insist that every penny of investment in the rail link must carry a return to the railway, and that there must be a straight commercial investment. The French knew that they could not take full advantage of the tunnel in that way, and they have invested seriously.
Another reason is the Government's tendency to look towards the next election, rather than to the longer term, or even to look merely to the next party conference. That was what determined the timing of the drop in interest rates which led to our entry into the exchange rate mechanism, and it is a very short-sighted view of how the economy should be managed.
The reasons for the recession were partly incompetence, partly short-sightedness and partly the failure to drive inflation out of the system. On the Government's own admission, underlying inflation is still likely to be around 6 per cent. by the third and fourth quarter of this year. The Government have clearly failed to drive inflation out of the system.
Why is the fact that inflation is still part of our system so bad, especially in this context? It is because inflation changes the relationship between people in society, in arbitrary and unfair ways. It reduces borrowers' liabilities, and reduces savers' capital. At the same time, it makes it more profitable to trade in pieces of paper than to trade in manufactured goods—in an era of price instability, riding on the back of inflationary increases by paper transactions is more profitable than making something and selling it. Inflation makes property a happier investment haven than industry. For all those reasons inflation is a direct source of the problems that we face today, as well as a cause of the high interest rates which are adding to those problems.
There is still no real sign that the Government will be able to keep inflation out of the system if we get out of the recession. One aspect of the Government's arguments today that worries me is that they seem to suggest that it is necessary for the recession to continue this year to help drive inflation out of the system, but that it will all be over in due course—in time, they hope, for a general election. When it is all over, they say, inflation will have been driven out of the system. I see no sign that that is the case. At the moment, our only aid for driving inflation out of the system is membership of the ERM, and that has a price. Lack of confidence in Britain's ability to drive inflation out of the system is what makes sterling vulnerable and it leads to the necessity to keep high interest rates to maintain sterling's parity within that system.
What must be done if the recession is to be cured without damaging anti-inflation policy? Action clearly needs to be taken to help Britain our of the recession. Investment in transport, training—not merely training for the unemployed—and education is necessary. The real giveaway about the Government's training policy is that, when challenged about it, they always relate it to unemployment. In the Treasury and Civil Service Select Committee, when we challenged the Government about last year's budget cuts in training, the cuts were justified on the basis that unemployment had gone down arid, therefore, there were fewer people to train.
When the Secretary of State was challenged today about the position of school leavers he insisted that training opportunities were available for every unemployed school leaver. That is not what training is about. Training is about providing those in jobs, as well as those not in jobs, with the skills required to make industry more 973 competitive. It is a crucial area for investment, and so are science and research and regional investment, which becomes more necessary because we are locked into an exchange rate system in which distortions cannot be corrected in any other way. Therefore, it becomes that much more necessary to ensure that investment, through public expenditure, is directed towards regions which have been left behind, and would seem more likely to be left behind by developments in Europe—regions not physically close to the economic centres of Europe.
None of that investment must be stopped on account of the Gulf war. Those of us who are most supportive of the prosecution of that war, and of the way in which the Prime Minister has conducted the nation's affairs in this matter, are nevertheless strongly insistent that it must not be used as an excuse for not carrying out essential investment in those areas.
The Budget must take special account of industry's needs. Obviously it is vital to bring down interest rates if we are to get out of this recession—that is the most widely stressed demand from industry. If one goes to any gathering of industrialists one will realise that the continued high level of interest rates is their greatest anxiety. However, it will not be easy to get interest rates down while our anti-inflation credibility is so low. That is why we believe that the freedom to achieve a substantial cut in interest rates also depends upon filling the anti-inflationary gap, and it leads us to believe that Labour's prescriptions will have the same disastrous side effects that they produced before, if they are not accompanied by firm anti-inflationary policy. Industry needs investment and lower interest rates, but it certainly does not need inflation. Serious inflation is a serious threat to manufacturing industry.
The Chancellor will make his Budget assessment in an especially uncertain atmosphere, and it is difficult to predict the economic consequences of the Gulf war. They are likely to be more far reaching then is implied by arguments about who contributes how much to our costs of participating in that war. It is important that we ensure that Britain gets support from our partners in the Community for the military effort that we are putting in, and that we get support from the United States when the reimbursement is shared between all those countries, including ourselves, that are providing a military commitment. There is, I believe, considerable admiration in the United States for the extent of Britain's commitment.
None of that, however, will prove as important as the response of the world economy to the war. What will happen to oil prices and to German interest rates, for instance? The atmosphere is one of uncertainty; but it is absolutely certain that, if the Chancellor ducks the obligation to stimulate the key investment that is needed to make our industry more competitive, he will do both industry and the future of this country a terrible disservice.
§ Mr. Michael Grylls (Surrey, North-West)
I strongly support what was said by the hon. Member for Berwick-upon-Tweed (Mr. Beith), whose remarks about the damaging effects of inflation must have struck a chord throughout the House.
974 I suppose that enabling the hon. Member for Dunfermline, East (Mr. Brown) to have a bit of party political fun with the downturn in the economy is an inevitable part of the democratic process in the House of Commons. He seems, however, to have ignored—perhaps for party political reasons—the fact that what we are experiencing is an economic cycle, which is moving downwards not only in this country but in others; I believe that my right hon. Friend the Secretary of State cited France. There is, in fact, every chance that we shall emerge from that cycle rather earlier than some of our European competitors.
The truth is—it is in this context that the hollowness of the Opposition's case is most glaringly obvious to any independent eye—that we have had an extremely successful 10 or 11 years of steady growth, expansion, high profits in industry, good export trade and, as has been said, a good deal of inward investment by foreign companies. As I pointed out earlier in an intervention about British Steel, our larger firms in particular are now dominating Europe: British Steel is only one of the clearest examples of the appalling effects on the interventionist policies suffered by firms under the Labour Governments of the 1960s and 1970s. I am amazed that Opposition Members should have the effrontery even to organise a debate on industry, given their party's dreadful record.
Although he belongs to the generation that succeeded those who made all the mistakes during those years, the hon. Member for Dunfermline, East appears to have learnt nothing from his elders—I will not say "elders and betters". He came out with all the old shibboleths: a bit more training here, a bit more intervention there, a quasi-National Enterprise Board—we all lived through the days of the NEB—and more regional policies. He sees all that as the panacea that British industry needs.
The outside world, however, knows very well that Britain's success over the past 10 years has been largely a result of the supply side changes that we have introduced. We have managed to reduce steeply the taxes paid by industry, as well as personal taxes. We have also allowed the great industries such as steel and shipbuilding to shed manpower—painful though that was—to enable themselves to compete with the rest of the world. Those industries are now firmly established: I believe that they will survive the present temporary downturn, and will continue to succeed in the outside world. Even at this difficualt time, our industry is in an incomparably stronger position than it was 10 years ago.
The hon. Member for Berwick-upon-Tweed was entirely right to remind us of the damage that is done by inflation. We are suffering now from the effects of high interest rates in an attempt to slay, yet again, that dragon of inflation. It is easy enough to criticise the Government for allowing interest rates to become too low three years ago, but the Opposition's hands are by no means so clean in that regard. Leaving aside party political rhetoric, however, we must deal with inflation. To their credit and honour, the Government are prepared to suffer the pain now to knock inflation on the head. Inflation that lasts for ever is far more damaging than high interest rates which, hopefully, will last for only a short time.
The Government—particularly the Chancellor, who, unlike my right hon. Friend the Secretary of State, is responsible for interest rates—should peep over the abyss and decide that it is about time to bring down interest rates. I hope that my right hon. Friend will conclude that 975 it is safe to do that, because the monetary figures are under control, and we know that inflation will fall very rapidly during the rest of the year. We must also continue to introduce supply side changes. Let us, for heaven's sake, carry on with a policy that has been successful before. We must maintain the momentum of the tax reform programme that has achieved so much over the past 10 years. That, too, is a matter for my right hon. Friend the Chancellor of the Exchequer.
Although Britain's large firms have done well over the past decade, and although we have created many small firms, there is a gap at present, comparatively unfilled by the medium-sized manufacturing companies that are so plentiful in some of our competitor countries. Perhaps it is dangerous for a politician to interfere, and there is probably little that we in the House can do about it, apart from continuing our supply side changes.
A persistent complaint from firms of that kind—almost more important than the complaints about interest rates, which we know will fall—is their inability to secure "term loans". This is a bad habit of the British banking system: too many independent, unquoted firms have traditionally borrowed on overdraft. That can be very dangerous. During a recession, when the banks start looking at some of their bad debts and worrying about their position, they can bear down on firms that may be quite healthy in order to help themselves.
It may be said that that is the system, and indeed it is; but it results all too frequently in damage being done to healthy independent firms with perhaps 200 or 300 employees. Germany has more term lending, and in Japan —I am leaving aside the question of interest rates—there is a long tradition of allowing independent small companies to take out loans for up to 20 years. That is completely unknown in Britain.
Industry also needs to make its voice heard in relation to the future of Europe. It is crucial that we succeed in establishing a single internal market—a free market. Let me say to my right hon. Friend the Secretary of State, who has a good deal of responsibility as a spokesman for Britain, that there is a real danger of our failing to establish that market by 1 January 1993 if Europe continues to be deflected in the direction of hares that have no relevance to the task. That, of course, is monetary union, and, even worse, political union.
I say this to my right hon. Friend, who must fight the battles in Brussels and elsewhere on the Continent: please fight for the success of the internal market—the nitty-gritty, the nuts and bolts. A discussion paper published by the European Commission deals with money transfers in Europe, an important factor for those who will do business across this huge market. It suggests a mechanism linking a national automatic clearing house,perhaps in the form of a pan-European clearing House. To illustrate this point, the Commission paper said 25 per cent. of payments in a sample of 144 transfers from France to Germany took more than 10 days to arrive; two per cent. took more than six weeks, and two had not arrived 12 months later.That shows that there is a long way to go in establishing an effective internal market when money transfers across the continent take so long, compared with the United Kingdom, where money can be transferred electronically within seconds. It is no good companies doing business in Europe if they cannot get their money, or if it takes so long to arrive that it undermines their profits.
976 My right hon. Friend the Secretary of State must ensure that he counteracts the underlying collectivist, protectionist and nationalisation ideas that still exist in the minds of some of our European partners. Such beliefs will not establish a successful European market. He must carry on the successful principles of the Government and ensure that they are spread throughout the European Community. The changes that we have made have served us very well indeed.
I foresee interest rates falling soon, but we must remain in a low interest rate regime. We must have stability—that is another great cry of industry—and, above all, in Europe we must ensure that the free market is established. If we can achieve those aims, our success in the past 10 years will be carried on even more strongly in the 10 years ahead, during which I am sure this country will continue to have a Conservative Government.
§ Mr. Ron Brown (Edinburgh, Leith)
First, I declare an interest. I think that I am the only member of the Amalgamated Engineering Union here. My union knows about recession; it experiences recession through its membership. That has been made clear by Gavin Laird and Mr. Jordan.
Things must be judged by reality. A recession, or a slump, must be judged by the factors that are known to us. It must be judged by unemployment, manufacturing output, bankruptcies, investment, interest rates, inflation and so on, all of which add up to a massive trade deficit. The Government, who speak of sound housekeeping, cannot balance the books. They cannot keep the sums under control to prevent the British people from suffering.
Conservative Members are looking for a fall guy. They say that it is all the fault of Thatcherism. But Thatcherism is another name for monopoly capitalism—a system that is unfair, inefficient, corrupt and dangerous. It is unfair because it concentrates wealth in fewer hands, inefficient because it cannot produce the goods, and corrupt because it justifies tax evasion and stock exchange fiddles. It is dangerous because it engages in military adventures, as we are seeing in the Gulf.
If there is a crisis here—it must be admitted that there is, otherwise we would not be having this debate—there is also a crisis worldwide, which, sadly, is hitting many developing countries that do not have a voice in this Chamber.
Britain's economic ills are blamed on the working class —on British workers. The excuse of Conservative Members is that we have changed Prime Ministers, but the medicine bottle remains the same; only the label has been replaced.
In the past, Tories said that wages were too high. The argument was, "Price yourself in or out of a job or get on your bike." The working class were told that repeatedly, but it was not said to police chiefs, generals or judges. Of course that was not said to the bigwigs, but it was said to the working class.
British workers are the coolies of Europe, and that has been known for some time. Conservative Members should not smile about that. If low wages were a panacea for Britain's economic problems, the Indian economy would be the boom economy of the world, but it is not. Conservative Members know that low wages do not solve anything. They justify skinflint employers and clapped out 977 machinery and plant, which is what has been going on. That is why British industry was decimated. Many factories were closed because they could not compete with the efficient industries of Germany and Japan. They could not face up to the fact that those countries had more modern equipment and tried to do things on the cheap.
Training and apprenticeships were discouraged by this Government. Instead, Mrs. Thatcher and others encouraged cheap, phoney labour schemes. What did that do? It did nothing for the British economy and little for the people who were exploited. It did nothing for those youngsters who had few rights, but who suffered appalling injuries and did not receive any compensation whatsoever. That is the legacy of the past.
Figures produced by the EEC show that 62 per cent. of Britain's industrial workers are unskilled, compared with 38 per cent. in Germany, 31 per cent. in Italy and 20 per cent. in France. That sums it up and it is a disgrace. We must always remember that our greatest asset is people and we should invest in them. Education and training have been neglected, as have so many other spheres that are important to the working class such as housing, the national health service and local government, which has tried to build up local economies. I am speaking not about luxuries but about essentials and what is important.
Debates on recession in industry are not held in Germany or in other major European countries, yet they do not have oil. We have had oil resources for so long, but, unbelievably, revenue from it has gone into the pockets of people who are represented by Conservative Members. I am not saying that that is done corruptly but that it is wrong and that that revenue is being misused.
What about Labour's position? We want an alternative to the Government's policies, but it is like sin—what do you put in its place? [Laughter.] Do not mock. The alternative will not come from the EEC. The Community has been a disaster in trading terms even on a capitalist basis. Being involved with the EEC has sunk the British economy and that is why I am against the EEC.
We must look to the future and act today. Talking about what we will achieve in future is an academic exercise. Tinkering with the economy is not enough. We need socialist policies that will take over the commanding heights of the economy under democratic control. It should be under the control of the workers. That is the only way in which we can influence what happens in Britain.
It is all very well talking about issues, but we want real control. Labour Governments have held office and a Labour Government might hold office again in the future, and we want to hold power. I speak for people outside this place. Unless we implement socialist policies we will not get anywhere. Whether Tweedledum or Tweedledee, it is unacceptable to me.
The Labour party and a future Labour Government have no mandate to run capitalism better than the Tories because the capitalist system and big business have no mandate from us outside this place. We and the working class expect something much better.
I hope that my colleagues on the Opposition Front Bench understand my point of view tonight. I speak for my AEU members and I am an AEU official. I do not criticise 978 my colleagues on the Opposition Front Bench, but the trade union movement and the AEU want socialist policies in answer to Tory policies.
§ Mr. Nicholas Budgen (Wolverhampton, South-West)
The hon. Member for Edinburgh, Leith (Mr. Brown) referred at some length and with great passion to the far distant future and a time when he hopes to see a fundamental change in the nature of our society. However, many of my constituents have told me that the most important thing they need—not next year, not even in the next six months, but this month—is a reduction in interest rates. It lies within the Government's power to make that reduction.
Many of the prescriptions put forward by the hon. Member for Dunfermline, East (Mr. Brown)—for example, a considerable increase in public expenditure on training and regional policies, and all those well tried and, I would argue, somewhat dubious remedies—would succeed only in a year or two years' time, if they were to succeed at all.
The plight of many of our constituents is urgent and critical. They are being crucified by very high interest rates that have been in place since the middle of 1988. We who believe in a minimal Government and that the Government's principal role is to provide sound money and not to increase public expenditure, have an important duty to decide whether lower interest rates can be delivered properly.
We have been through many fashions in respect of floating and fixed exchange rates. There is a danger in all human affairs to think about the last experiment and to conclude that something better could replace it, and then to achieve something worse. I believe that the best period of economic management pursued by this Government occurred between 1979 and 1982, when the Government pursued policies of floating exchange rates and attempted to control inflation by following a medium-term financial strategy that envisaged a steady, continuous and inexorable reduction in the rate of increase in the money supply.
Of course that did not happen without pain, a great increase in unemployment and much unpopularity. However, I contend that the alternative of fixed exchange rates—I make no distinction between fixing the pound to the dollar and fixing it to the deutschmark—which have been tried so often, have always failed. They failed in 1967, when Mr. Wilson had to devalue in humiliating circumstances. Every time I hear the present Chancellor of the Exchequer and the Prime Minister say that there will be no devaluation, I remember the speeches that Mr. Wilson used to make, and I recall the horrifying humiliation that descended on his Government after he had so unwisely fixed himself to a particular value against the dollar.
We tried fixed exchange rates again in 1972, and after six weeks we came out of the snake. We have now had two experiments, because it is wrong to say that we entered the exchange rate mechanism only recently. We were informal members of that mechanism between 1986 and 1988, when the former Chancellor of the Exchequer, the right hon. Member for Blaby (Mr. Lawson), apparently without any authority from the Prime Minister or the Cabinet, in effect pegged the pound to the deutschmark.
979 As a consequence, our interest rates were much too low for a long period. That created a massive increase in the money supply and a major increase in asset prices, and in particular in house prices. That was extremely popular, and it enabled the right hon. Member for Blaby to say that he had achieved an economic miracle. However, that is now, quite rightly, seen as a disaster.
Having had that recent experiment of being informal members of a fixed exchange rate mechanism, we are now entering such a mechanism on a formal basis. It just so happens that at this particular moment the way in which the pound is valued by foreign speculators requires us to have our interest rates too high for domestic reasons. For every domestic reason, interest rates should be coming down now. Asset prices have fallen, and share prices are low in real terms. House prices have fallen in both real and actual terms. Every part of the economy that is attached in any way to asset prices is having difficulty.
On an entirely political point, I noticed with interest that one of the things of which the Government are proud, according to their amendment, is the increase in new businesses. Before I entered the Chamber today, I asked the hon. Member for Wolverhampton, South- East (Mr. Turner) what he thought of the position in Wolverhampton at the moment. He said that things were pretty difficult, but not as bad as the period between 1979 and 1982. He represents the Bilston area, and he reminded me of what happened to the Bilston steel works. He said to me, "The awful thing is that many of the people who took their redundancy money became self-employed. They were exactly the people who voted for Maureen Hicks. They voted Conservative for the first time while they were setting up their new businesses"—
§ Mr. Budgen
No, they may not, because they have been squeezed hideously by the high interest rates. Some of those people may have borrowed £10,000 to buy a couple of vans or a lorry and become self-employed.
It is perfectly true that we cannot squeeze inflation out of the system without pain. However, let us consider the other argument. It might be possible, to retain the pound in its present setting, to have base rates at 25 per cent. That would certainly push inflation out of the system, but it is not good enough just to say, "We are doing this to push inflation out of the system." We must decide whether we are doing that in a steady, predictable way to minimise the social and economic consequences of doing so.
Of course, by hitching ourselves to the deutschmark, we are hitching ourselves to something that is unpredictable. The value of the pound against the deutschmark is not decided, as the Prime Minister suggests, simply by the differential rates of inflation: it is decided by speculators' views of the two currencies. One speculator may say that the differential rate of inflation is the most important aspect. Another person may take a view about the relative stability of the political situation. Another person may decide, for the sake of argument, that the balance of trade deficit is all-important. All those matters form part of a speculator's judgment, but a market judgment is inherently unpredictable, and that is so much less satisfactory than the medium-term financial strategy.
I am not saying that the medium-term financial strategy was absolutely perfect. There may have been unfortunate enthusiasts such as myself who had a mechanistic view of 980 such matters and thought that it was impossible to impose it without sufficient judgment, but that system is infinitely preferable to the vagaries of hitching the pound to another exchange rate.
Unless we move away from the exchange rate mechanism as quickly as possible, we will have the humiliation of seeing our leading politicians—that applies to whatever Government there may be at the time—doing what Mr. Wilson did. They will say that there will be no devaluation, and the Governor of the Bank of England will appear on the telly, saying, "There is no devaluation," while foreign exchanges see massive sums of money being lost in intervention, and then we shall have devaluation. I do not mind whether it is called a realignment or a readjustment or any word that it is possible to fudge 1.0 retain the dignity of our leaders. What we do not want is the continuation of the unpredictability of having our currency fixed to the deutschmark.
There is, of course, another reason for having a fixed European exchange rate. It was thought by some that there were political advantages in the European exchange rate mechanism. I do not want to overrate the matter, but I should have thought that even those who are sceptical about such issues must have noticed that there has been some slight lack of uniformity in the European nation states' response to the conflict in the Gulf. I do not wish in any way to cause trouble about that.
However, if, for the sake of argument, after the last war we had imposed upon Germany a constitution that prevented them from taking part in conflicts such as that in the Gulf, and if we had split their country and then they quite understandably decided that their main energy and financial resources should be devoted towards the cost of making their reunification successful, can we be surprised that they have a rather different view of the conflict in the Gulf?
Can we be frightfully surprised that the French, with their traditional links with Iraq and their traditional habit of selling arms on what might be described as a rather more pragmatic basis than some other countries are prepared to pursue, have a different attitude towards the Gulf? Is it not obvious that the political advantages that were said to accrue from going into a European fixed exchange rate mechanism are not likely to come about?
The sooner the Government go back to the successful policies of, first, having a floating exchange rate and, secondly, having a predictable programme for slowly reducing the increase in the money supply, the better; otherwise, we shall certainly lose the election by being hitched to an unpredictable star such as the deutschmark. We shall humiliate ourselves, as so many other statesmen have humiliated themselves in the past, by fixing the currency to another currency.
§ 6.4 pm
§ Mr. Ian McCartney (Makerfield)
Hon. Members have listened to a devastating critique in opposition to the Government's amendment. It is not the first time that the hon. Member for Wolverhampton, South-West (Mr. Budgen) has set out his economic opinion in intellectual terms. Although I could not support his attitude to the free market, his critique was at least honest compared with the Secretary of State's political chicanery.
I think that the hon. Gentleman is known as "Budgie" to his friends. It is interesting that he literally blew the 981 whistle on the Government's pretence that there is no recession in the United Kingdom, that there is simply a downturn and that sacrifices are not being made by ordinary men and women, many of whom, as the hon. Gentleman said, took up the Government's promises in the past decade. In many cases they invested their own resources, not just redundancy money, and took up the opportunity of self-employment. They now find themselves riddled with debt and are desperate.
Some Conservative Back-Bench Members have sneered. They do not sneer at Opposition Members, they sneer at people who are suffering at the sharp end and who are making real sacrifices. In answer to an intervention by me, the Secretary of State himself sneered at the contributions that are being made by local authorities in an attempt to develop alternative economic policies to take account not only of what happened in the 1980s but of what needs to happen to develop alternative employment prospects and create wealth.
Despite my accent, I represent an English constituency in a former mining community in south Lancashire. Devastation was brought to the community in the 1970s, and in the 1980s in particular. The loss of tens of thousands of textile and engineering jobs has made local authorities think deeply about interventionist policies in the local economy, and about working with the private sector, public bodies and the European Community to try to develop a regeneration strategy. The Minister rejects that concept, despite the Audit Commission's report on urban regeneration and economic development clearly stating that there is a role for local government in the regeneration of the economy at local and regional level. However, the Government continue, as a matter of policy, to underrate the contribution made by local authorities.
In my area there has been a strategy, which will continue into the 1990s, of putting forward proposals, working with the private sector, and developing new job opportunities. Every time we have launched a scheme and created new jobs there have also been massive job losses. In the past few weeks there have been 800 redundancies in the Wigan travel-to-work area. That does not include the Wigan people who work in the St. Helens travel-to-work area, the Preston travel-to-work area, or the Warrington travel-to-work area.
In my area, one of the most promising new textile companies in the 1980s was developed with assistance from the local authority, and it created new jobs, training schemes and new factory arrangements. That company has announced 104 redundancies. That is not because of bad management or a lack of interest in creating new markets, it is because the Government's interest rate policy is virtually crippling the company. The Government's failure to deal with import penetration has crippled the country. That company was successful, trained its work force, had good industrial relations, and had a good working relationship with and assistance from the local authority. Yet it has had to make over 100 people redundant because of Government policies.
Gullick Dobson—a company in the constituency of my hon. Friend the Member for Wigan (Mr. Stott)—is one of the largest firms in the world involved in the manufacture of mining equipment. As a direct consequence of the privatisation of the electricity industry, hundreds of jobs in 982 the mining equipment industry have been lost, and it was announced recently that there would be a further 100 redundancies by April this year. As a direct consequence of the Government's policy towards British Coal and the privatisation of the electricity industry, millions of pounds' worth of investment in mining equipment has been lost, and the market has almost totally collapsed.
That is not a case of bad management, or of the failure of the management of Gullick Dobson and its work force; it is a direct consequence of Government policies. Unless those policies are reversed, Britain will cease to have any mining technology industry, despite the fact that we have coal reserves that would last nearly 1,000 years and the fact that we have had a century of research and development connected with mining equipment.
I could go on and devleop the same theme in respect of all aspects of the local economy. Small, medium and large companies are suffering the same problems—in every case, the direct result of Government policies, rather than of a failure of management or of the work force.
Rockware plc, which is one of Britain's largest plastic and glassware companies and one that has received awards for its contribution to British industry, found itself last year with a real problem. As a result of high interest rates it could not find the resources for the machinery that, after 1992, will be necessary to develop new plastic containers and other products. Its European competitors entered the field and virtually purchased the entire market capacity. How were they able to do that? They were able to do it because the banks in their countries encourage long-term investment at low interest rates.
In addition, those Governments are prepared to use regional development funds for that purpose. I refer, for example, to the Governments of Holland and Germany. As a consequence, this company is reducing its work force by more than 100, and what has been United Kingdom capacity is being transformed into a foreign investment portfolio. I say again that this is a direct consequence of the Government's failure to create a market in which companies can take risks and take advantage of new investment opportunities.
During the 1980s Labour local authorities in the north-west had a record of success. Indeed, much of the remaining manufacturing base exists as a direct result of local authority intervention. In the early and mid-1980s the present Government almost destroyed the engineering base of the north-west. Indeed, in that regard, the area has suffered more than any other region of Britain. Over the decade, there has been a 30 per cent. reduction in manufacturing employment—30 per cent. in the case of a region that accounts for the second largest contribution, in monetary and material terms, to the British economy. The region has been virtually destroyed as a result of the Government's policies.
We shall not win in the Division Lobbies tonight. The Government's position is clear. The tragedy is that it is British industry that will lose tonight. The losers will be the work force, the managements, people who want to invest and local authorities that want to develop a new economic outlook and a new future. Every time the Secretary of State comes to the Dispatch Box, our competitors in Europe and elsewhere rub their hands with glee. Every time the Government refuse to intervene, to develop a common approach to investment and training, in partnership with local authorities and with the private 983 sector, they give our competitors a signal that the British market, in terms of capacity and production, is available to them.
We are involved in a war in the Gulf, but there is also an economic war at home. This was set out very well by the hon. Member for Wolverhampton, South-West. Unless something very dramatic happens in the next few years, unless there is a change of Government and a change of policies, we shall lose the economic war, and we shall lose the opportunities for thousands of young people. That is what Ministers sneer at. A generation of young people are being denied real job opportunities in a real economy.
The Secretary of State sneered at my hon. Friend the Member for Dunfermline, East (Mr. Brown) when he presented his alternative policies. Where would he get the money? The Government are prepared to invest £1 million a day in the Gulf war—and the possibility is that that will go up to £1 billion a week. If there is a will, resources can be found. If resources are to be found to protect industry, jobs and opportunities, we need a Government with the will to provide those resources. If the present Government are not prepared to do so, let us have a general election so that a Labour Government may save British industry.
§ Mr. James Cran (Beverley)
As a number of other hon. Members wish to speak, I shall curtail my remarks.
These debates always disappoint me. Essentially, what happens is that British industry is criticised on the one hand, and individual companies and their work forces on the other. It seems to me that that is not the way to provide British companies with the incentive they need. The manner of the moving of the motion by the hon. Member for Dunfermline, East (Mr. Brown) was disgraceful. He used the gatling-gun approach—an enormous number of ideas presented in rapid-fire fashion. Indeed, they were not ideas; they were simply words that did not connect with one another and, in the end, did not amount to strategy. "Strategy" is a magical word which has been used by all Opposition spokesmen. So far as Opposition Members are concerned, everything is reduceable to strategy—a training strategy or an economic strategy or, as in the days when I represented industrialists in the west midlands, an industrial strategy.
Whatever industrialists in this country want, it is not a Labour Government or a whole load of strategies, one heaped upon another. That is a simple fact and if the Opposition do not understand it they ought to start speaking to a few industrialists. It is perfectly clear that they have not done so recently. My right hon. Friend the Secretary of State was absolutely correct to take inflation as the kernel of his argument. I speak to many industrialists and every one of them wants price stability. There is no question about that. That is why industrialists will never place their trust in the Labour party.
I looked up some facts and the situation is quite clear. The Labour party's record prior to 1979, in so far as it was a record, showed an average inflation rate of 15.5 per cent. Under the present Government the rate, at 7.9 per cent., has been just about half that. I am not satisfied with the present rate of inflation—nor are the Government—but the industrial community knows perfectly well that the Government can reduce it, whereas the Opposition could not do so in a month of Sundays. That is a simple fact.
984 Some hon. Members have drawn comparisons between the present downturn—I do not use the word "recession"; it is a downturn—and the situation in the period 1979–81. That is ludicrous. Comparing the period 1979–81 to the present is like comparing chalk with cheese. I well remember taking a train journey at that time between New Street station in Birmingham and Wolverhampton. What I passed through was a lunar landscape. That was the result of a number of years of policies pursued by the previous Labour Government—although, to be fair, not just that Government. On each side of that railway line there were no companies; there were just a lot of empty sheds. I repeat: it was a lunar landscape.
That has been transformed. If anyone cares to take that rail journey again he will find that the whole area between Birmingham and the black country has been rejuvenated. It was not rejuvenated in the absence of policy. It was rejuvenated in the back of the sensible fiscal, monetary and industrial policies followed by the Government during the past 10 years.
I am astonished that we have not heard as much about the Confederation of British Industry during the debate as I expected. I came armed with a quote from the chief economic adviser to the CBI in The Times of 2 January 1991. He knows perfectly well what the facts are, because he said:There are substantial strengths in the British economy which should reassert themselves as inflation abates.It is quite clear to me that inflation is abating. The strengths to which the CBI referred will undoubtedly assert themselves.
It is extraordinary that in a debate such as this we have heard a litany of doomsday stuff from the Opposition. They did not mention that in the United Kingdom living standards, which are a reflection of what industry is doing and achieving, have moved up in the past 10 years from eighth position in the league table of EC countries to fifth position. To hear Opposition Members speak, one would think that the opposite was true.
Of course, I am not satisfied that we have merely maintained our share of world trade in manufactures since 1983. I should have liked to see it increase. But the Opposition's record shows that they allowed that share to decrease. My right hon. Friend the Secretary of State alluded to that. So progress has indeed been made.
I am also disappointed that no Opposition Member mentioned that in the United Kingdom we have some of the strongest and best companies on the globe. If I were a manager or a worker in any of those companies I should have taken great offence at the rubbish I heard from the Opposition. [Interruption.] Opposition Members should listen sometimes, because they might learn something. If they looked at the record, they would find that, of the top 500 European companies, 138 are British. To listen to that lot on the Opposition Benches, one would think that there were no British companies on the list at all. How many such companies does Germany have on the list? It has a mere 92. Some of us might have presumed from the stuff we heard from the Opposition that the figures were the other way round, but they are not.
Let us consider turnover. British companies account for 69 per cent. of the turnover of Europe's 50 top industrial companies. Why was that not mentioned? It is because the fact does not suit the Opposition's political case, which is 985 all that we heard from Opposition Members today. Their case was not based on sense or fact because not one of them could mobilise a bit of sense or fact between them.
Another fact that was entirely missing from the scenario given by the Opposition was that the standard of competence of management is so much higher following the past 10 years of Government policy. [Interruption.] Opposition Members may harass, but that does not change the fact. Management is now far more competent than ever before. That was reflected in the Lonrho statement to shareholders which appeared again in The Times—one of my favourite newspapers—of 25 January 1991. [Interruption.] If Opposition Members would listen they would find that there was something different about management. The chairman said in that statement:Some economies are in recession, but change always means opportunity and Lonrho welcomes it with sharpened teeth.That is a characteristic of most of the companies to which I have referred today and it is certainly a characteristic of most of the companies that I visit in my constituency.
I finish by merely drawing attention to a factor which has already been mentioned—inward investment. It is clear that the United Kingdom has been the number one location for inward investment in Europe. That clearly could not have been the case if the scenario put to us by the Opposition was as bad as they suggested. Foreign companies want some economic stability and they know that that is exactly what they will have from this Government. There will be no U-turns or sail trimming and that policy will continue.
I shall finish with those words to allow some of my hon. Friends an opportunity to speak. I deprecate the manner in which the Opposition introduced the motion. It was an insult to British companies, but, worse, it was an insult for the British labour force which works for those companies.
§ Mr. Edward O'Hara (Knowsley, South)
I wish to turn the debate from intellectual abstractions such as we have just heard from the hon. Member for Beverley (Mr. Cran) to what recession feels like in the regions. I speak as one who comes from the north-west—which, according to many indicators, has suffered more than any region in the past decade—from Merseyside—which is the most deprived part of the north-west—and from Knowsley, South—which is undoubtedly the most deprived part of Merseyside. I speak as one who does not believe in minimalist government but who believes in strategies. When I talk to industrialists in my part of the country, they tell me that they would prefer some economic strategy to the laissez-faire mess which they are suffering under this Government.
I, too, remember the miracle years of 1979 to 1981. I remember rusting barbed wire on perimeter fences of empty factories in the trading estates of Knowsley, South. Manufacturing investment figures are quoted as part of the vaunted economic miracle of the Government. The Government always carefully choose the year from which they date their improvements. It took until 1988 to return to the 1979 levels of investment, and the figures mask the cumulative shortfall of over £20.5 billion of industrial investment between 1983 and 1987.
986 The worst hit area was the north-west, which had a cumulative shortfall of £3.75 billion of industrial investment in that time. The Government could have helped with regional preferential assistance to the north-west, but they did not. Regional preferential assistance to the north-west between 1978–79 and 1989–90 fell by as much as 72.2 per cent. As recently as 1988–89, there was a reduction of £181 million.
The result was a drop in gross domestic product per head in the north-west between 1979 and 1989 of 5 per cent. in the worst hit of all regions. The result for my people was unemployment at a rate which demoralises and distorts communities. Unemployment is rising in every region. It has risen by 13,300 in the north-west since October. In the north-west, 35.5 per cent. of those registered unemployed have been out of work for over 12 months. Not only small businesses but major companies are shedding jobs.
When a company such as Ford sheds thousands of jobs, those jobs are spread over a large go-to-work area. BICC, which is presumably one of the strongest companies in the world, is from the area and was originally called Prescot Cables. When it closes a factory, it tears the heart out of the community because we do not have such a strong tradition of commuting to work in my part of the world. There are fewer cars per family there. The latest factory closure announced by BICC in Prescot means that approximately half the capacity in this country for the production of highly valuable conductive copper will be lost because of the laissez-faire policies of the Government. They could have done something about it, but they did not care.
Unemployment distorts local economies and local populations. At Euston station at tea time on any Friday, one can see the migrant labourers of Merseyside returning home on what we call the Tebbit express. Many will not come back. There is an irony. Proud Merseyside, based on immigrant labourers from Ireland, Wales and elsewhere in the 19th century—my ancestors came from Ireland—is now exporting its migrant labourers to wherever they can find menial work.
The Government boast that living standards have increased overall, but in the north-west they are only half the national average. In Knowsley, South, I could show the Minister many families whose living standards have declined the past 10 years because of the distortions in the population consequent upon the Government's economic policies. We have a high incidence of families dependent on benefits. We all know the position. The freezing of child benefit in particular has had a disproportionate effect on families in Knowsley. For those in employment, the average cost of a mortgage has risen by £93.21 over the past two years. In Knowsley, South that has a significant impact on living standards.
The people in Knowsley, South spend a higher than average proportion of their weekly income on the necessities of life. If the cost of the necessities goes up, it has an impact on living standards. Mortgage interest is one example; the poll tax is another. The community has a large number of large families with many poll tax payers per household. The poll tax bills have gone up considerably compared with rate bills. The average increase is 38 per cent.
All that feeds back into failures of shops and small businesses in an already fragile economy. My hon. Friend the Member for Makerfield (Mr. McCartney) referred to 987 the economic needs of the community. When local authorities try to service the social and economic needs, because we believe in a local government policy of industrial development locally, they are punished by the Government with the threat of capping.
I hope that I have shown that, in the regions such as Knowsley, South, which I represent, the people are crying out for a change of Government as soon as possible and for the advent of a Government with a commitment to introduce policies for regional industrial development, jobs and increased living standards.
§ Mr. Alistair Burt (Bury, North)
I am grateful for the opportunity to make a short contribution to the debate. I shall try to cover the history of the last 10 years in three minutes.
The problem with a debate such as this is that it must concentrate on the immediate, but if we consider just that and not the trends of the last 10 years, we do not see the whole picture. It is important to see how we have come through the last decade, so that we may understand how we have got to this stage and how we can go on.
It is wrong for Opposition Members not to pay any regard to the changes for the good which have happened to the structure of British manufacturing over the past 10 years. Yes, there are fewer people employed, but that is a worldwide trend. We all know that that was bound to happen. Productivity has improved in many ways and investment has gone up. In my constituency, the base of manufacturing has changed since 1979. We have a greater diversity of industry since service industries have grown. That change is neither good nor bad; it is simply fact.
However, the bad times have come back. I do not believe the easy words which say that the recession is affecting only some parts of the country and not the regions. It is affecting the regions. Ministers should note what the hon. Member for Stalybridge and Hyde (Mr. Pendry) said. He spoke about people in manufacturing listening to the Labour party. Yes, they are. If we are to stop them listening to the Labour party, we have to move quickly.
As many of my hon. Friends have said, inflation remains the major enemy for everyone, including manufacturers. They appreciate that our policies are basically correct, but interest rates are hurting. What is also hurting is that the Government do not seem to have the same feel for manufacturing industry as they have for the City. We have time to correct that attitude. We have a Budget coming which we can make a Budget for industry.
At heart, no manufacturer seriously wants a Labour Government. Manufacturers do not want devaluation or inconsistencies in policies; they do not want the disasters of the past. [Interruption.] The hon. Member for Worsley (Mr. Lewis) is muttering to himself, but he cannot explain why manufacturing productivity fell by 2.5 per cent. during the time the Labour Government were in power, or how investment plummeted by 20 per cent. in three years. Manufacturers do not want those conditions back. They want a Conservative Government, but a Conservative Government who plainly believe in manufacturing industry.
Let us get the rhetoric right in the Budget. Let us find some measures within our economic strategy which do not 988 affect the fight against inflation but which recognise the pain that manufacturers are going through and keep their faith with a Government who at heart are really for them.
§ Mr. Doug Henderson (Newcastle upon Tyne, North)
The debate is about the Government's economic failure, which has brought the country into a deepening recession. It has been an interesting debate, although it has been short. There have been some telling contributions. We have heard the experiences of hon. Members from different parts of the country and from different sectors of industry.
My hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) made a convincing case for the north-west and the need to do something to help the business community which felt particularly let down by the impact of Government policies. We heard a passionate speech from my hon. Friend the Member for Makerfield (Mr. McCartney), who spoke about the damage being done in the Wigan travel-to-work area and the damage to the textile industry in his area. He also talked about the important role of local authorities, in partnership with industry, to help economic development. Surely that makes sense. It is not a party political point. Surely it should be accepted by local authorities of all colours if they have some wisdom.
My hon. Friend the Member for Edinburgh, Leith (M r. Brown) made a strong contribution in support of his constituency. I cannot say that I agree with every word, but I agree with his point about medicine from the new leader of the Conservative party being essentially the same as we have had from the party for the last 10 years.
The hon. Member for Berwick-upon-Tweed (Mr. Beith), a neighbour of mine in the north-east, made a plea for investment in infrastructure and railways in connection with the channel tunnel. He and I are at one in support of that important project.
My hon. Friend the Member for Knowsley, South (M r. O'Hara) reminded the House that, in his constituency, we again have the rusty barbed wire which we saw to our cost in 1979–81. Again damage is being done to local communities.
In a forthright contribution, the hon. Member for Wolverhampton, South-West (Mr. Budgen) made a courageous comment. He said that there was a hideous squeeze on small business in that city because of Government policy and current interest rates. He also predicted that the Government would lose the general election if they stayed in a currency system which was linked to the deutschmark. That historic prediction may well be proven correct, even if for other reasons.
The hon. Member for Hastings and Rye (Mr. Warren), also in a useful speech, drew the attention of the House to the importance of the creation of wealth in society. I can tell him that the Labour party fully supports and endorses that.
The hon. Member for Beverley (Mr. Cran), in a speech of which he cannot be proud, especially given his CBI background, accused virtually every Opposition Member of complete ignorance of our industrial community. It was a lot of nonsense, and I am not prepared to comment further. Labour Members take great pride in supporting their local industry and those who work in it.
989 The hon. Member for Bury, North (Mr. Burt) emphasised the need to take a long-term view of the economy. We agree on most things connected with football, and I agree with him also on that point. However, when he said that manufacturers in the north-west did not want a Labour Government, it was clear that he could not have been talking to manufacturers even in his constituency. When I visited it recently, they emphasised the importance of having a Government who looked after industry, training, the infrastructure and the rest of it.
My hon. Friend the Member for Dunfermline, East (Mr. Brown) emphasised that the recession which the country faces is self-inflicted by a Government who, following the tax cuts of 1986–87, created rapid inflation, high interest rates and a massive deficit in the balance of payments. The recession is self-inflicted by a Government who are so obsessed with cutting public expenditure that they sit back in complacent idleness while our transport system chokes itself to a halt. The recession is self-inflicted by a Government who are so obsessed with having no regulations on training and employment that we now have virtually no training policy. The recession is self-inflicted by a Government who are so obsessed with the party line that they have killed off the production line.
The Secretary of State pointed out that the Government believed that tackling inflation was the main aim of economic policy and that inflation was a disease in this country. All the millions of mortgage payers who for the past 24 months, have had to pay rapidly increasing contributions will also agree that inflation is a disease which has been created by the Government. Mortgage holders who have had to forfeit their homes because they cannot keep up with the payments because of the interest rates will feel even more acutely that that is the case.
If tackling inflation is the Government's main aim—I do not dispute that—they cannot duck the evidence before them. Inflation is now more than double the European Community average. It was more than 10 per cent. in 1990. It has made our industry the most uncompetitive industry in Europe. What makes matters worse, the Secretary of State has said that inflation penalises the sick, the poor and the weak in society. If that is so—I am sure it is—it is an admission by the Government that the failure of their economic policies has penalised the sick, the poor and the weak sections of our community.
Time and again during the 1980s, the Government told us that inflation would be the judge and jury of their policies. If so, the verdict is that their economic policy has been a complete failure. The result is that we now not only have high inflation, but have returned to a vicious recession worse than anything since the second world war, bar the 1979–81 recession.
Time and again the Government have claimed that there has been a transformation. Indeed, the Under-Secretary of State made that point last week during Trade and Industry questions. I had little sympathy for him when he made that point as a Back Bencher, ambitious to get on to the Conservative Front Bench, and had a choice. Nevertheless, he learned the lines about the great transformation. I now have some sympathy for him. Although he still comes out with the same well worn, well rehearsed lines, the difference is that he has no choice.
990 When the Under-Secretary of State comes to the Dispatch Box, he will undoubtedly again tell us of the difficulties that the Government have faced, yet there has been a great transformation. What he will not tell us, and what the Secretary of State did not tell us either, is that about 2 million people will be out of work by the spring. They do not tell us about the 1,500 people who are losing their jobs in manufacturing every week, about the thousands of businesses that have gone to the wall because of high interest rates, about the manufacturing deficit in 1990 of £13 billion and the trade deficit of £16 billion—the fastest fall in output for 10 years—or about the reduction in manufacturing investment which is 8 per cent. down in the third quarter of 1990 compared with the same quarter in 1989. They have not told us those facts. It is clear to the whole country that there has been no transformation in our economy and that we are in another deep recession.
I understand Tory Members who think that the CBI is a bunch of whingeing faint hearts, disloyal to the point of objectivity. Nevertheless, the CBI has a view. It knows about industry. Its members are industrialists. They know what is happening at the point of production every day. The CBI's latest "Industrial Trends" clearly shows that business confidence has fallen more sharply than at any time since October 1980, that total demand has continued to fall sharply and that the largest proportion of firms since April 1981 are preparing to cut employment.
In case the Minister or the Secretary of State think that I am being selective in my evidence, I draw their attention to that other band of treacherous lefties, the chambers of commerce. The chamber of commerce survey published in the past few days found that most regions are experiencing severe recession and that it is deepening further. The difference from past recessions—in 1974–75 and again in 1979–81—is that the Government blamed a world recession for their troubles. There is no world recession in 1991. Countries such as Germany and Japan are still enjoying growth and low levels of inflation. In past recessions, the north of the country, south Wales, Scotland and Northern Ireland were the hardest hit by the fall in economic activity nationally.
This is a new-fashioned recession. It is not worldwide. It has not hit the north and old industries only. Of course, it has hit the north too. Our northern regions have been badly hit and damaged, particularly the textile and engineering industries and the truck sector of the motor vehicle industry. This recession has hit the whole of our community. The south has been equally badly affected. Unemployment in the south-east is more than 450,000. It rose by 117,000 between October and December. In London and the south-east, 50 per cent. of company liquidations occurred in 1990, and there was a 35 per cent. increase in business failures since 1989. New industries have been hit, such as the electronics companies in Cambridge and British Aerospace in Kingston.
The country knows that the evidence of unemployment, our trade deficit, mortgage rates, interest rates and inflation has exposed the economics of the Conservative Cabinet as ruinous, dated and out of touch. Our industrial and commercial community know that the country is in an economic mess. If truth be told, if the Government face up to the facts and are honest about the predicament of the economy, they know that there has been no transformation and that the economy is in a mess.
The Government have dug deep into the trenches of a recession that is entirely of their own making. The people 991 want to know how the country can be dug out. There is enormous consensus among industrialists, chambers of commerce, workers and others that we should begin to invest and plan for the needs of future generations. They believe that we should invest in roads, railways, and telecommunications. They believe that we should plan our trading needs and invest in research and development in common with other comparative economies, so that we can upgrade our technology.
Those people believe that we should make a real effort so that economic activity is fairly distributed and the country is not hamstrung by a stop-go cycle that usually starts in the south and kills off the north. This time that cycle has started in the south and has damaged the north, but it could well kill the south before it ends.
The people are asking when we shall have a Government who will help industry instead of helping themselves to industry. I believe that people will choose to support the policies and the politics contained in our motion. When it comes to the next general election, the people will back the political party that supports those policies, which can form a decent Government to serve the country in the future.
§ The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Edward Leigh)
During the entire speech of the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) I was waiting to hear about Labour party policies—and we had to wait until the final two minutes. I wonder whether the hon. Gentleman has checked his list of priorities with the shadow Chief Secretary? I doubt it, because we have been informed that the Labour party is not in the business of peddling spending policies. The hon. Gentleman's speech gave the opposite impression.
We have had an interesting debate—a "crisis" debate, I believe the hon. Member for Edinburgh Leith (Mr. Brown) called it as he addressed all of two Labour Back Benchers. It has been a debate in which my hon. Friends have been prepared to be positive. I want to pay particular tribute to my hon. Friend the Member for Beverley (Mr. Cran), who speaks from experience. I do not think it was entirely unremarkable for my hon. Friend to try to persuade the Opposition not to talk down British industry and the successful parts of our economy.
§ Mr. David Blunkett (Sheffield, Brightside)
I am grateful to the Minister for giving way in the limited time available. Perhaps he and his hon. Friend the Member for Beverley (Mr. Cran) would care to come to Sheffield to talk to the managing director of Barworth Flockton, which employs hundreds of men in engineering. That company survived the previous recession, but without a change in Government policy on exchange rates and interest rates, it simply will not be able to stay in business. The Government should also protect us from their free trade policies which have allowed import levies into the United States to start to kill Shardlows, which is part of United Engineering Steels, in the forging industry. Those are the facts. Beverley and Gainsborough may be protected from them, but the great skilled city of Sheffield is not.
§ Mr. Leigh
Gainsborough is not very far from the hon. Gentleman's constituency, and he should know that it is 992 an industrial town. If the hon. Gentleman had studied the recent 3Is—Investors in Industry—survey of business men, he would discover that 80 per cent. believe that business is in a better position now to weather the current downturn in demand than it was nine years ago. I would rather take evidence from a well conducted survey of business men throughout the country than anecdotal evidence from the hon. Gentleman.
My hon. Friend the Member for Hastings and Rye (Mr. Warren) is Chairman of the Select Committee on Trade and Industry, so he speaks with great knowledge. He made it clear that it is vital that we should preserve our competitive edge in Europe. That is precisely what our policies are designed to achieve.
In the short three hours that have been available to us, this debate has brought out the short-termism of the Labour party. As usual, it is unwilling to take a long-term view. To the extent that the Labour party's vision is focused, it is focused on opportunism and quick fixes. That is and always has been the policy of the Labour party.
§ Mr. Brian Wilson (Cunninghame, North)
I am sure that the Minister will be interested to learn that I received today a list of eight engineering firms in one small area of Ayrshire that have been in liquidation since November. Does he agree that death is perhaps the ultimate form of short-termism?
§ Mr. Leigh
The hon. Gentleman and I were not in the House when the previous Labour Government held office, but the Opposition have always tried to pose as the friend of the manufacturing industry. When they were last able to exercise that friendship, they ensured that we had an average inflation rate of 15.5 per cent., and that manufacturing output went down. That is the result of short-termism.
Let me make it absolutely clear that no one denies that times are tough in the current economic downturn. It is necessary for times to be tough so that we can finally lick inflation. The true enemy of output is inflation. If it were to slip out of control, it would have a devastating effect on jobs, productivity and investment. All our policies are designed to lick inflation.
Let us try, if that is possible for the Opposition, to keep the debate in some perspective. The hon. Member for Newcastle upon Tyne, North said that I would talk about the transformation of British industry, and I shall not disappoint him. In the past 10 years, output has increased by nearly a quarter, productivity has increased by 60 per cent. and investment has increased by 25 per cent. It is a record of which to be proud. It is right to keep such matters in perspective, and we shall continue to do so.
We did not hear a great deal from the Opposition about our membership of the exchange rate mechanism. In the months leading up to our membership, they were its constant advocates. I have always been rather surprised at that, because surely such membership would prevent a Labour Government from retreating to their traditional boltholes of fiddling interest rates and devaluation. Such policies have been followed by every Labour Government since Attlee. Would they use such boltholes in the future, or would they slip out of the ERM? I do not believe that a Labour Government could keep to the disciplines of the ERM any more than an alcoholic could sip orange juice in a bar.
993 We heard precious little about policies from the hon. Member for Dunfermline, East (Mr. Brown). In summary, those policies are as follows: one throws in a state investment bank, a few quangos, a few controls, a few state subsidies, a few interest rate cuts, a few tax increases and a regional policy. What does one get? An industrial soufflé that collapses at the first puff of smoke. Such are the Opposition's policies—they have not worked before and they will not work again. The Labour party has not explained how its policies would satisfy the Commission.
Our policies are based on supply side economics. Since 1979, no fewer than 42 privatisations have occurred, which have transformed the services available to customers.
We have achieved tax cuts—the lowest rate of corporation tax in the industrialised world and a tax regime for small companies which is the envy of that world. We are determined to achieve the best environment in which prosperity and enterprise can be promoted, and we shall continue with the policies that will bring that about.
If we followed the advice of the Labour party and resorted to quick fixes and opportunism, if we let inflation rip out of control, there would be disastrous consequences for British industry. We shall not do that. We shall remain committed to our policies, which are the basis of a successful and enterprising British industry, well capable of meeting the competitive challenge of the single market and the opening markets in eastern Europe. We shall remain true to our policies. We shall stick to them, and we shall win through.
§ Question put, That the original words stand part of the Question:
§ The House divided: Ayes 215, Noes 272.996
|Division No. 52]||[7 pm|
|Abbott, Ms Diane||Canavan, Dennis|
|Allen, Graham||Cartwright, John|
|Alton, David||Clarke, Tom (Monklands W)|
|Archer, Rt Hon Peter||Clelland, David|
|Armstrong, Hilary||Clwyd, Mrs Ann|
|Ashdown, Rt Hon Paddy||Cohen, Harry|
|Ashton, Joe||Cook, Robin (Livingston)|
|Barnes, Harry (Derbyshire NE)||Corbett, Robin|
|Barron, Kevin||Corbyn, Jeremy|
|Battle, John||Cousins, Jim|
|Beckett, Margaret||Crowther, Stan|
|Beith, A. J.||Cryer, Bob|
|Bell, Stuart||Cummings, John|
|Bellotti, David||Cunliffe, Lawrence|
|Benn, Rt Hon Tony||Cunningham, Dr John|
|Bennett, A. F. (D'nt'n & R'dish)||Dalyell, Tam|
|Benton, Joseph||Darling, Alistair|
|Bermingham, Gerald||Davies, Rt Hon Denzil (Llanelli)|
|Bidwell, Sydney||Davis, Terry (B'ham Hodge H'l)|
|Blair, Tony||Dewar, Donald|
|Blunkett, David||Dixon, Don|
|Boateng, Paul||Doran, Frank|
|Boyes, Roland||Douglas, Dick|
|Bradley, Keith||Dunnachie, Jimmy|
|Bray, Dr Jeremy||Dunwoody, Hon Mrs Gwyneth|
|Brown, Gordon (D'mline E)||Eadie, Alexander|
|Brown, Nicholas (Newcastle E)||Eastham, Ken|
|Brown, Ron (Edinburgh Leith)||Evans, John (St Helens N)|
|Bruce, Malcolm (Gordon)||Ewing, Harry (Falkirk E)|
|Buckley, George J.||Ewing, Mrs Margaret (Moray)|
|Caborn, Richard||Faulds, Andrew|
|Campbell, Menzies (Fife NE)||Fearn, Ronald|
|Campbell, Ron (Blyth Valley)||Field, Frank (Birkenhead)|
|Campbell-Savours, D. N.||Fields, Terry (L'pool B G'n)|
|Fisher, Mark||Michie, Mrs Ray (Arg'l & Bute)|
|Flynn, Paul||Mitchell, Austin (G't Grimsby)|
|Foot, Rt Hon Michael||Morgan, Rhodri|
|Foster, Derek||Morley, Elliot|
|Foulkes, George||Morris, Rt Hon A. (W'shawe)|
|Fraser, John||Morris, Rt Hon J. (Aberavon)|
|Fyfe, Maria||Mullin, Chris|
|Galbraith, Sam||Murphy, Paul|
|Galloway, George||Nellist, Dave|
|Garrett, John (Norwich South)||Oakes, Rt Hon Gordon|
|George, Bruce||O'Brien, William|
|Gilbert, Rt Hon Dr John||O'Hara, Edward|
|Godman, Dr Norman A.||O'Neill, Martin|
|Golding, Mrs Llin||Orme, Rt Hon Stanley|
|Gordon, Mildred||Patchett, Terry|
|Graham, Thomas||Pendry, Tom|
|Grant, Bernie (Tottenham)||Pike, Peter L.|
|Griffiths, Nigel (Edinburgh S)||Powell, Ray (Ogmore)|
|Griffiths, Win (Bridgend)||Prescott, John|
|Grocott, Bruce||Primarolo, Dawn|
|Healey, Rt Hon Denis||Quin, Ms Joyce|
|Henderson, Doug||Radice, Giles|
|Hinchliffe, David||Randall, Stuart|
|Hoey, Ms Kate (Vauxhall)||Redmond, Martin|
|Hogg, N. (C'nauld & Kilsyth)||Rees, Rt Hon Merlyn|
|Home Robertson, John||Reid, Dr John|
|Howell, Rt Hon D. (S'heath)||Richardson, Jo|
|Howells, Geraint||Robinson, Geoffrey|
|Hoyle, Doug||Robinson, Peter (Belfast E)|
|Hughes, John (Coventry NE)||Rogers, Allan|
|Hughes, Robert (Aberdeen N)||Rooker, Jeff|
|Hughes, Roy (Newport E)||Rooney, Terence|
|Hughes, Simon (Southwark)||Ross, Ernie (Dundee W)|
|Illsley, Eric||Rowlands, Ted|
|Ingram, Adam||Ruddock, Joan|
|Janner, Greville||Salmond, Alex|
|Jones, Barry (Alyn & Deeside)||Sedgemore, Brian|
|Jones, leuan (Ynys Môn)||Sheerman, Barry|
|Jones, Martyn (Clwyd S W)||Sheldon, Rt Hon Robert|
|Kaufman, Rt Hon Gerald||Shore, Rt Hon Peter|
|Kennedy, Charles||Short, Clare|
|Kinnock, Rt Hon Neil||Skinner, Dennis|
|Kirkwood, Archy||Smith, Andrew (Oxford E)|
|Lamond, James||Smith, C. (Isl'ton & F'bury)|
|Leadbitter, Ted||Smith, Rt Hon J. (Monk'ds E)|
|Leighton, Ron||Smith, J. P. (Vale of Glam)|
|Lestor, Joan (Eccles)||Smyth, Rev Martin (Belfast S)|
|Lewis, Terry||Soley, Clive|
|Litherland, Robert||Spearing, Nigel|
|Livingstone, Ken||Steel, Rt Hon Sir David|
|Livsey, Richard||Steinberg, Gerry|
|Lloyd, Tony (Stretford)||Stott, Roger|
|Lofthouse, Geoffrey||Strang, Gavin|
|McAllion, John||Straw, Jack|
|McCartney, Ian||Taylor, Matthew (Truro)|
|Macdonald, Calum A.||Thomas, Dr Dafydd Elis|
|McFall, John||Turner, Dennis|
|McKay, Allen (Barnsley West)||Vaz, Keith|
|McKelvey, William||Walley, Joan|
|McLeish, Henry||Wardell, Gareth (Gower)|
|McMaster, Gordon||Wareing, Robert N.|
|McNamara, Kevin||Watson, Mike (Glasgow, C)|
|McWilliam, John||Welsh, Andrew (Angus E)|
|Madden, Max||Welsh, Michael (Doncaster N)|
|Maginnis, Ken||Williams, Rt Hon Alan|
|Mahon, Mrs Alice||Williams, Alan W. (Carm'then)|
|Marek, Dr John||Wilson, Brian|
|Marshall, David (Shettleston)||Winnick, David|
|Marshall, Jim (Leicester S)||Wise, Mrs Audrey|
|Martin, Michael J. (Springburn)||Worthington, Tony|
|Martlew, Eric||Wray, Jimmy|
|Meacher, Michael||Tellers for the Ayes:|
|Meale, Alan||Mr. Thomas McAvoy and|
|Michael, Alun||Mr. Frank Haynes.|
|Michie, Bill (Sheffield Heeley)|
|Adley, Robert||Alexander, Richard|
|Aitken, Jonathan||Alison, Rt Hon Michael|
|Amos, Alan||Fookes, Dame Janet|
|Arbuthnot, James||Forsyth, Michael (Stirling)|
|Arnold, Jacques (Gravesham)||Forth, Eric|
|Arnold, Sir Thomas||Fowler, Rt Hon Sir Norman|
|Ashby, David||Fox, Sir Marcus|
|Baldry, Tony||Franks, Cecil|
|Banks, Robert (Harrogate)||Freeman, Roger|
|Batiste, Spencer||French, Douglas|
|Beaumont-Dark, Anthony||Fry, Peter|
|Bellingham, Henry||Gale, Roger|
|Bendall, Vivian||Gardiner, Sir George|
|Bennett, Nicholas (Pembroke)||Garel-Jones, Tristan|
|Benyon, W.||Gill, Christopher|
|Bevan, David Gilroy||Gilmour, Rt Hon Sir Ian|
|Biffen, Rt Hon John||Glyn, Dr Sir Alan|
|Blackburn, Dr John G.||Goodhart, Sir Philip|
|Blaker, Rt Hon Sir Peter||Goodlad, Alastair|
|Body, Sir Richard||Gorman, Mrs Teresa|
|Bonsor, Sir Nicholas||Gorst, John|
|Boscawen, Hon Robert||Greenway, Harry (Ealing N)|
|Boswell, Tim||Greenway, John (Ryedale)|
|Bottomley, Peter||Gregory, Conal|
|Bottomley, Mrs Virginia||Griffiths, Peter (Portsmouth N)|
|Bowden, Gerald (Dulwich)||Grist, Ian|
|Bowis, John||Ground, Patrick|
|Boyson, Rt Hon Dr Sir Rhodes||Grylls, Michael|
|Braine, Rt Hon Sir Bernard||Hague, William|
|Brandon-Bravo, Martin||Hamilton, Hon Archie (Epsom)|
|Brazier, Julian||Hampson, Dr Keith|
|Brooke, Rt Hon Peter||Hanley, Jeremy|
|Brown, Michael (Brigg & Cl't's)||Hannam, John|
|Bruce, Ian (Dorset South)||Hargreaves, A. (B'ham H'll Gr')|
|Buchanan-Smith, Rt Hon Alick||Hargreaves, Ken (Hyndburn)|
|Buck, Sir Antony||Harris, David|
|Budgen, Nicholas||Haselhurst, Alan|
|Burns, Simon||Hawkins, Christopher|
|Burt, Alistair||Hayhoe, Rt Hon Sir Barney|
|Butler, Chris||Hayward, Robert|
|Butterfill, John||Heathcoat-Amory, David|
|Carlisle, John, (Luton N)||Hicks, Mrs Maureen (Wolv' NE)|
|Carlisle, Kenneth (Lincoln)||Hicks, Robert (Cornwall SE)|
|Carrington, Matthew||Hill, James|
|Carttiss, Michael||Hind, Kenneth|
|Channon, Rt Hon Paul||Hogg, Hon Douglas (Gr'th'm)|
|Chapman, Sydney||Hordern, sir Peter|
|Chope, Christopher||Howard, Rt Hon Michael|
|Churchill, Mr||Howarth, G. (Cannock & B'wd)|
|Clark, Dr Michael (Rochford)||Howell, Rt Hon David (G'dford)|
|Clark, Rt Hon Sir William||Hughes, Robert G. (Harrow W)|
|Colvin, Michael||Hunt, David (Wirral W)|
|Conway, Derek||Hunter, Andrew|
|Coombs, Anthony (Wyre F'rest)||Irvine, Michael|
|Coombs, Simon (Swindon)||Irving, Sir Charles|
|Cope, Rt Hon John||Jack, Michael|
|Cormack, Patrick||Janman, Tim|
|Couchman, James||Jones, Gwilym (Cardiff N)|
|Cran, James||Jones, Robert B (Herts W)|
|Critchley, Julian||Kellett-Bowman, Dame Elaine|
|Currie, Mrs Edwina||Kilfedder, James|
|Davies, Q. (Stamf'd & Spald'g)||King, Roger (B'ham N'thfield)|
|Davis, David (Boothferry)||King, Rt Hon Tom (Bridgwater)|
|Day, Stephen||Kirkhope, Timothy|
|Devlin, Tim||Knapman, Roger|
|Dicks, Terry||Knight, Greg (Derby North)|
|Dorrell, Stephen||Knowles, Michael|
|Douglas-Hamilton, Lord James||Knox, David|
|Dover, Den||Lamont, Rt Hon Norman|
|Durant, Sir Anthony||Lang, Rt Hon Ian|
|Dykes, Hugh||Latham, Michael|
|Eggar, Tim||Lawrence, Ivan|
|Emery, Sir Peter||Lee, John (Pendle)|
|Evans, David (Welwyn Hatf'd)||Leigh, Edward (Gainsbor'gh)|
|Evennett, David||Lennox-Boyd, Hon Mark|
|Fallon, Michael||Lester, Jim (Broxtowe)|
|Favell, Tony||Lilley, Peter|
|Field, Barry (Isle of Wight)||Lloyd, Sir Ian (Havant)|
|Fishburn, John Dudley||Lloyd, Peter (Fareham)|
|Luce, Rt Hon Sir Richard||Shepherd, Richard (Aldridge)|
|Lyell, Rt Hon Sir Nicholas||Shersby, Michael|
|McCrindle, Sir Robert||Skeet, Sir Trevor|
|Macfarlane, Sir Neil||Smith, Tim (Beaconsfield)|
|MacGregor, Rt Hon John||Soames, Hon Nicholas|
|MacKay, Andrew (E Berkshire)||Speller, Tony|
|Maclean, David||Spicer, Sir Jim (Dorset W)|
|McNair-Wilson, Sir Patrick||Stanbrook, Ivor|
|Madel, David||Stanley, Rt Hon Sir John|
|Malins, Humfrey||Steen, Anthony|
|Mans, Keith||Stern, Michael|
|Maples, John||Stevens, Lewis|
|Marland, Paul||Stewart, Allan (Eastwood)|
|Marshall, John (Hendon S)||Stewart, Andy (Sherwood)|
|Martin, David (Portsmouth S)||Stewart, Rt Hon Ian (Herts N)|
|Mates, Michael||Sumberg, David|
|Maude, Hon Francis||Summerson, Hugo|
|Maxwell-Hyslop, Robin||Tapsell, Sir Peter|
|Mayhew, Rt Hon Sir Patrick||Taylor, Ian (Esher)|
|Meyer, Sir Anthony||Taylor, John M (Solihull)|
|Miller, Sir Hal||Tebbit, Rt Hon Norman|
|Miscampbell, Norman||Temple-Morris, Peter|
|Mitchell, Andrew (Gedling)||Thompson, D. (Calder Valley)|
|Monro, Sir Hector||Thompson, Patrick (Norwich N)|
|Montgomery, Sir Fergus||Thorne, Neil|
|Moore, Rt Hon John||Thurnham, Peter|
|Morrison, Sir Charles||Townend, John (Bridlington)|
|Morrison, Rt Hon Sir Peter||Townsend, Cyril D. (B'heath)|
|Moss, Malcolm||Tracey, Richard|
|Mudd, David||Trippier, David|
|Nicholls, Patrick||Twinn, Dr Ian|
|Nicholson, David (Taunton)||Vaughan, Sir Gerard|
|Norris, Steve||Viggers, Peter|
|Oppenheim, Phillip||Waldegrave, Rt Hon William|
|Page, Richard||Walden, George|
|Parkinson, Rt Hon Cecil||Walker, Bill (T'side North)|
|Patnick, Irvine||Walker, Rt Hon P. (W'cester)|
|Pattie, Rt Hon Sir Geoffrey||Wardle, Charles (Bexhill)|
|Peacock, Mrs Elizabeth||Warren, Kenneth|
|Price, Sir David||Watts, John|
|Raison, Rt Hon Sir Timothy||Wells, Bowen|
|Rhodes James, Robert||Wheeler, Sir John|
|Riddick, Graham||Whitney, Ray|
|Ridley, Rt Hon Nicholas||Widdecombe, Ann|
|Ridsdale, Sir Julian||Wiggin, Jerry|
|Roberts, Sir Wyn (Conwy)||Wilkinson, John|
|Roe, Mrs Marion||Wilshire, David|
|Rossi, Sir Hugh||Winterton, Mrs Ann|
|Rost, Peter||Winterton, Nicholas|
|Rumbold, Rt Hon Mrs Angela||Wolfson, Mark|
|Ryder, Rt Hon Richard||Wood, Timothy|
|Sackville, Hon Tom||Woodcock, Dr. Mike|
|Sainsbury, Hon Tim||Yeo, Tim|
|Sayeed, Jonathan||Young, Sir George (Acton)|
|Shaw, David (Dover)||Younger, Rt Hon George|
|Shaw, Sir Giles (Pudsey)|
|Shaw, Sir Michael (Scarb')||Tellers for the Noes:|
|Shephard, Mrs G. (Norfolk SW)||Mr. Nicholas Baker and|
|Shepherd, Colin (Hereford)||Mr. Neil Hamilton.|
§ Question accordingly negatived.
§ MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
That this House congratulates Her Majesty's Government on policies which have transformed economic performance and, over the last decade, achieved a faster rate of output and investment growth than in Germany, France and in Italy, the largest increase in manufacturing productivity of any major industrial country, record levels of exports, a record number of businesses, the highest ever number of people in work and an unemployment rate below the average of the European Community; welcomes the threefold increase in shareholders since 1979; and commends the resolve of Her Majesty's Government to bear down on inflation and to continue with the supply side policies which have contributed to these achievements.