Manufacturing Industry

HC Deb 16 October 1991 vol 196 cc340-412

Mr. Speaker

I have selected the amendment in the name of the Prime Minister. Because of the late start, I regret that I shall have to impose a limit of 10 minutes on speeches made between 7 and 9 o'clock.

5.12 pm

Mr. Gordon Brown (Dunfermline, East)

I beg to move, That this House strongly condemns the economic incompetence of the Government which has caused a decline in manufacturing output, investment and jobs, has brought very high levels of bankruptcies and closures, and caused fast rising unemployment in every sector of industry and every region of the United Kingdom; and demands that the Government now take seriously the needs of manufacturing industry with policies, both nationally and for the regions, to halt the huge decline in manufacturing investment, to bring unemployment down, and to improve the skills base of the economy. The motion demands urgent action on jobs and training to end the disgrace of the fastest-rising unemployment this year in western Europe. It seeks immediate action on improving investment in industry, which is the real test of economic competence, with a new manufacturing investment programme. The aim is to bring to an end a collapse of investment which in the last year has been the worst since 1932.

Yesterday, the most recent figures showed that manufacturing production was not rising but falling by 1.1 per cent. Industrial output is not rising but falling by 1.6 per cent. No one denies that unemployment, which officially has already reached 2.4 million—and is an absolute disgrace at that level —will rise yet again. It will rise in the north and in the south; it will rise among skilled, unskilled, and professional workers; and it will rise in high-tech as well as traditional industries. On the Chancellor's own admission, when he was interviewed on the "Today" programme last week, unemployment will rise next month and the month after that unless the Government take the action that our motion proposes.

According to the British Textile Confederation, redundancies in the textile industry will rise by 10,000 in the next few months, and the Engineering Employers Federation states that job losses in engineering will increase by 90,000. The Motor Agents Association says that there are 40,000 more redundancies to come in the vehicle industry, and another 100,000 job losses are expected in the construction industry. Those affected will be men in their 50s who will never work again, girls and boys in their teens who will be denied their first job, and family men and women who face the loss not just of their jobs but of their homes as well. Many of them are among the three-quarters of a million people who have mortgage arrears of two months or more. Business men and women who invested their life savings now feel abandoned by banks and by the Government.

This is not the failure of some other Government, some other Cabinet, or some other Prime Minister—today's failures are the failures of this Government, this Cabinet, and this Prime Minister. If Ministers had the courage to defend themselves, today's debate would be taking place not just in this Chamber but throughout the country, in a general election—in a nationwide debate in which the Government could no longer continue to cower behind their temporary parliamentary majority. Instead, the Government would be subjected, as they should be, to the full and direct scrutiny of the electorate. Such a debate would encompass not only the Government's failures in manufacturing but the importance of electing a Labour Government to rectify those failures.

The reason why a general election is not being fought at this time is abundantly obvious from everything that we heard at the Conservative party conference. It is not that the Chancellor has a new economic programme for Britain to implement, or that there is a new policy for the 1990s for which the Government want to legislate in the next Queen's Speech—the Conservative party has run away from an election that it knew it would lose.

The country knows that the Government are going down. The tragedy is that they are taking much of British industry with them. Let us examine the scale of the manufacturing crisis which confronts this country. Manufacturing employment is now below 5 million for the first time this century, after huge job losses of 250,000 in only 18 months. Industrial output is 3.3 per cent. lower than this time last year, and manufacturing output is down 5.7 per cent. It is not just one trade or sector that is affected, but almost every trade and sector. Engineering output is down 6 per cent., and output in investment goods by 6.6 per cent. Consumer goods are down by nearly 4 per cent. That is not an industry-led recovery or investment-led growth. Ministers argue that Britain is undergoing a weak recession that will give way to a strong recovery, on the road to the permanent elimination of inflation. The neglect of industry, however, means that Britain is moving from a deep recession towards only a shallow recovery, on the road to a permanent reduction of the country's industrial capacity.

Britain's manufacturing economy is already smaller than that of France and Italy, and half that of Germany. If the Government do not act on the supply side measures that we recommend, Britain will fall further behind in the more competitive Europe of 1992. I am sure that most right hon. and hon. Members agree that if we are to succeed in the new Europe, and if we are to be leaders in European industry, the real test of Britain's prospects—and of the jobs of tomorrow, not just of today —is the quality and quantity of investment. However, not only has overall investment fallen this year, but according to all estimates it will call again next year by 2 per cent., in contrast with a general rise throughout the rest of western Europe.

Mr. John Bowis (Battersea)

The hon. Gentleman says that he wants to see more investment, and presumably he also wants to encourage savings. How will savings be encouraged by Labour's pledge to impose a 9 per cent. surcharge on them?

Mr. Brown

The measures that we have outlined will encourage people to invest in manufacturing industry. Our small business scheme includes provisions whereby individuals can invest, and therefore save with tax relief, to put small business in this country on its feet. It is no use Conservative Members posing as the friends of small business men and women, and of savers, when they have been responsible for 40,000 businesses going down this year alone.

Business investment in Germany is rising by 7 per cent. this year, in Spain by nearly 5 per cent., and in Japan by just under 7 per cent. According to the Confederation of British Industry, business investment in Britain is falling by 11 per cent. this year—19 per cent. in total in manufacturing. I can think of no other European competitor country experiencing such a big collapse in its basic manufacturing investment this year. Worse than that, I can think of no other western European country where the Government's response to falling investment has been to withdraw the little help that they have rather than to offer the best that they can do. We are not merely the only major country in Europe in which business investment has fallen this year by significant amounts—we are also the country in which investment will fall in 1992.

Let us be absolutely clear about what is happening to manufacturing in this country. According to the Confederation of British Industry, investment in manufacturing was £12.4 billion in 1989 and £12.1 billion in 1990; it is only £9.4 billion for this year and in real terms it will be only £8.5 billion in 1992. In other words, in three years investment in manufacturing will have fallen by 30 per cent.

Whom do business blame for what has gone wrong? Do they blame the Organisation of Petroleum Exporting Countries, the European Community, world conditions, or the trade unions? Do they blame the BBC, as Ministers now seem to? Does not business in fact believe that the Government have no one to blame but themselves?

Mr. Peter Gill, director of the Builders Merchants Federation, said: As a result of a combination of ineptness and sheer arrogance, the Treasury and Government were responsible both for the depth of the slump and its seemingly endless course. Mr. John Harris, chairman of the policy unit of the National Federation of Self Employed and Small Businesses, said: A little more sympathy and humility would not come amiss". The managing director of Marlborough Ceramic Tiles said: This time round we have no such benign feelings towards the Government. We regard the recession as being the result of unforgivable incompetence by the Government. The Secretary of State, who is before us today, knows all that. He has been on a regional tour, as he told us earlier this afternoon, meeting business people. Perhaps he should tell us what business has been telling him. Clearly he was impressed by what he heard in the north-east at a meeting on 17 September, almost exactly a month ago. He met Mr. Carl Watkin, the managing director of Crabtree in Gateshead which was a winner of the Queen's award for export achievement, and exporter of the year. The Secretary of State described it as a tremendous firm. What did the director of that tremendous firm say? Did he thank the Secretary of State for all his work? Did he express confidence that the Government had revived manufacturing industry? Did he say that there was any sign of uplift? Did he blame the BBC for all the bad news and start to jam the BBC switchboards, as Mr. Patten has suggested? No, I have here the cutting entitled: Award Winner in Fierce Attack on Government". Just to be sure, we checked this afternoon that he was correctly reported. He said: The economy has been in trouble since the present Prime Minister was made Chancellor. We forecast the problems in September 1989 but the Government did not accept recession until the beginning of 1991. Confidence is totally destroyed in manufacturing …there is no sign of an uplift. Is that not the view of many manufacturers throughout the country?

Faced with all the evidence, with rising unemployment, ever-rising bankruptcies and direct condemnation by industry itself, what are the Government still trying to tell us? The Secretary of State for Trade and Industry was interviewed on the "Today" programme last week by Mr. Brian Redhead—the man whom he accused a few months ago of voting the wrong way at the last general election, until Mr. Redhead pointed out that he had indeed voted the wrong way as he had voted Conservative. What did the Secretary of State say in that interview? Did he say that he appreciated all the problems of industry, that he shares the doubts about confidence coming back, or even that things may gradually improve? No. He said: The mood that I detect in businessmen"— obviously based on his experience in the north-east—is that confidence is flooding back". Is it flooding back when investment is falling, redundancies are rising, and unemployment is increasing? Perhaps the Secretary of State will explain exactly what he means by confidence flooding back when he speaks later this afternoon.

The Chancellor, not to be outdone by the Trade Secretary, told us that there was a miracle when there was not, and that there was no recession when there was. He told us in the spring that he could hear faint stirrings that no one else, he admitted, could hear. In the autumn, he alone can see "green shoots of spring" that no one else can currently see. What does the Chancellor say when pressed? I have the cutting here. He says that the United Kingdom economy is "making dramatic progress".

Why should we believe the statements of Ministers who told us in 1988 and 1989 that they had created a miracle, who told us in 1989 that there would be no recession, who told us late in 1990 that the recession would be over by the beginning of 1991 and who told us this year that the recession would be over towards the middle of the year and then by the middle of the year? That never happened, as everyone knows. Now, even in the face of the Government's own evidence—published in the Budget statement—we know that next year the balance of payments will worsen, imports will rise and investment will continue its decline. In the face of that, what do they tell us? The same vicious circle is about to be repeated—a circle that can only be broken by a proper policy for industry.

Nowhere is the gap between what Ministers say will happen and what happens wider than in the statements of the Prime Minister. Let us be clear about what the Prime Minister told us almost a year ago when he was Chancellor, giving the autumn statement in the House. Last November he told us that growth would be 0.5 per cent.—it is now declining by 3.7 per cent., so he was wrong by just over 4 per cent. He told us that manufacturing output would fall by 0.5 per cent.—it fell by 6 per cent., so he was wrong by more than 5 per cent. He told us last November that investment would fall by only 0.75 per cent., but it has fallen by nearly 12 per cent. according to estimates, so he was wrong by more than 11 per cent.

What is the Government's answer? As we saw in the Financial Times on Monday, it is not to admit to mistakes but to suggest privatising the Treasury forecasters. It is not the civil servants who work for the Government who should be moving out of Government and into the private sector—it is the Cabinet Ministers who made the policies that undermined the forecasts.

To be fair to the Prime Minister in his record on manufacturing, however, let us consider his record since he first arrived at the Treasury in 1987. He told us then that he had licked inflation—but then it doubled, and doubled again. In 1988, he told us that he would continue as a Treasury Minister with a policy of a balanced budget and said: Living today and paying tomorrow is not an attractive philosophy for Government, nor is it a Conservative philosophy. We are determined we will not do that. We will maintain a balanced budget. Is a £10 billion and rising public sector borrowing requirement a balanced budget? To crown it all, in April 1989 the Prime Minister made a speech to the country which I have here. What is its title? It is "The Manufacturing Renaissance"—under the Tories of course. He told us: The British economy is now resilient and dynamic and growing and so it will remain, and manufacturing will lead the way". Since that day in April 1989 when the Prime Minister, then Chief Secretary, made that speech manufacturing investment has fallen 21 per cent., manufacturing output by 8 per cent., and manufacturing unemployment by 361,000. Is that a renaissance? We should be grateful that he is not promising a renaissance in the health service, in schools and in our public services.

The failures cannot be dismissed as one-off misjudgments, as aberrations or as the misfortunes of a single recession. We argue that the failures in manufacturing are the enduring and cumulative consequences of 12 years of short-termism when what Britain needed was a long-term strategy for investment in our future.

After twelve and a half years of this Government, manufacturing output has grown by 63 per cent. in our competitor country Japan, by 26 per cent. in Germany and by 32 per cent. in America, but in Britain it has grown by only 6 per cent.—10 times slower than in Japan.

The debate is not about whether we are fourth, fifth, sixth or seventh in the league for manufacturing growth. The fact is that we are 20th out of 21, with only Greece behind us. This is the Government who tell us that they think that manufacturing is important. Not only that—no other industrial country has seen such a lamentable performance in manufacturing investment, and in no other country has Government-funded research and development for the future expanded so poorly. Let us consider the figures for a minute.

Mr. Tony Marlow (Northampton, North)

I am intervening by popular demand: I have been asked to do so by some of the hon. Gentleman's colleagues on the Opposition Benches, who are bored stiff with what he has been saying so far. I am very grateful to the hon. Gentleman for giving way.

Whenever the hon. Gentleman speaks to one of his colleagues, there is a promise to spend more money on this, that or the other. Thus everyone in the country knows that if they suffered the misfortune of a Labour Government, it would lead to massive increases in taxation. How does the hon. Gentleman feel that that would increase investment in manufacturing industry?

Mr. Brown

That question is asked in every debate on this subject, whether it is asked by the hon. Gentleman or by someone else. We have set out our programme very clearly, and we have listed our priorities. We shall not spend what we cannot afford to spend, but we shall invest where we believe investment is essential for the future. We will take no lectures about prudence in public spending from a party that wasted £10 billion on the poll tax.

In 12 years, manufacturing investment—the key to our industrial prospects—has risen by 52 per cent. in France, 48 per cent. in Germany and 54 per cent. in Europe as a whole. Since 1979, it has fallen in real terms in Britain —the only one of the main industrial countries in which it has done so.

Mr. Keith Mans (Wyre)

The hon. Gentleman has referred to budget deficits. Is he saying that he now believes that we should balance the budget?

Mr. Brown

What I am pointing out is that it was the Conservative party which said that it would balance the budget. [Interruption.] Conservative Members are unduly sensitive today about some of the points that Labour is making about their management of the economy. That is the party which said not only that it would achieve a balanced budget—which must be the aim of Governments over a period of years—but that it would try to balance the budget every year. Now, of course, we have a budget deficit of £10 billion or more.

How do we improve our prospects so that we can achieve the wealth creation through which public services can be financed? We must do so by means of a strategy for investment in our future, and particularly in manufacturing industry. Let us, however, examine the current position. Germany now exports three times as many manufactured goods as Britain; under the present Government, production of electric motors, transformers, tractors, buses, lorries and vacuum cleaners has halved in this country. We now produce less steel than Brazil and even less than Taiwan. We import 3 million computers and 2 billion microchips a year, and 36 per cent. of all our manufactured goods are imported.

The truth is that our production is falling away, not only in the traditional industries, but in the high-technology industries on which our future depends. The tragedy is that, without a policy for industry, the current recession is merely an interval between the making of mistakes in one short-term consumer-led economic upturn and their repetition in another.

If another investment crisis exists in this country, along with the crisis that I have already described—the crisis relating to the Conservative Government's investment in industry—it is the crisis relating to industry's investment in the Conservatives. If Conservative Members are not worried about their party's investment in industry, should they not be worried about industry's lack of investment in their party? What has happened as a result of the policies for manufactuing industry that Conservative Members have pursued? Until 1985, GEC gave the Tories £50,000. What is the latest figure? Nil. Viyella gave £25,000, and now gives nothing. Vickers gave £30,000, and now gives nothing. Plessey gave £32,000, and now gives nothing. Pilkington gave £30,000, and it, too, now gives nothing. I could continue with the list: fewer and fewer British manufacturers are now prepared to support the finances of the Conservative party.

The only enthusiastic supporter of whom the Tory party can still boast—in Britain, at least—and the only one who can boast about the Tory party is Mr. Gerald Ratner, and we all know what he thinks of the products that he supports. The reason is clear. Quoted in The Spectator, one company director said: This is the age of shareholder power. We just can't hope to get big contributions past them … especially since our shareholders seem to blame the Tories exclusively for the recession. The problem has affected not only donations to the Conservative party but, I understand, its winter ball. Refusing to support the last one, Mr. Peter Edmondson, of Anglia Secure Homes, said: After a decade of hard work and commitment to free market ideology I find in financial terms that I am back where I started. Perhaps, however, tickets for this year's winter ball are selling better, at least in Hong Kong, Athens and other such hotbeds of activity. Indeed, one Greek shipping magnate is contributing more than the whole of British manufacturing industry.

Mr. Robert G. Hughes (Harrow, West)

What the hon. Gentleman is saying is very interesting. Will he confirm, however, that the Transport and General Workers Union will be giving, and has always given, more to his party than has been given to ours by all the companies that he listed put together? Moreover, unlike those companies, the union controls the party to which it is contributing, and dictates its policies.

Mr. Brown

I can confirm that the Transport and General Workers Union gives money to the Labour party, but I cannot confirm whether it gives Labour more or less than what is given to the Tory party because the Tory party does not publish its accounts. To know how much it is receiving, we have to rely on The Sunday Times.

The Transport and General Workers Union may give money to the Labour party; what we want to know is who gives money to the Conservative party. Furthermore, when that or any other union sponsors individual Members of Parliament, it is not giving money to those Members of Parliament directly. That cannot be said in relation to the 800 directorships and consultancies held by Conservative Members.

The fact is that the Government have nothing to say to the management of a midlands light engineering company which is struggling in the export market and battling with high interest rates. They have nothing to tell a small business man faced with the twin problems of interest rates and bank charges. They will, however, be extremely interested in what a Greek ship owner with a special affinity with the right wing of politics has to say. As for the Hong Kong business man who offers to contribute, the Prime Minister will not, it appears, merely meet him halfway—he will meet him in Hong Kong.

I ask Conservative Members whether there could be any stronger indication of Conservative priorities than this. I understand that the Prime Minister was in Hong Kong a few weeks ago, and that he left a drinks reception organised on behalf of United Kingdom trade and industry to go and see Mr. Li Ka-Shing, a plastic flowers millionaire and contributor to Tory party funds. According to The Sunday Times, the Prime Minister left with an important carry-out: the promise of £100,000 in Hong Kong dollars. That must have been one of the most lavish Chinese takeaways in history. A Happy Eater indeed, and yet another invisible item in the nation's trading balance—and, I suspect, yet another disgracefully invisible item in the Tory party's traditionally mysterious accounting system.

If we were to ask the Prime Minister to list his engagements for 3 November, we should learn that he is to be in Oxfordshire. Will he be meeting small business men and manufacturers? Will he be talking to the unemployed, or to some of the youth trainees who cannot even obtain a place, and certainly cannot obtain any benefits? No—he will be at Blenheim, entertaining 40 of the Tory party's biggest contributors. Some of them may even be from this country. We can take it for granted that all these millionaires share the Prime Minister's vision of a classless society for Britain. The Conservative and Unionist party is no longer what it was. If its fund-raising is anything to go by, it has become the City and offshore party of this country —yet it is the party that tells us that it thinks and acts as though British manufacturing industry is important.

What has changed since the time, early in the 1980s, when the Conservative party discounted manufacturing industry and complained of Labour's obsession with it? What has changed since it talked about the importance of the service economy and even of a low-tech, no-tech economy? All that has changed are the statements— nothing else. The Conservative party tells us that manufacturing industry is important, but is there a new manufacturing investment programme, as Labour proposes and as industry supports, to kick-start investment in our economy? No. Is there a new regional investment incentive—a reform of regional aid to benefit manufacturing industry in all the regions of this country? No. The Conservative party has abolished many of the existing forms of aid that were available. Are there new incentives for research and development through the tax system, as we propose, and supported by industry? No. Are there tougher takeover rules to encourage long-term investment and to free business from stop-go short-termism, as Labour proposes? No.

The Conservative party wants weaker, not tougher, rules. Has it adopted our proposal for regional development agencies, which would be welcomed in every part of England? Would it create them in Scotland and Wales? No. Has the Conservative party even considered our proposal for a one-stop business service that would help many of the small businesses that are currently in difficulty, a policy that has been welcomed by business? No. Has it considered our new approach to training that would help manufacturing industry to expand? No, not at all. All that has changed is that, under pressure, the Conservative party now tells us that manufacturing is important. However, it pursues exactly the same policies that damaged manufacturing, even though we were told that those policies were not doing it damage.

If the Conservative party supported a policy for manufacturing industry, would it not have responded in 1984 and 1985 to the House of Lords report on manufacturing instead of disparaging it and wasting another six years, and would it not have supported its own official committees' recommendations—to take action on information technology in 1987, to take action on optel-electronics in 1988 and to take action on biotechnology in 1989? Would it not have responded when the Bank of England identified an investment gap for small business in 1990? No last gasp initiatives from this Government, no cheap scheme, simply for its public relations value, can disguise the fact that for twelve and a half years the Department of Trade and Industry, charged with responsibilities to industry, has been a do-nothing, care-nothing and listen-to-no-one Department.

Mr. Graham Riddick (Colne Valley)

The hon. Gentleman believes that the Government should have a far larger role in the way that manufacturing industry is run. Will he please tell me what experience either he or any of his colleagues in the shadow trade and industry team have of working within manufacturing industry?

Mr. Brown

The Labour party has been listening to industry and talking to industry. We have entered into a proper dialogue with industry. If the hon. Gentleman does not believe it, industry does.

Mr. Riddick

But has the hon. Gentleman ever worked in industry?

Mr. Brown

There is now a consensus about the measures that need to be taken. The people outside that consensus are the members of this Government.

Mr. Quentin Davies (Stamford and Spalding)

During the dialogue that the hon. Gentleman conducted with industry, did he ask industrialists or small business men what they thought of his industrial relations policies, or his minimum wage policies, or his tax policies? If he asked that question, does he have the courage to tell the House what replies he received?

Mr. Brown

The hon. Gentleman may be interested to know that the Institute of Personnel Management has just reported on a survey that it has conducted of its members. More than 50 per cent. of them want a minimum wage and believe that it is absolutely right. The Conservative party has remained absolutely silent as the chairmen and directors of privatised companies have awarded themselves 50, 60, 70 and more than 100 per cent. pay rises and then complained about workers, struggling on £2, £2.20, £2.40 or £3 an hour, wanting a minimum wage—something that happens elsewhere in Europe and America without job losses.

Apart from neglecting manufacturing industry, the Conservative party has neglected the whole of industry over the past 12 years. We have a new Conservative party document entitled "The Government's Industrial Strategy." For 12 years they told us that there was no need for an industrial strategy and that a regional policy was a phoney Government activity. Rapturous applause was given to the former Secretary of State for Trade and Industry when he asked what the DTI was actually for. Now the Conservative party tries to tell us that an industrial strategy is what it is pursuing in Government.

Let us explore just what the Secretary of State means by an industrial policy. Does he mean that the market, unaided, cannot solve the training problems and that legislation will be essential? Does he believe in a market forces approach to training, or is he prepared to legislate? Does he mean a new commitment to regional policy, which he has cut, and cut again? Or does he still agree with his ministerial colleagues who believe that a regional policy has no real place in industrial policy as a whole? Does the Conservative party's industrial policy amount only to extolling the market's virtues or recognising the market's limitations? Is the partnership that it talks about a partnership between Government and industry to achieve specific training and technology objectives, long-term objectives and a policy for the regions, as we propose? Or is the truth not this: that, as the document makes clear, the partnership and the industry policy that the Conservative party talks about amounts to simply more privatisation —not to a recognition that markets can fail. It is a statement of conviction, in the teeth of all the evidence, that markets will always be right.

If the Conservative party really supported a policy for industry, this year alone it would be acting on the recommendations of the Government's committees regarding the action required on advance manufacturing for the 1990s, on the quality of technology transfer and on the lack of support for small business. It would have listened to and taken action on the House of Lords report that promoted the idea of capital allowances for manufacturing, tax credits for research and development, regional development agencies and proper policies for technology. Is the Confederation of British Industry not right to complain that these technology policies are public relations exercises rather than anything of substance? Is the House of Lords not right when it says that schemes come forward, when they do, simply for the sake of gaining political kudos?

The truth is that as we face the problems and challenges of the 1990s—when we need a policy for training, a policy for technology, a new approach to regional policy similar to that pursued by our competitors and an emphasis on long-term investment—a once great Department of State, whose job it is to support industry, has been hijacked by a faction that does not believe that industry needs the Department.

The Government say that they are the party of small business; yet they stand by and do nothing as enterprising people are let down by an unenterprising Government. They say that they support home owners; yet they have forced record numbers into mortgage arrears. It is the Government of a Prime Minister who tells us that his motto for the 1990s is the power to choose and the right to own. Let him tell that to the 70,000 victims of repossession in his first year of office because of mortgage arrears. Let him tell that to the 750,000 people who have been made redundant because of the Government's mistakes in the 10 months he has been Prime Minister. Let him tell it, too, to the 50,000 businesses likely to go bankrupt in the 15-month period he will have been in office.

If the Prime Minister believed in a classless society and in opportunity for all, would he stand by and do absolutely nothing as firm after firm, industry after industry, goes to the wall in a series of preventable disasters for British industry? If he really believed in opportunity for all, would he not repudiate the top rate tax cuts which have caused many of the problems that we now have? Would he not repudiate private medical care tax relief, the training cuts and the cuts in support for the regions and industry? If the Prime Minister believed in opportunity for all and a classless society, would he not have introduced a better deal for the unemployed, with an emergency work programme, legislation to improve training, action to bring the regions into play in our economy and, most of all, action to get people back to work?

British industry is no longer safe in the Government's hands. They have no new policies and no new vision. They have no new programme for six months, let alone for five years. Even six more months is too long for British industry and for the British people to wait—they need a new Government with a new mandate, and they need it now.

5.50 pm

The Secretary of State for Trade and Industry and President of the Board of Trade (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 its success in bringing down inflation to German levels and in creating almost three million jobs since 1983; recognises that the defeat of inflation is essential in maintaining international competitiveness, and in further job creation; welcomes the dramatic transformation which has taken place in training in this country and the continuing succeses in export markets and in attracting inward investment; recognises that sustained growth depends upon quality and innovation and welcomes the Government's policies to stimulate these; and notes the revival in business confidence, which would be put at risk by the inflationary, job destroying and anti-industry policies of the Opposition, in particular their commitment to nationalisation, state intervention, punitive taxation, renewed union power and a national minimum wage.". The House is familiar with the speech of the hon. Member for Dunfermline, East (Mr. Brown). Every time he plays us the same recorded message of denigration and despair. He gloats over gloom. He crows over closures. He revels in redundancies. But what makes him genuinely gloomy is any sign of good news. He is the sort of chap who is banned from his local wine bar during happy hour.

There is good news coming through. We did not hear a word of it from the hon. Gentleman, because what is good news for Britain is bad news for the Labour party. Contrast the picture that Labour paints of the British economy with the description given by the director general of the CBI: manufacturing output in Britain is running at levels which caused local economists to worry about overheating not three years ago; British manufactured exports have been increasing faster than world trade—we export more per head than Japan; in Britain import penetration remains below that in West Germany; British investment in skills and innovation is at record levels and still rising; our private sector inflation is under 4 per cent. and falling; our manufacturers are rapidly closing the gap between productivity growth and pay rises … and our industrial disputes are at their lowest level for half a century.

Mr. Gordon Brown

rose——

Mr. Lilley

I shall give way later. The hon. Gentleman spoke for 36 minutes without telling us any Labour policies.

The Opposition have given the debate the title "Manufacturing Decline". Of course, that is a subject which they know a lot about. Manufacturing output fell under the last Labour Government. It has risen under this Government. Manufacturing output is now 25 per cent. higher than it was 10 years ago—the same point in the business cycle.

Moreover, the wounds of which British industry still bears the scars were inflicted by socialism. It was manufacturers who suffered most from the excesses of trade union power, from inflation, nationalisation, high taxation, protection and state intervention. Those Labour policies are all behind us now. We rejected them and sowed the seeds of a manufacturing revival in his country.

I would not even mention the past if the Labour party did not intend to take us back to it. But it does. It is committed to policies that wrought havoc in the past and would undermine what everyone outside the Labour party recognises as the great achievements of the last decade.

Above all, poor industrial relations used to be the cancer of British manufacuring industry. We tend to forget just how appalling they were. In 1979 we lost 29.5 million working days through industrial disputes. Over the past 12 months we have lost only 0.7 million days—the lowest level for more than 50 years.

Yet the Labour party opposed each and every one of the trades union reforms which have brought about this improvement. Now it threatens to restore trades union powers and privileges. Of course, it sends the hon. Member for Sedgefield (Mr. Blair) to reassure us that Labour will not undo all our reforms. He is a nice chap; went to a good public school; speaks posh. But even he cannot conceal the fact that the trades unions are Labour's paymasters. They expect a return on their investment. And they have the votes to ensure they will get it. Labour claim some support among business men. I have yet to meet a business man who wants to unpick our laws on secondary action; who wants to change our laws on picketing; who wants compulsory union recognition.

Another undoubted Government success which a Labour Government would put at risk is the flow of inward investment. This Government have made Britain the most attractive country in Europe in which to invest in manufacturing. Last year we attracted more than half of all the Japanese and American investment coming into the European Community. Yet, by an overwhelming majority, the Trades Union Congress condemned Japanese investment as alien.

It would be a tragedy for this country, especially for our manufacturing sector, if inward investment were frightened off. Yet not one Opposition Front-Bench spokesman has dared to disown the TUC. I challenge them to do so now.

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

rose——

Mr. Lilley

I shall give way to the hon. Members opposite who are so indifferent to inward investment that they talk through what I am saying about it. Will either of the Labour Front-Bench spokesmen—the hon. Member for Dunfermline, East, the spokesman on trade and industry, or the hon. Member for Sedgefield, the spokesman on employment—disown that overwhelming majority vote of the TUC condemning inward investment? What about their colleagues from the regions that have benefited so strongly from inward investment?

Mr. Nigel Griffiths (Edinburgh, South)

On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Member for Harrow, West (Mr. Hughes) to sign letters to his constituents and stuff envelopes, failing to listen to the drivel being spoken by the Secretary of State?

Mr. Lilley

That was a defensive measure to try to help the Front-Bench spokesmen out of their embarrassment. They have to call in the Whips. How pathetic. The puppetmasters pull the strings. And there are more union strings on the Labour party than in the entire cast of "Thunderbirds"—but there is nobody, it seems, called Brains. The result is that a Labour Government and their trades union paymasters would frighten off foreign investment overnight. All that investment, all those factories and all those jobs would go to France, Germany or Spain, and they would export to us instead of our exporting to them.

Mr. Campbell-Savours

rose——

Mr. Lilley

I happily give way to the hon. Gentleman.

Mr. Campbell-Savours

The Secretary of State says that investment is taking place. Will he respond to the proposition put by the shadow Secretary of State, my hon. Friend the Member for Dunfermline, East (Mr. Brown) —that investment has fallen? Has investment fallen?

Mr. Lilley

Investment this year is 30 per cent. higher than it was a decade ago—the same point in the economic cycle. As for inward investment ——

Mr. Campbell-Savours

On a point of order, Mr. Deputy Speaker. You will have heard me ask the Secretary of State a specific question. Will he answer it? Has investment fallen—yes or no?

Mr. Deputy Speaker (Mr. Harold Walker)

As I suspected, that is not a point of order.

Mr. Lilley

Only this week a report from Nomura spelt out just how dramatic will be the full benefits of the current inward investments. It says: our new estimates suggest that by 1995 Japanese investment could add £4 billion to the trade balance, 2 per cent. to output, and over 400,000 new jobs". That is what Labour Members put at risk by their shameful silence. I do not believe that British voters will share that willingness to put at risk the successful flow of inward investment by putting it in the hands of a xenophobic Labour movement.

Nothing was more destructive of industry than rampant inflation. It reached 27 per cent. under Labour. That almost wiped out profits. It made planning for investment impossible and it provoked the biggest industrial unrest Britain has seen.

By contrast, we have brought inflation down to 4.1 per cent. That is barely half the lowest level ever achieved under the Labour Government. It means that we are getting inflation down to German levels for the first time in a generation and it has enabled the Chancellor to reduce interest rates by nearly a third. That is why all the surveys show a strong recovery in business confidence.

Business men recognise that we have now created the conditions for sustained and non-inflationary growth. Manufacturing output should again outstrip the rest of the economy, as it did in the second half of the 1980s.

Another unqualified success story which the Labour party's policies would put at risk is privatisation. Virtually every company that we have privatised has improved its output, turnover, profits, investment and industrial relations.

British Steel is a case in point. It was one of the commanding heights of the economy which was nationalised by the so-called moderate Labour Government in the 1960s. Nationalisation brought the steel industry to its knees. There was a genuine danger that we would end up with no viable steel industry in this country. Attempts to sustain it were costing the taxpayer ever more unbearable sums—totalling £14 billion between 1975 and 1985. In 1979–80 British Steel was costing the taxpayer £5 million a day.

Privatisation has transformed all that. British Steel has become one of the most successful steel industries in the world. Its efficiency increasingly rivals and, in many areas, surpasses even that of Japan.

I recently visited British Steel's works at Redcar, which has the largest blast furnace in Europe. It is more efficient than its Japanese counterparts. I saw the massive new beam mill being installed. It is a huge investment and the best in the world and is operating to twice as fine a tolerance as its best rival anywhere in the world.

We never hear a word of praise from the Opposition Benches for the achievements of our privatised companies. They threaten our utilities with renationalisation. At last year's party conference the hon. Member for Dunfermline, East won a cheap cheer from his socialist supporters by reaffirming Labour's commitments to renationalise water, the national grid, and British Telecom. Before this year's party conference I challenged him to withdraw those pledges. It would have been the first time he had ever given us some cheerful news, but he passed up the chance.

The Labour party remains committed to its priority programme of nationalisation which represents a £10 billion threat to the taxpayer, a threat to 6 million private shareholders and a threat to 50 million customers. Labour is the only party east or west of the old iron curtain which remains wedded to nationalisation. The Labour party has replaced Oxford as the home of lost causes.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

Will the Secretary of State tell us whether he considers the privatisation of British Rail Engineering Limited to be a success, when the railway industry is falling apart, when it has totally empty order books and when my constituency has the largest and fastest growing unemployment level in the north-west? Will he tell us whether he regards the privatisation of BREL as an example of the brilliance of privatisation?

Mr. Lilley

If the hon. Lady thinks that nationalised industries with empty order books can survive, she has a strange idea of economics.

Nationalisation of the utilities, which is what the Labour party proposes, would damage those utilities and undermine British manufacturing industry. When British Telecom was state owned 250,000 people, many of them with small businesses, had to wait two months or more to obtain a telephone line. Delays such as that damaged, destroyed or aborted countless small firms. Today nobody has to wait that long for a new line and if British Telecom is even a day late in repairing a telephone, it offers compensation. There would be small hope of that if it was still nationalised.

When the water industry was nationalised, investmeni was held back. Now that the industry is privatised it has embarked on a massive £28 billion investment programme. That creates immense opportunities for British suppliers.

We have seen how well our manufacturers can do in winning orders in such massive engineering projects. For example, on the channel tunnel, British firms have won 78 per cent. of the orders at this end of the tunnel, and 45 per cent. overall. French industry has picked up only 30 per cent. of the total orders.

Dame Elaine Kellett-Bowman (Lancaster)

My right hon. Friend will be pleased to know that not only large companies are thriving. An engineering firm in my constituency—R. E. Leach—which is small but growing steadily, secured an order in Cologne, the backyard of the German engineering industry, for work on a wind tunnel. Having got the order, it then trebled it. Would my right hon. Friend care to add his congratulations to that company?

Mr. Lilley

I add my congratulations. I recently had the pleasure of visiting the constituency of my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) and I was struck by the enterprise and initiative of the business men I met there and by their positive attitude. That contrasted massively with the attitude of Labour Members.

One key to our success in reviving British industry has been reducing tax rates, simplifying many taxes and abolishing others. We now have the lowest rate of corporation tax of any major industrial country. We have abolished six major taxes, including the surcharge on employers' national insurance contributions, investment income surcharge, capital duty, development land tax, composite rate tax and stamp duty.

Paradoxically, fewer, simpler, lower taxes generate more revenue as they restore incentives, boost profits and leave companies free to invest their own money. As a result, we have kept the total tax burden on business below that of our major continental competitors. The total of corporation and payroll taxes on business in this country amounts to 8.9 per cent. of national income. In Germany it is 10.5 per cent. and in France it is no less than 17 per cent.

The Opposition are reluctant to talk about their tax policies in any detail. However, we do have some sources of information.

Mr. David Winnick (Walsall, North)

rose——

Mr. Lilley

Perhaps this is one of them.

Mr. Winnick

If it is all such a great success story, can the right hon. Gentleman tell us—I hope that he will refer to it in his speech—why there is such devastation in the west midlands, why 37 unemployed people are chasing every available job and why the west midlands is suffering devastation arising from the recession in the same way as it did 10 years ago, under the same Government? Is the Secretary of State at all concerned about what is happening in what should be Britain's industrial centrepiece? If the west midlands suffers as it did in the early 1980s, British industry suffers.

Mr. Lilley

If the hon. Gentleman seriously believes that that would be improved by a return to nationalisation, increased trade union power and higher taxation, he will believe anything.

As I have said, we have some sources of information about the Labour party's tax policy. The first is its voting record. It has opposed virtually every tax reduction that we have introduced. Secondly, we have the frank acknowledgement by the shadow Chancellor that he would never cut taxes. His counterparts in former left-wing parties in Spain, Australia and New Zealand have set lower taxes as their objectives. The right hon. and learned Member for Monklands, East (Mr. Smith), happily for us, intends to go into the next election with the slogan, "Watch my lips—no more tax cuts." That is about the only Labour slogan that the electorate will believe. Those who read not just the right hon. and learned Gentleman's lips but his party's spending pledges know that he really means much higher taxes. The Labour party's £35 billion spending pledges, about which the hon. Member for Dunfermline, East refused to comment, as he refused to answer any questions, are equivalent to 15p on the basic rate of income tax. When my hon. Friend the Member for Battersea (Mr. Bowis) asked how a 9 per cent. tax on savings would help investment, he scored a bullseye. The hon. Member for Dunfermline, East wriggled and squirmed and said that there would be some offsetting incentives. It is fiscal madness to raise taxes and reduce them at the same time on the same thing.

The Labour party often condemns short-termism, but, like the hon. Member for Dunfermline, East did again today, it invariably focuses on the short term. I am fully aware from my daily contacts with business men how painful the economy still is in many sectors. However, the return of confidence, in all the surveys, shows that business men increasingly take a positive long-term view. We should do likewise. It is clear from our record over the past decade and the outlook for this decade that the picture for manufacturing is very positive indeed.

After falling rapidly behind during the 1960s and 1970s Britain's manufacturing productivity grew faster in the 1980s than in any other major country, including Japan. With improved productivity came increased competitiveness. Our total exports have risen by over 60 per cent. since 1979. In the past two years alone, manufactured exports have increased by nearly a fifth. Since 1983 our share of world trade in manufactures has done better than that of France, Germany, Japan, the USA and Italy.

Make no mistake. Britain is succeeding in world markets. Whole industries that once seemed in terminal decline are undergoing a rebirth. Output of motor cars halved during the 1970s. Yet since the early 1980s output has been rising. The planned increase in capacity to produce motor cars exceeds that of all our European partners put together. Car imports this year have been up 82 per cent. on last year. Output of television sets has doubled since 1979, and we now export more television sets than we import.

Our policies have brought about this transformation. But we do not sit back complacently. We are developing the policies for the future, to build on success, to reinforce growth. By contrast, the Labour party looks back to the past, to policies which failed, to a recipe for decline. It is a party in decline, wedded to policies of decline, which it declines to change.

We have been developing new approaches to encouraging exports. Early in February we co-ordinated a comprehensive British presence at India's massive trade fair. I am proud to say that British firms outnumbered the rest of the world put together. The orders that we won exceeded all expectations.

In April I led a team to Kuwait to ensure that Britain played as important a part in reconstructing that country as we did in liberating it. We have already won £0.5 billion worth of orders. And much more will follow.

Business men were so pleased with the success of these efforts that they suggested that we develop them further. As a result, last month I led a high-powered British team to Venezuela to establish a task force of nine business men supported by officials which will stay in Caracas until December. We announced a series of ministerial follow-up visits over the months to come and seminars back in Britain to disseminate the information that is gained. The response of the Venezuelan Government and industry was enthusiastic, the commitment of British industry wholehearted, and we all believe that the success of the project is assured.

I also recently announced new schemes to encourage technology transfer from our universities to industry; help for our universities to carry out technology audits to assess their strengths and scope for commercial exploitation; and support for industrial units to manage and market their technology to meet commercial deadlines and industry's needs. Today I am announcing further support for the Centre for Exploitation of Science and Technology.

Labour pretends that it has changed. I wish that I could believe that it really has abandoned socialism.

Mr. Peter Hain (Neath)

Will the Secretary of State give way?

Mr. Lilley

I will give way to the hon. Gentleman to see whether he has.

Mr. Hain

Are these entrepreneurial activities abroad the reason why Air India has just cancelled its £87 million deal with Rolls-Royce to build its engines?

Mr. Lilley

No. But I believe that my visit to Japan played a part in British Aerospace winning the biggest aircraft order that we have ever won in that market and one which I believe will presage further sales for our aerospace industry.

Labour pretends that it has changed, but I wish I could believe that it has abandoned socialism. If it had, that would be the most dramatic conversion since St. Paul on the road to Damascus. But it would be a whole lot less convincing. St. Paul saw the light. The Opposition saw the opinion polls. So they decided that Labour's unpopular policies must be hidden from sight.

Mr. Winnick

On a point of order, Mr. Deputy Speaker. I have referred to the plight of industry in the west midlands, where there are 37 people going for every job. My point of order to you, Sir, is this. In view of what is happening in my region and the number of jobs which have been lost already, does not the Secretary of State for Trade and Industry have some responsibility at least to refer to the matter and tell us what the Government intend to do? This is just empty political propaganda.

Mr. Deputy Speaker (Sir Paul Dean)

The hon. Gentleman knows that that is not a point of order for the Chair.

Mr. Lilley

The hon. Gentleman was probably upset by the contemptuous way in which the shadow spokesman treated manufacturing industry. He devoted most of his speech to knockabout and none of it to policy to remedy the defects that he saw.

Mr. Gerald Howarth (Cannock and Burntwood)

Is my right hon. Friend aware that the real reason why the hon. Member for Walsall, North (Mr. Winnick) is so desperately upset is that there is a substantial private building programme in his constituency? Is my right hon. Friend also aware that he will soon open an extension to a factory in the area bordering on the hon. Gentleman's constituency? The Reward group has said that the most damaging thing that could happen to British industry would he a national minimum wage and that the region which would be worst hit would be the midlands, with its manufacturing base.

Mr. Lilley

My hon. Friend is right. The damage that would be done to the west midlands by that policy would be greater even than that which would be done to other regions. I saw the development to which my hon. Friend refers. It is doing much to contribute to the regeneration of that area.

The Labour party decided that its unpopular policies must be hidden from sight. So just for the sake of appearances it steals some of our clothes. But do not be deceived by appearances. The truth is that Labour has become a party of political transvestites. It wears Conservative outer garments but still clings to its socialist clothing underneath. It remains attached to nationalisation, high spending, high taxes, state intervention and trades union power.

One topic to which the Labour Front Bench spokesmen devote much rhetoric, though little detail, is training. Training is very important they tell us; qualifications are essential. So they are. How strange then that the Labour Front-Bench spokesmen arc so singularly lacking in qualifications for the roles to which they aspire. It ill behoves those with neither experience nor qualifications in industry to lecture industry on training and qualifications, still less to tell business men infinitely more competent than themselves how to run their businesses.

I shall be asking my right hon. and learned Friend the Secretary of State for Employment to set up special training courses for the shadow industry team, to convert this assortment of lecturers, trades union officials, charity workers and psychiatrists into a decent set of industry spokesmen. The hon. Member for Dunfermline, East believes that his experience as a lecturer and broadcaster perfectly equips him to run British industry. In his conference speech he revealed his patent solution for all our industrial ills. It is the university lecturer turned broadcaster's approach to industrial regeneration. He wants to set up a new satellite television station to bring together universities, industry and broadcasters using satellite telecommunications to disseminate the newest ideas to industry as rapidly as the ideas themselves come forward. I cannot help feeling that this was a zany idea which came forward and got disseminated a bit too rapidly. It conjures up visions of a television station beaming the thoughts of Chairman Mao—sorry, Chairman Kinnock—to every factory, laced with exhortations from Commissar Brown. What reams that tells us about the hon. Member's understanding of British industry.

Recently the Labour Front-Bench team has been out on its cocktail offensive. Offensive, certainly. One unfortunate business man who had the misfortune to hear them certainly found it offensive. Asked how Labour would run industry he replied, Run industry? That shower couldn't run a bath. We cannot have a successful British economy without a vigorous manufacturing sector. But we cannot have a vigorous manufacturing sector if we return to Labour's trade union laws, to Labour's penal tax rates, to Labour's rampant inflation and to Labour's nationalisation.

The way to success is to set managers free to manage, to return unions to their members, to slash red tape, to cut taxes, to restore incentives, and to release the enterprise of the British people. That is our strategy. It has succeeded in reversing decades of decline. It will reinforce success. It will regenerate Britain.

6.20 pm

Mr. Joseph Ashton (Bassetlaw)

My constituents will look in vain to the Secretary of State's reply to the opening speech of the debate for a single new concept which would lead to new jobs. I am sorry to say that his speech contained nothing but personal abuse of my hon. Friend the Member for Dunfermline, East (Mr. Brown).

During the past 12 years of Conservative power, my constituency has seen unemployment at least double and almost treble. I shall speak about the electricity industry and coal mining, because they create so many jobs in our part of the world.

In 1979, under the Labour Government, we had a system of grey areas, and an area such as mine got help towards machinery and buildings. The Tories took that away. Since then, there has been no regional aid, despite the massive pit closures in areas such as Nottinghamshire and despite the privatisation of the electricity industry, which will make matters even worse by increasing coal imports.

Three months before the last election, the then Secretary of State for Energy, the right hon. Member for Worcester (Mr. Walker), promised from the Dispatch Box to build a new power station, West Burton B. It was to create about 800 permanent jobs and 2,500 temporary building jobs, would cost £1 billion and would be a godsend to the area. There were some marginal seats in Nottinghamshire, which is why he made that announcement. Lo and behold, what happened after the election? Nothing. The promise was quickly forgotten. The industry was sold off, privatised, and there is no sign whatever of that new power station being built. It was just an election promise.

Instead, the power stations were sold off at about a third of their worth. Now, the intention is to import massive quantities of coal from South Africa, Poland, Columbia—where it is dug by children—and any other part of the world where labour is cheap. That will be done to close down the pits in Nottinghamshire and South Yorkshire. Last week, we heard that the Rothschild report would recommend cutting the number of pits there to four. Again an election is coming up, so the Tories will say that they will not make any decisions or announcements, but they know very well that they will privatise the industry.

The two industries go together. The nationalised coal mining and energy industries were planned. We heard the Secretary of State scoff at nationalisation. Three power stations were built on the Trent in my constituency and were connected to the coal mines by a railway. The railway ran 365 days a year, picking up coal at the mines and dropping it off at the power stations, which ran 365 days a year. That was nationalised planning, and it worked.

That planning is to be destroyed. Coal is to be imported on the Humber through Killingholme and such places and then taken to the power stations, probably by road. Heavy lorries will thunder through the environment, destroying the countryside, on roads which were not built to carry their weight and which have no proper street lighting or verges. Importing coal will destroy not only jobs, but the countryside. What will it achieve? It will make massive profits for the newly sold electricity industry. The consequences will be massive pit closures, because British mines will not be able to get their price down to that of imported coal, and further massive job losses, because the coal that was transported on the railways will no longer be taken from those pits.

Every job lost in manufacturing industry loses four further jobs connected with it. The suppliers to the coal mines will suffer. Even the farmers who supply potatoes to the canteen will lose their contracts. There is no planning for that. There is no regional policy. The pits will be shut, coal will be imported, and nothing will be put in their place. Everything will be entirely down to naked market forces, about which the Government talk so much. Prices and profits alone will matter—if jobs are destroyed, so be it. They could not give a damn. That is the level of their concern.

About four years ago, the Common Market protested about our power stations causing acid rain which was landing on the forests of north Germany and elsewhere. Naturally, people were concerned about the environment. The then Prime Minister went across to Germany and said that we would do something about it. At the time she implied that the power stations would be modernised and improved, which can be done, to stop acid rain pouring on to Europe. That would have created many jobs.

If the power stations had been nationalised, that would have been done and the cash would have been spent—but not under private enterprise. There is no way that the new order, PowerGen and National Power, will spend their money on improving those power stations. It is much simpler and cheaper to import low-sulphur coal than to spend cash on creating local British jobs and modernising our industry. That will destroy our pits and save private enterprise from spending a penny on the power stations.

The regions of the country affected are Yorkshire and Nottinghamshire, as we saw from last week's leaked Rothschild report. Two of the 14 pits, Harworth and Welbeck, are in my constituency. In case the miners there think that they will be okay as their pits will stay open, I warn them now that, if those pits stay open, they will work seven days a week for their new private owners. They will work three shifts around the clock. The environment of the privatised coal mining industry will destroy whatever is left. It is not that good in a pit village anyway, with the slag heaps, the cracks in the walls, the nightshifts and the lorries working through, but at least there is a bit of peace on Saturdays and Sundays. There will be none of that under privatisation. Safety standards will go, because privatisation will do away with the Mines and Quarries Act 1954. The new owners will not spend as much on safety as the nationalised industry does.

Hundreds of thousands of miners will be made redundant and lose their right to concessionary coal. As my colleagues can verify, many pensioners who worked in the industry enjoy concessionary coal under an agreement with the miners' union. There is no guarantee whatever that, once the pits are privatised, that concessionary coal will continue to be given to pensioners and ex-employees. There is nothing in writing, no contract. It is not part of the pension. A new owner of a privatised industry could stop it straight away. Privatised industries do not guarantee to continue with the same pension schemes. I am not saying that the privatised industry would get rid of the pension scheme, but there is nothing to stop it, for example, dropping a 6 per cent. contribution to 2 per cent. There is no agreement. There is nothing in law. There is no protection of pensions or concessions in the mining industry, or any other, if they are sold.

One of the most serious and diabolical situations that we have seen for a long time arises with additionality, under which the Common Market makes moneys available for regional policies. The Secretary of State is not even bothering to listen. He is talking to his colleagues, because he knows that we have raised the matter many times in the House, and he does not have an answer.

The European Economic Community made available millions of pounds for areas such as mine, which have suffered from massive pit closures, or those where the fishing industry has been run down. All over Europe, other countries have gratefully said, "Thank you for the RECHAR system, the additional cash, the regional money from the Common Market"—except Britain. But what have the Government said? Apparently, if the coalfields receive any cash from the Common Market, the Government will stop other grants. We have led deputations to the Government on this issue and made protests, and the Coalfield Communities Campaign has asked the Government many times to take up the issue and to press the additionality case for RECHAR.

If money is available from the Common Market through RECHAR—money that could be pumped into the regions—why do the Government say to local authorities that, if they take that cash, they will stop an equivalent amount in Government grant? Therefore, the local authorities would not be a penny extra better off. Every other European country gets that extra cash—it is going begging—but the Government adamantly refuse to allow our regions to receive it.

Mr. Lilley

May I reassure the hon. Gentleman that he is labouring under a delusion? If the Common Market will release the money, we will let it be spent on the RECHAR programmes. The fact that that money cannot be spent, because we have not got it, is proof that those programmes are additional. That should be enough proof for Commissioner Millan. We have endeavoured to persuade him that he should let us have the money. We want it and we are exactly on the same side as the hon. Gentleman and the people in the coalfields. We regret the stance that Commissioner Millan has adopted so far.

Mr. Ashton

That is extremely interesting, but I have a letter from the Coalfield Communities Campaign that refers to a resolution tabled in the European Parliament urging the UK government to adhere to the rules of the European Community and implement additionality for RECHAR". That was passed by a 3:1 majority.

The British Chambers of Commerce has added its voice to the controversy. Its president, Miles Middleton, has written to the Secretary of State in support of the additionality principle for RECHAR funds. Commissioner Bruce Millan has also made strong protests. The coalfields of Germany, Belgium, France and Spain have got the cash but we have not. Is the Secretary of State saying that the Government, not his Department, will ensure that RECHAR funds will be made available without an equivalent amount being deducted from the Department of the Environment or anywhere else?

Mr. Lilley

We have made that clear in public and in private to Commissioner Millan. He has dug in his heels on certain technical issues, but we hope that he will show some flexibility. In his most recent letter, he said that he thought that he was close to agreement and that the sooner he can overcome his difficulties the sooner the money can be spent. We believe that half the RECHAR funds should come to this country. Those funds are earmarked for expenditure, and that expenditure can take place as soon as the money is released.

Mr. Ashton

I am grateful for that information. In that case, perhaps the right hon. Gentleman would not mind meeting a deputation from the Coalfield Communities Campaign to straighten things out. In July, the Parliamentary Under-Secretary of State for the Environment wrote to the Coalfield Communities Campaign: little purpose would be served by a meeting. I take it that the right hon.. Gentleman and his Ministers will now be prepared to meet representatives of the campaign so that we can clear up this important matter.

During Trade and Industry questions, mention was made of the reason that Toyota has decided to go to Derby. That company has chosen to go to Derby without any Government cash when so many coalfield areas with far higher unemployment are absolutely desperate for that type of work. Nissan went to the north-east and the coalfield areas of south and north Yorkshire would have given anything for the Toyota plant. The Minister claimed that the Toyota decision showed that the free market was working. However, if Japanese entrepreneurs and firms are allowed to choose where they want to establish in this country without being steered or bribed into the important areas, surely that does nothing to solve existing problems.

Toyota has gone to Derbyshire for one reason—to steal the skilled workers from British Rail Engineering Ltd., Rolls-Royce and the other car manufacturers in the area. Toyota has not established in any other area because mining skills are not transferable—they are not engineering skills. Despite massive unemployment, we face a massive skills shortage. Foreign industries therefore invest in the areas with a skilled work force.

Toyota will simply offer more money to Rolls-Royce engineers. It will recruit those engineers and those employed by BREL and that will cause skill shortages in those companies. Those engineers will be used to train Toyota's own people, as it will not import Japanese personnel to train the new employees. Toyota must get its skilled workers from somewhere, and that is why it has gone to Derby, an area with a skilled work force. It will poach the skilled workers who are desperately needed in other industries.

The Secretary of State for Employment (Mr. Michael Howard)

I invite the hon. Gentleman to disabuse himself of the misapprehensions under which he is, evidently sincerely, labouring. If he visits the Nissan plant in the north-east, he will find out how it has trained its workers to reach levels of skill of an extremely high order. This morning, Nissan was one of the 28 companies to qualify as "investors in people" —the highest accolade that we have in our training policies and programmes. I invite the hon. Gentleman to visit Nissan to see the steps it has taken to train British workers. I am sure that Toyota will do exactly the same in Derbyshire.

Mr. Ashton

Initially Nissan took skilled workers—admittedly, they were unemployed—from the shipyards. One reason why Nissan chose the north-east was that surplus of skilled workers. It is easy to train workers after five years when a plant is running, but initially a company needs skilled people.

The Secretary of State for Employment is a lawyer, but I am an engineer. I served my apprenticeship; I went into a drawing office and I am a design engineer. I am not seeking to be derogatory about the right hon. and learned Gentleman, but I know what I am talking about. It is impossible to think that one can acquire skills just like that.

People have argued that, when the defence contracts are dropped, the engineers in the defence industry will be able to do something else, but that is like saying that, because I speak English and I have a voice, I can immediately start speaking French. One has to be trained, and it takes years to acquire the necessary skills. One cannot suddenly switch skills, and any company developing a new high-technology plant knows that.

The next thing that the Japanese will go for are our defence plants. The House can rest assured that, 25 years from now, all British industry will be owned and run by the Japanese. They are smart enough and have the cash and the nous to put money into investment, but we are not training people to acquire the right skills.

People in my area may have been employed as jobbing welders at the pits. They come to me to ask whether they can train as ASVIII welders or insurance welders, who weld boiler drums—high-quality welding. Those people cannot get the training, because the factories that used to provide such high-skilled training have gone. When I take up such cases with the north Nottinghamshire training and enterprise council, I am told that it will send such people to train as waiters or something else. However, the guy with the basic skill who wants to improve it in my coal-mining area cannot do so, because there is nowhere for him to improve it. I could give chapter and verse on that, but I do not want to take up the time of the House.

I know that the Secretary of State for Employment is absolutely against the minimum wage. I made my maiden speech 23 years ago next week. Between 1972 and 1973, we spoke about a Labour Government bringing in equal pay for women. The then Tory Government cried out that that would throw thousands out of work at Woolworth, Marks and Spencer and the like. The Tories claimed that hundreds of thousands of women would be thrown on the dole if we brought in equal pay. But it did not cost one job.

When women got the extra money, they went out and spent it, and that created other jobs. When the Government give tax cuts to the well off, they spend that cash on a bigger mortgage, a BMW, a Mercedes or a microwave. They will spend it on anything that has not been made in Britain. If the minimum wage is awarded to those who work in C&A, McDonald's or Woolworth, those men and women, but especially the women, will go out to buy a new carpet, furniture or clothes. They will buy stuff that is made in Britain, which will get British industry back to work. Those who object to paying women shop assistants another 50p an hour will find that they soon need more shop assistants because the volume of customers with money to spend will start to grow, as it did when we introduced equal pay.

6.40 pm

Sir Julian Ridsdale (Harwich)

I was interested in the little argument about the Toyota plant and Nissan plants because I have visited them both. I assure the hon. Member for Bassetlaw (Mr. Ashton) that the RB211 plant is as recognised and as advanced in technology as any plant that I have visited in Japan.

I remember going to Japan with the hon. Member for Bassetlaw and Joe Harper, who is no longer with us. He was an excellent Member of Parliament and, like the hon. Gentleman, an excellent Yorkshireman. Like the hon. Gentleman, Joe Harper objected angrily when the Japanese said that they were going to close down a coal mine. But were the Japanese wrong to close down an unproductive coal mine? In the 1970s they closed down inefficient industries because they knew that they were getting into the motor car industry. They moved from the motor car industry to the electronics industry and from the electronics industry to the technology industries. That pattern is happening in this country today, mainly with Japanese help. We must follow that pattern because we can no longer think in terms of United Kingdom industry alone. We must have bigger companies like the Japanese companies, which can compete on world terms.

That is the experience that I have gained from being chairman of the all-party group on engineering development, which has 120 members from both sides of the House and from the House of Lords. The group has visited factories around the country. Because of my experience in Japan, I knew that we had to copy Japan's industrial pattern if our manufacturing industry was to have a chance to compete in world markets, as it must and will do.

I am glad that we may now have reached the stage of getting away from the hustings and trying to reach a consensus by discussing some of the problems that face us. As the election may be in six months' time, the Government still have another Budget in front of them, and my all-party group will try to advise them on how to help our manufacturing industry.

I congratulate the Government on bringing down inflation to German levels and on the direction in which interest rates are moving. They are a key to investment, which is so badly needed in this time of world recession. We think that the recession is happening only in this country, but, alas, world trade has not expanded for the past two years. Anyone who goes to the continent—I speak of the continent and not of Europe, because we are part of Europe—or to Japan, or sees the problems in the developing world, will know what a terrific task faces any Government of this country. We must face up to that problem, which is why I hope that we shall get away from the hurly burly of electioneering and get down to discussing some of the problems facing this country.

As chairman of the all-party group on engineering development, I have found it valuable that our group believes in specific action to ensure that engineering makes its full contribution to the balance of payments. One of the biggest concerns in the past few years in that regard has been transportation equipment, particularly our imports from Germany. I only wish that the Germans had invested in this country like the Japanese have when their exports to this country in 1987 reached a £10 billion surplus in one year, and a £10 billion surplus again in 1988. If that had happened, the world recession in trade may not have been nearly so bad because we could have kept the economy going. We must learn a lesson from that.

Mr. Doug Hoyle (Warrington, North)

As the hon. Gentleman knows, like him I was one of the first to go to Japan and urge the Japanese to invest overseas. I said that they could not export their unemployment. Would not it be better if that advanced economy now took away all the restrictions on imports into Japan and really opened up a free market so that we and others could have a fair chance?

Sir Julian Ridsdale

The hon. Gentleman's comments are misguided. My experience of the Japanese market is that our exports to Japan have almost doubled in the past three years. With the priority campaign that now exists, it is up to us to test the market. I think that the hon. Gentleman's remarks are out of date, but I do not want to be too emphatic because I am trying to keep the argument on a low key and not to raise the temperature in this debate.

Thanks largely to Japanese investment in transportation equipment, particularly by Nissan, Toyota and Honda, when we pull out of the recession in the first half of next year—I am optimistic that we shall do so—we shall have the capacity not to suck in, as we did in the late 1980s, huge amounts of transportation equipment, especially from the continent.

I declare an interest in the Nissan plant, because I am an adviser to Sir Robert McAlpine. In 1983–84 I met Nissan with McAlpines, which then won the contract to build the Nissan plant in the north-east of England. How exciting it is to visit that plant today. As my right hon. and learned Friend the Secretary of State for Employment said, people must go and see the Nissan plant. I understand why the Opposition do not talk about that plant: it is an example of what should be done in British industry. Unfortunately —or fortunately—it has Japanese management, but, in answer to the point raised by the hon. Member for Bassetlaw on training, may I say how exciting it is to meet the 3,000 23-year-olds who work there and earn £15,000 a year. Perhaps the Archbishop of Canterbury will go there if he wishes to comment, as he did the other day, on crime in the north-east.

It is an inspiration to see what is happening at that plant, which is exporting all the new Primeras to Germany. There is a waiting list for those cars and, although we are worried about the current rate of unemployment, 1,000 more people will be employed within the next month because of the demand for the Primera. A new model of another car is coming out which will help us to correct our imbalance with Germany. I am sure that nobody will welcome that more than the Germans, who do not want to be embarrassed by huge surpluses, because huge trading surpluses and huge deficits create unemployment.

The same may be said of the Toyota plant in Derby, where skilled jobs will not be taken. The RB 211 plant is so mechanised that not so many people work there. As the Secretary of State for Employment said, I am sure that Toyota will, like Nissan, train staff. The hon. Member for Bassetlaw, as an engineer, knows the importance of training engineers. We must train more skilled people and take advantage of engineers and other skilled people, but they must not be poached. I am sure that my Japanese friends would not wish to do that because they do not want to get a bad name through their investment in this country. They want to help this country because in doing so they will encourage world trade and raise the standard of living throughout the world.

It is exciting not merely to see the Japanese plants, but to see the British plants. At the IBM plant in Havant one can see computer-integrated manufacturing and computer-aided design and manufacture—we should ensure that the same processes apply throughout industry. We did not hear a word about that from the hon. Member for Dunfermline, East (Mr. Brown) who made a hustings speech ——

Mr. Hoyle

We did not hear it from the Secretary of State.

Sir Julian Ridsdale

I am trying to lower the temperature of the debate because I want to help by introducing constructive ideas on manufacturing industry, not just to make a political argument.

Gavin Laird, the general secretary of the Amalgamated Engineering Union, was right to say that the success of Japanese plants in this country was a result of company unions. Anyone who has been to Japan knows the importance of the company union. I know that some of our engineering industries wish that we could have the company union in some of our engineering plants because we would achieve better productivity which would allow us to sell more throughout the world. The skilled bloke on the shop floor must produce for £1 that which his competitor is producing for £2 ——

Mrs. Llin Golding (Newcastle-under-Lyme)

And women.

Sir Julian Ridsdale

Yes, certainly the ladies. I should hate to leave out the ladies because as one goes around industry one appreciates the value of ladies, particularly in relation to computers and machines in industry.

It is encouraging that achievements are being made, even now, in some of the British companies that I have visited, including EIS, Ricardos and the IBM factory in Havant to which I referred. However, some companies have been badly hit, particularly those in the machine tool industry. That is why we must press the Chancellor to encourage more extensive and effective investment in the most up-to-date processes in our manufacturing industry —I have already referred to computer-aided design and computer-integrated manufacturing.

The Italian machine tool industry has suffered a similar fall in the level of its orders—about 40 to 50 per cent.—as a result of an alarming fall in investment. The Italian senate has recently passed the "Righi Battalia" law which, if formally approved, will provide for about £700 million of investment in new technology over the next three years. Our machine tool industry is not asking for aid in excess of that received by our competitors; all that it is asking for is the opportunity to compete on a level footing. Surely we must provide help through capital allowances in the next Budget. I am delighted that I can talk about the next Budget although I shall not be standing in the next election, which is one of the reasons why I am not making an electioneering speech tonight.

In the next Budget we must also assist those sectors of the engineering industry that will have to bear substantial engineering costs in order to meet stricter environmental standards. Perhaps most important, we must encourage research and development. In Germany and Japan, that is being done from the profits of the big and successful engineering companies, but we lag behind, mainly because of the world recession. I congratulate the Government on what they are doing to encourage science parks around our universities. We must not be complacent about investment in research and development, but must take note of the huge amounts that Germany and Japan are investing in research and development.

There are other sectors in which help is needed, especially in the new markets in eastern Europe, Russia and China. We must give continual and expanding support to United Kingdom engineering companies to obtain overseas contracts and help to provide export guarantees for such work.

I hope that the Secretary of State and the Chancellor will bear these points in mind. In the marketplace, as in skiing, there is no security, only opportunity. In normal times, industry can get on well on its own, but in a recession it needs a helping hand.

Several Hon. Members

rose——

Mr. Deputy Speaker

Order. I remind the House that the ten-minute limit on speeches operates from 7 o'clock, so the next hon. Member I call can speak until 7.10 pm if he needs to.

6.57 pm

Mr. Alex Carlile (Montgomery)

I am extremely grateful to you, Mr. Deputy Speaker, for calling me at this opportune moment in the debate—6.57 pm.

The debate stands as an indictment of the Government's wilful neglect and failure to sustain this country's manufacturing base. The case against the Government is based simply on an exposure of three aspects of their policies: first, their understanding, such as it is, of the recession; secondly, their commitment, in so far as they have one, to training; and thirdly, their attitude, if that is not too polite a word, to unemployment.

This recession—for we are still well in it—is one that has been made worse for manufacturers and the service industries alike by the Government's lengthy, desperate and, until recently, mostly unsuccessful attempt to get to grips with inflation. Surely the Government cannot be satisfied with the results. While inflation is down, which is welcome, it remains so under a threat of high interest rates. Industry knows that, the moment that inflation rises, interest rates will rise with it, yet those rates remain at historically high levels.

As a result of what has happened to manufacturing industry, particularly in the past two to three years, when the recession eventually ends it will be at the expense of a significant slice of our manufacturing base. The inevitable consequence is that, at the end of the recession, there will be greater import penetration, for we shall have lost even the facilities to manufacture many of the goods that we consume.

Mr. Howard

As I understand the policy of the hon. and learned Gentleman's party, it is to hand over responsibility for these matters to another quarter altogether—to an independent European central bank. What recourse would the House have in respect of high interest rates if such an authority decided that high interest rates were necessary?

Mr. Carlile

If the right hon. and learned Gentleman, who asks a fair question, will bear with me, I shall come to the answer to that in due course.

I would ask the House to examine some of the evidence for the depth of this recession. The gross domestic product at the end of the third quarter of this year is one relevant item. GDP fell by 0.6 per cent. between the first two quarters of 1991 and was 3.7 per cent. lower in the second quarter than in the same period last year. Manufacturing output, however, was as much as 6.6 per cent. lower than a year earlier. Construction output was worse still—9.4 per cent. below the same period last year. Output in the energy and water sectors, flagships of the Government's privatisation policies, was 4.1 per cent. lower than a year earlier.

There are some dramatic examples of what has happened to certain sectors of manufacturing industry. One such is the textile industry. Since the last general election in 1987, there has been a 16 per cent. fall in output in the textile, clothing, footwear and leather industries. That is affecting my constituency, where there are a number of Laura Ashley factories.

Laura Ashley is just one example of a company whose share price rises as people are made redundant in the United Kingdom. The more people Laura Ashley employs outside the European Community, the higher its share price, because that is thought by the City to be a sign of efficiency. It should not be so. I think that it shows that the Government have failed to sustain, in an important domestic industry, the manufacturing base that is necessary in the long term. For the share price to be in inverse proportion to the amount of manufacturing done in the United Kingdom cannot be right.

In the venture capital sector, fund managers in the regions—the Secretary of State emphasises their importance —say that they have plenty of money to invest but that there are practically no takers. They feel that usual mechanisms for funding investment and growth appear to be at a standstill because the banks do not know whither Government economic policy is leading them.

Mr. Abbott, who runs the Liverpool office of Capital for Companies, part of a well-known group in the north-west, has said that he knows of one company that needs to borrow about £120,000, and of others needing less, and adds: The banks which would have normally financed these sorts of sums are nervous as kittens. Until they do, the economy will not turn. Yet the Government are not creating the climate in which this can take place.

The evidence provided by members of the British Venture Capital Association—I assume that the Government applaud their activities—shows that the recession is still very deep, especially in manufacturing industry. Over the years, the Government have been enthusiastic about management buy-outs and management buy-ins. The British Venture Capital Association's statistics show that the sums invested in 1990 in management buy-outs were one third below the sums invested in 1989. The total amount invested by British venture capitalists in industry and commerce as a whole in 1990 was £1.394 billion, £253 million less than the amount invested by the same group of investors the year before. Indeed, in 1990 the amount regressed to equal the 1988 figures.

Another striking example is the leisure industry. In 1990, venture capitalists invested about one third of what they invested in 1989. In retailing, they invested one tenth of what they invested in 1989; and in construction they invested £21 million less than in 1989. To be fair, the figure for financial services was significantly higher than the 1989 figure, but it was less than 50 per cent. of the investment in 1988.

In the manufacturing sector, investment declined by 40 per cent. in 1990 as compared with 1988. That is the evidence of the Government's failure to provide a manufacturing base in which venture capitalists would feel keen to invest.

Evidence of the depth of the recession emerges from another source, too. Bankruptcies and liquidations are at record levels. Every time a small company goes into liquidation and its directors go bankrupt, people are affected. We know about their misery from meeting the many constituents who face bankruptcy and liquidation.

The Government have done nothing except to create a climate in which those of us who meet young people looking for good careers in the professions would be well advised to tell them to go into the liquidation business: at least that is a growth industry. Dun and Bradstreet report 33,532 business failures in the period between January and September of 1991.

What is most worrying is that the Government seem as confused about the state of the economy as industry and commerce. To be sure, some entrepreneurs have tried to work their way out of the recession and have adopted with a vengeance the Government's vaunted belief in free enterprise; but the evidence for that belief is fairly unimpressive—the dismal procession of the denizens of Thatcherite policy wending their grim trail through the Old Bailey and Southwark Crown court. One thinks too of the Rover fraud which the Government perpetrated against the European Community—the evidence for that is manifest. One thinks too of the disreputable episodes that led to the House of Fraser takeover. That was clearly tainted with malpractice, if not with fraud.

So it is not surprising that the Government themselves are confused about the state of the economy. When they talk to home audiences or British journalists, they give the impression that the recession is at an end and recovery under way. At the Tory party conference, the Chancellor talked about the green shoots of economic spring". After figures this week showing manufacturing output falling, the Chancellor said that the recession in manufacturing was over and that the fall in output was consistent with the recession bottoming out and with recovery in the second half, adding: I have always said that the recovery will be gradual. When the Chancellor is out of the country, however, talking privately to other Finance Ministers, he comes up with a much less upbeat story about the economy. According to the evidence of Herr Kohler, the German deputy Finance Minister, when the Chancellor talked to the Germans he was much more cautious. The weekend communique from the G7 said that Britain was moving towards recovery, while recovery is under way in the United States and Canada. Those of us who remember the former Chancellor's repeated promises that there would be no recession, and the current Chancellor's comments that the recession would be shallow and short-lived, cannot help but greet recent remarks by the Chancellor, such as the one that next year growth will take place at a moderate pace, with a huge scepticism. Predictions from the Government's Chancellors are about as reliable as the weather; when the Government say that it will he sunny tomorrow it might be a good idea to invest in an umbrella.

I should like the Secretary of State to give a clear answer to a question about the training and employment sector. Do the Government still adhere to the target set by the Secretary of State's predecessor, the right hon. Member for Sutton Coldfield (Sir N. Fowler), who as recently as 1989 said that half the work force would achieve the equivalent of National Council for Vocational Qualifications level 3 by 2000? Is that still the target? If it is, how will the Government achieve it, given the situation in which the training and enterprise councils currently find themselves, in which all their money is being spent not on retraining people in work, but on providing some kind of training for people who are out of work?

Mr. Deputy Speaker

Order. The hon. and learned Gentleman has run out of time and must now come to his last sentence.

Mr. Carlile

I understood you to say that I was not tied to the 10-minute rule.

Mr. Deputy Speaker

Order. I told the hon. and learned Gentleman that the 10-minute limit started to operate at 7 o'clock. That meant that he had until ten past 7 and, as he started to speak before 7 o'clock, he had a time bonus. He must now come to his last sentence.

Mr. Carlile

I do not want to finish my speech without giving a direct answer to the Secretary of State. The whole range of our policies answers his question. An independent central bank is part of it. Bringing sterling into the narrow bands of the exchange rate mechanism is another part. The Government have promised to do that, but they are not doing it at the moment. A proper training and investment policy in manufacturing is the key.

7.11 pm

Sir Giles Shaw (Pudsey)

I shall not deal immediately with the speech by the hon. and learned Member for Montgomery (Mr. Carlile), although I shall deal later with a part of it. The debate turns on the scale of manufacturing investment, and I firmly suggest to the hon. Member for Dunfermline, East (Mr. Brown), who is not in his place, that he was in grave danger of overplaying his rather feeble hand. The point about manufacturing investment is not its actuality, its level or its rigidity or flexibility, but the determination that it demonstrates to provide goods and services for people to buy and use.

It is ludicrous to talk about manufacturing investment in isolation, without regard to the market at which the industry or service is pitched. For that reason, in looking at the way in which the recession will he beaten— as beaten it will surely be—it is not enough merely to look at manufacturing. We must also look at consumption and access.

I concede that the recession has been far deeper and longer and has had far more features that were unknown in any previous recession. Whether it was started peculiarly by Saddam Hussein and the Gulf war or the energy crisis which followed it, or whether it was started by the extraordinary decision of corporate America and, I say to my hon. Friend the Member for Harwich (Sir J. Ridsdale), by corporate Japan virtually to stop flying and therefore to stop taking any real interest in corporate decisions other than in their domestic markets, we cannot tell. However, we know that the complexity of the recession has made it much more difficult to manage than those which occurred hitherto.

There are some obvious matters. The scale of inflation that Britain once endured and the interest rates that followed made the effect on the United Kingdom peculiarly vicious. None of us can do other than recognise that those two factors had a depressing effect on British manufacturing. The consequences of manufacturing investment in terms of funding the investment and on cash flow cannot be ignored. The confidence factor is such that the consumer purchasing power of the United Kingdom is heavily depressed. That is the real problem in the high street and in service industry, and for the moment it stunts the growth of manufacturing investment. The hon. and learned Member for Montgomery rightly said that there is plenty of money available for investment if there were a corporate willingness to undertake it, but no company, whether a plc, a private institution or a small business, would willingly take that decision unless it was confident that it could manage the cost of debt on the basis of the revenue from what is assumed it could sell in the market place.

Two factors require to be added to our mighty success in bringing down inflation so that we can reduce the rate of interest which all trade has to bear. First, we need to make sure that our policy places a high priority on access to markets. The Government's resumption of continuity in the GATT negotiations will do far more for the confidence of British industry than anything that has happened in the past six months. I congratulate my hon. Friend the Minister for Trade on the remarkable way in which he has dealt with that difficult matter. I hope that he will be able to bring the GATT talks to a solution because that would have two immense advantages. First, we shall know whether we can get access to new markets on more beneficial terms than in the past. Secondly, we shall know the international commitment to running markets in a fair and sensible manner. That will do more to restore our export potential and long-term investment than most of the matters mentioned by the Opposition.

British industry does not need great panoplies of Government grant-aided Systems, committees, form-filling or bureaucratic management. Everyone in British industry takes risks every day, and the management of risk is personal, complete and direct and cannot be devolved in a welter of Government agency help.

In addition to opening markets, we must look at some of the problems associated with the European Community. We are committed to the biggest single extension of the domestic market that Britain has ever seen. We are delighted to know that the stability of the European exchange rate mechanism will provide some stability in the value of our currency. There is great panic by the Government to ensure that our European credentials are met and therefore they implement every directive instantly and in full. That has huge consequences for the confidence and competence of British industry.

I took a small delegation to see my hon. Friend the Minister for Roads and Traffic about the European regulation on drivers' cabs on lorries and the ultimate configuration and length of articulated vehicles. That is not a matter that the burghers of Pudsey are thinking about, but a matter in which I got involved. It was a surprise to the Minister, as it was to me, to find that the Government are the only one who have implemented this tortuous process right away without a long deferral or derogation. I understand that the Dutch and the Germans are trying to delay implementation because of its consequences on the efficiency of transporting goods.

British industry could do without such haste. We should take more time because no one is hustling us. I doubt very much whether the Greeks have even heard of the directive. It is high time that our view was a bit more like that of the Gallics and Latins, whose implementation of the water directive has barely started. Let us take a slightly more relaxed view on the regulatory mechanisMs of the Commission. I am sure that that will find some favour with the Minister.

Another problem alongside that is the one faced by small businesses in particular in dealing with the mechanisms of the national insurance charge on benefits in kind. I found in my constituency a business which has three or four vans which it uses to sell its products. It does not operate cars for the benefit of its employees. It seems that operating the vans has to be regarded as a benefit in kind, and that is subject to the national insurance charge.

It is not just a matter of value added tax or the Inland Revenue. The Department of Social Security is entering the range of assisted services with which small businesses have to cope. These businesses have managed to cope with the Inland Revenue and its inspectors. They have managed also to deal with Customs and Excise and its inspectors, but they now have to deal with the DSS and its inspectors. The Revenue and Customs and Excise have become used to the way in which VAT is handled. They have, broadly speaking, reached an agreement on how small businesses can cope and have learnt to live together. The DSS. with its new inspectorate—I understand that it is funded largely by sale or return on a Commission basis, or something like that—has decided that all telephone calls, domestic or business, must be separated one by one, and that unless that is done it will regard all calls as having a private purpose. That would mean that the entire bill would carry a national insurance charge, because the facility will be regarded as a benefit.

For cars the Inland Revenue found it acceptable to apply a scale of 2,500 to 15,000 miles unless a taxpayer's claim showed the mileage to be otherwise. That is not acceptable to the DSS, which has introduced a band of under 2,500 business miles. That scale will he applied unless detailed mileage records are maintained. I will not have that, and I do not think that my right hon. and learned Friend the Minister will have it either. We want a conformity of Systems that small businesses can manage.

Those businesses should be given a little lift at a time when, unfortunately, they are going broke. As Opposition Members have said, that is happening all too frequently.

I am aware of the problems in the textile industry mentioned by the hon. and learned Member for Montgomery, but there has been rather better news from west Yorkshire. The wool scouring business is doing much better. I understand that at Haworth Scouring orders worth £300,000 have been placed in the past six months. There has been an important development in Dewsbury. Standard Wool has invested £1.5 million, and in other industries Spring Ram has invested £85 million in Birstall, Bradford, Barnsley, Scunthorpe and Huddersfield. It is not all gloom. Britain can make it and we shall make it. But we should like a little less interference from Government.

7.21 pm

Mr. Ken Eastham (Manchester, Blackley)

I am glad that the House has an opportunity to examine the true position of Britain's manufacturing base. Unfortunately, it is nothing like what was projected last week at the Tory party conference. I watched the proceedings at Blackpool, during which Minister after Minister sought to soothe the Government's supporters. In effect, they said that everything was running well and that there were no problems. The conference ended with the waving of flags and the playing of an organ, after which everyone went home. We are now in the real world.

During the debate my hon. Friends have presented the true picture when describing the standing of our industrial base. Regardless of what the Secretary of State said, we must recognise that we have the fastest growing rate of unemployment in the industrialised world. That is the real world to which I was referring when I made a comparison between the picture that was presented at the Tory party conference and the standing of our industrial base.

When I returned from my holiday during the summer recess I received a long letter from the Machine Tool Technologies Association. It probably wrote to me because I act as the secretary of the engineering parliamentary group. The letter set out a dreadful catalogue of disaster in the machine tool industry. We must remember that the industry is the seed corn of any manufacturing base. Without a good machine tool industry we shall have no future that embraces inventiveness, innovation and competitiveness. Having received the letter from the association, I wrote to the Secretary of State. Unfortunately—I hope that the civil servants in the Box are taking notice—it seems that my letter has disappeared somewhere in the Department. Four or five weeks have passed and I have received no reply. I asked him to consider the problems facing the machine tool industry and to comment on them.

At the same time I received a further communication from the Machine Tool Technologies Association. The association stated that demand for machine tools in the three months to July 1991 was down by 28.5 per cent. when compared with demand during the same period in 1990. Some companies are experiencing reductions in demand of between 40 and 50 per cent. The association states that industry is not investing and that there is little hope in the machine tool industry of any upturn until well into next year. It claims that this will have major implications for its competitiveness, which will bear on the productivity and the quality of British industry in future.

The association referred in its letter to the Italian machine tool industry. It seems that that industry has been suffering a little because orders are not being placed for its machine tools. The association tells me that the Italian Government are in the process of granting the industry the equivalent of £700 million over the next three years. It fails to understand why we in Britain cannot learn some of the lessons that have been learnt by the more successful countries in Europe. It cannot be denied that Italy has been successful, along with France and Germany. If Italy and other countries can learn the relevant lessons, why cannot Britain? We must make some adjustments if we want to have a successful machine tool industry.

When my hon. Friend the Member for Dunfermline, East (Mr. Brown) was speaking from the Opposition Front Bench some young Conservative Members were making jibes to the effect that Labour Members have no experience of industry. I shall place my credentials before the House. I worked in the machine tool industry, I have been involved with heavy turbines and I have worked in the diesel engineering industry. I have worked in manufacturing industry from the shop floor to the office, where I worked on the technical side. It can be claimed that at least my colleagues and I know something about the manufacturing base. That should be remembered when we say that we are facing a devastating situation.

I contacted the Amalgamated Engineering Union, which provided some good information and feedback. It told me that the recession is following a different pattern from that which emerged during the recession in the early 1980s. During 1980–81, no Conservative Member seemed to care about the impact of the then recession in the north. So many jobs were being lost in the region and the Government said, "This is some of the pain that you must endure. It will all come right. Make the sacrifice and everything will turn out well." We made sacrifices in 1980–81, and lo and behold we are back to square one in 1990–91. This time, however, the recession is in the south-east. Its stranglehold is being experienced in unexpected areas.

The greatest downturn has taken place in the south-east. Even Northern Ireland is doing better than the south-east. In August this year the turndown in Northern Ireland was 3.9 per cent. compared with the previous year. In the south-east it was 84.7 per cent. Such factual comparisons show that there is no success story.

The feedback that I have received from various engineering offices in the southern region leads me to ask what Conservative Members have been doing for industry in the south-east. They predominate in those areas but they do not seem to be doing anything. They do not even seem to care.

Let me give some examples to show what has really gone on in the south-east during the past few months. Ford Motors will lose 300 to 350 jobs at Dagenharn. Ferguson is closing its plant at Gosport in Hampshire. Sealink has lost 1,500 jobs. Ford New Holland is reducing its work force in Basildon by 650. British Aerospace is to close its plant at Kingston. In west London, Trico-Folberth is to close its Great West road plant at Brentford and Clearplas is to close its car components factory at Heathrow. Courage Brewing is to lose 506 jobs in Middlesex. Riverside Press has lost 210 jobs in Whitstable.

GEC Marconi has lost 130 jobs in Chelmsford. Crittal Windows has lost 152 jobs in Colchester. Allen West has lost 71 jobs in Brighton. Rolls-Royce is to lose 6,000 jobs and its Leavesden helicopter facility is threatened. British Aerospace has lost 300 jobs in Stevenage and the London Brick Company is to lose 250 jobs in Milton Keynes.

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. I regret that the hon. Gentleman has had his 10 minutes.

7.31 pm

Mr. Donald Thompson (Calder Valley)

Much has been said tonight by my hon. Friend the Member for Harwich (Sir J. Ridsdale) and by Opposition Members about the Japanese and Japanese industry. A long time ago, in 1904, Lord Masham, who founded the great silk spinning company of Listers, was invited to the opening of the Cartwright museum in Bradford. In his reply to the vote of thanks by the mayor he said that what he was about to say might be considered to be in the realms of fiction.

Lord Masham pictured the Cartwright hall as a place where the Asiatics of the future might come in search of the inventor of the power loom—the power loom being the means by which the east would overcome the west. At that time, that power enabled the west to overcome the east, but he said that the thoughtful mind must realise that, if ever the power loom were taken up by such nations as the Japanese—a wonderful nation with a facility for copying western ideas—who could say what would happen in a few years' time. He said that some might think that he was in the realms of fiction, but that sometimes reality was even stranger than fiction. "Hear, hear," said historians.

His Lordship continued: I have a very strong itnpresson that the east will overcome the west in the coming years and instead of our clothing the east, the east will clothe us. There was loud laughter. However accurate he was in 1904, he did not predict that the Japanese would now be investing in the north-east.

My constituency is in the heart of what used to be, and can still be called, the manufacturing areas. The manufacturing industries employ 50 per cent. of my constituents. I am not as keen as many Opposition Members on what has in the past been known as regional aid. Regional aid—the hon. Member for Bassetlaw (Mr. Ashton) hinted as much when he spoke about job skills —has taken jobs from high skill areas and planted them in areas without such inherent skills, and those jobs and skills have then withered at the slightest economic winter. The jobs have to stay with the skills and, difficult as it is, people must be brought to the jobs. I was interested to hear what the hon. Member had to say about that specific objective.

I get a lot of help in my constituency from the development Commission. People seeking help from the Commission have a range of experiences from their own and their friends' jobs. It is not the same in the coal-mining areas. Coal miners who live in a big community and are then thrown out of work do not have such multiple experiences. They do not have friends who have been in 50 different industries; that makes a huge difference.

There is investment throughout the valleys in my constituency. The local bus company has spent £4.5 million on 61 new buses and 13 minibuses, all of which were built in the United Kingdom, and there is investment in heavy engineering, furniture, textiles and non-woven textiles, kitchen equipment, ceramics, motor car components and white goods. Those companes have told me that, since the beginning of August, they have invested considerable sums of up to £5 million in jobs.

However, manufacturing needs, and is short of, a climate for success. To people from my part of the world, there seems to be no enthusiasm for manufacturing, not just on the part of the Government or the Opposition, but on the part of the banks, universities and schools and the City. They seem to think that manufacturing is the bottom line. I think that it is the bricks on which a good and sensible country is built.

We have heard much from the Opposition today, but in the country we hear a story different from the balanced one which it tried to convey today. In the country, the Labour party still turns up its nose at profit, risk and success, and that almost completely negates the words that we hear in this place. The cry is for high tech. In practice, that often means a soldering iron instead of a sewing machine. The ladies and gentlemen still sit in serried rows.

There is even less understanding when we hear the Labour party in the country crying out against service industries, forgetting that the financial side of those industries is the greatest purchaser of high-tech equipment and that most of the service industries are expanding to provide jobs for my constituents in the manufacture of beds, carpets, baths, and so on.

The climate created by the Labour party is not the climate that manufacturing industry needs. It is no good the Opposition complaining about bankruptcies and then not allowing successful industries to continue making profits and retaining them and the men who work in those industries to earn higher and higher wages.

Before we reduced taxation to 40 per cent., people used to say that we were taxing their overtime. They do not say that any more. Ordinary working men and women in our successful industries do not want the Government's hand in their pockets. They want a reasonable tax regime.

The Government's commitment to the north is exemplified in my constituency by an £8 million grant for industrial development. That follows millions of pounds of investment in other parts of the north, year after year, when jobs have been lost. For example, millions of pounds were invested yearly in Todmorden in my constituency.

My part of the world has benefited from self-help, by supporting business in the community—and the development Commission also helps. Business is still not properly understood by much of the rest of the community. I once employed 26 people, but others cannot understand the joys and hassle of employing five, 10, 15, or 20 people. The Administration also misunderstand the difficulties, and the burdens placed on small industry are still too great. Over the next 10 years, a Conservative Government must get those burdens off its back. Labour will not do so because, basically, it does not like small businesses. That is because small businesses do not like unions as they represent an even greater burden than anything else.

Eastern Europe is now seeking our help, and the Government can provide it through their diplomatic service. It seems strange to some of my constituents who export white goods to Poland that the British embassy there has a staff of 50, but that only two of them are commercial attaches. They think that it should be the other way round. The whole of eastern Europe wants to be a consumer society and its working men and women want to buy all the goods that we take for granted—all the trappings of a reasonable life. Our manufacturers have a chance of supplying those goods, and the Government must help them in whatever way they can. We can do so without contravening EC rules, from within the diplomatic service, which can help our business men to find their way through the decaying labyrinths of eastern European bureaucracy to the entrepreneurs. In that way, we can take a few leaves out of many other books. Industry wants the Government—any Government—off its back.

7.42 pm

Mr. Doug Hoyle (Warrington, North)

I am sorry that the Secretary of State for Trade and Industry is no longer in his place. If the House had been sitting in August, the Secretary of State would not have been with us today because of the terrible mess into which he got himself in respect of the export of military, chemical and nuclear materials to Iraq. What kind of Secretary of State is he to say, "It is a lot of fuss about nothing—it is a silly season story"? I do not imagine that those British troops who served in the Gulf, or their parents, would regard it as a lot of fuss about nothing for Britain to have exported equipment which might have cost the lives of British service men and women.

The Secretary of State got himself into an even worse mess in connection with the strange story of the 8.6 tonnes of depleted uranium. He said it was all a question of the packaging—of the lead and dry ice. The Secretary of State cannot tell his ice from his elbow. His Department, which issued the instructions, directed that exports must be listed in terms of net weight, not gross weight.

The Secretary of State had not one word to say today about the businesses that are being destroyed. Had he been in Rome, he would not have been fiddling but using the torch to start even more fires. The Secretary of State and his Ministers do not understand industry. The Under-Secretary of State for Industry and Consumer Affairs, the hon. Member for Gainsborough and Horncastle (Mr. Leigh), was a second-rate barrister, and the Secretary of State and at least one of his other Ministers were City slickers. The Minister for Trade is the lad whose father would not let him out of the back room to run the grocery store. Is it any wonder that unemployment is rising, interest rates are higher than in most of our major competitor countries, business failures are at a record level, and manufacturing output has fallen below the 1988 level?

Perhaps the Under-Secretary of State will say whether the Government have made any representations to British Airways or to Lord King about its decision to buy the Boeing 777 with a General Electric engine. Why did British Airways reject a good commercial bid that offered a stretched A330 with a Trent engine, which would have been not just a European aircraft but virtually a British aircraft, using British parts and British engines? The problem is that the Government are not interested.

Not only did British Airways fail to buy the European airbus, which is a fine aircraft; it decided to buy a paper aircraft with a paper engine—one which has never flown. Rolls-Royce has already shed 6,000 jobs, and now it is to lose out because GE bought a factory in south Wales for £270 million, and GE will repair the engine. British Airways' decision could mark the beginning of the end for Rolls-Royce. I should have thought that that was a matter of concern to the Government. Have they asked for any explanation?

The Minister may smile, but all our competitors—be they in Germany, Japan or the United States—operate in protected domestic markets while our leading aircraft engine manufacturer, which makes 20 per cent. of the world's aircraft engines, is put at risk.

I remind Conservative Members that large businesses are important to small businesses. Thanks to privatisation, BMW now has 1 per cent. of Rolls-Royce, and there is talk in the City of a hostile takeover bid. That could not have happened if Rolls-Royce had remained in the public sector. More nails have been driven in by the Government, who do nothing to help. The same applies to British Aerospace. The Secretary of State said nothing about the denigration of British Aerospace and the way it has been talked down by the City. That company has 195,000 workers, and annual sales of £9.3 billion. What is happening does not seem to bother the Government in the slightest. They are standing idly by.

Let us contrast that with what is happening in Germany. Daimler-Benz owns Deutsche Aerospace and 28 per cent. of the holdings in Daimler-Benz are held by the Deutsche Bank. Compare Deutsche Bank with one of our banks—50 per cent. of its lending is to companies for four years or more. Can one imagine a bank in this country doing that? It is no wonder that Deutsche Aerospace has 200 experts studying the conversion of military items and spending in Deutsche Aerospace to civilian products.

Mr. Eastham

That is the peace dividend.

Mr. Hoyle

My hon. Friend is right.

Why are we not setting up such an agency here? British Aerospace has appealed to the Government to do so, but the plea has fallen on deaf ears. Yet the aerospace industry accounts for 10 per cent. of our manufacturing exports. Despite that fact, not a word is being said about it.

On the subject of mergers, can one imagine any other country where the Secretary of State would have had nothing to say about Hanson's bid for ICI, which is our largest manufacturing company? It is our second largest exporter, exporting 50 per cent. of its output, and spends £591 million on research and development or 4.5 per cent. of its annual sales as compared to Hanson, which spent £34 million on R and D—0.5 per cent. of its annual sales. Yet the Government are prepared to stand idly by while the bids are made. Hanson could take over ICI, split it up and sell it off—asset stripping—but the Government are not bothered.

The Government are standing idly by while a bid is made by Williams for Racal, one of our leading electronics manufacturers. Williams is involved with distribution. Hawker Siddeley, the largest manufacturer of electric motors, is going to be taken over by a predator, BTR, which would split it up. The Government know that Pilkington is shedding 750 jobs. Nothing is being done. The best thing that could happen is for the Government to be defeated. Nowhere would the wind of change be more welcome than if it blew away the current trade and industry team, who are all Dr. Dolittles.

7.52 pm

Mr. Anthony Coombs (Wyre Forest)

Although I support the Government's strategy for manufacturing industry, I would not like to underestimate the difficulties that some industry in some parts of the country has been facing. I come from Kidderminster, where there is a carpet industry which is related to the housing market, and there is no doubt that during the past 18 months it has been going through a difficult period. That has been exacerbated by the closure of the Coloroll factory, which lost 1,400 jobs, primarily because it was badly managed and massively in debt as a result of an over-expansionist policy.

Nevertheless, having talked with businesses throughout my constituency, I can report that confidence is gradually returning. The same policies that resulted in unemployment in my constituency being reduced from 18 per cent. to only 4 per cent. will again lead to such a regeneration of industry.

When one considers the decline in investment and output this year, it is important to see it in context. In 1989 and 1990, gross domestic capital formation for manufacturing industry was at a record high, which meant that a whole range of industries in my constituency and elsewhere were able to re-equip. In the 1980s, investment grew twice as fast as consumption and faster than anywhere outside Japan. As a result, about 40 per cent. of the Organisation for Economic Co-operation and Development's investment comes into Britain.

With that record of investment, it is scarcely surprising that the average productivity of manufacturing workers in this country has increased by 50 per cent. in the past 10 years. Interestingly, The Independent said recently that, despite the fact that output had been declining recently, productivity per man has continued to improve and as a result our competitiveness in world markets remains relatively unimpaired.

The "CBI News" recently said: Not only do the key indicators of output, productivity and UK share of world trade all show an improving trend relative to our main competitors, but there has also been a considerable restructuring of industry, with the help of inward investment, increasing the UK presence in high technology sectors. Employee communications and industrial relations have been transformed. In addition, some long standing weaknesses, in terms of quality, customer service, innovation and skills are being addressed. It would be wrong to leave the impression —as the Opposition tend to do—that all manufacturing industry is not doing well. In my constituency, a number of companies in several sectors are doing well. A spring makers, which supplies the automotive industry, is working at capacity and 68 per cent. of its output goes to the automotive market. It estimates that, by 1996, Britain will be the fulcrum of the engine market in Europe.

There is a con rod maker in my constituency which supplies the automotive industry and is working at full stretch. Other newly started carpet companies which I visited last week have increased turnover, with minimal stock turn, by 50 per cent. in the past year. There is an improvement in confidence.

As far as manufacturing industry is concerned, the fundamentals are right. That has been exemplified in the export sector and has been carried through into the first half of this year. The figures for the three months to August this year—about the latest available—show that manufacturing industry exports have increased 60 per cent. in volume terms since 1979, and that exports of electrical machinery have increased by 11 per cent. over last year, scientific instruments by 16 per cent. and clothing and footwear by 28 per cent. and car exports by 47 per cent.

It is significant that people in the machine tool industry say that they have a trade surplus with Europe for the first time since 1971.

More important than all those figures is the fact that that will continue. Consider the CBI pay database. The CBI says that, because wage settlements are less here than in Germany, our unit labour costs are coming back into line with those of our European competitors. As a result of that, and of the improvements in productivity that I referred to, our competitiveness relative to the outside world and to our European competitors is improving all the time; hence our export performance.

Although times are difficult, there is a background of low inflation, low taxation and a better industrial relations climate. Those are many of the fundamentals that industry needs and that made it so successful in the 1980s, and they are in evidence now.

What industry does not need are the sort of policies that have been advanced —sadly too consistently—by the Opposition. Ask any business in my constituency, and I suspect in virtually every other constituency, and one will find that they do not want a party in government whose record when it was last in power was a significant decline in manufacturing output and a reduction in road infrastructure spending, which is so important to industry, of 60 per cent. in real terms, and which never reduced inflation to less than 7.4 per cent.

Businesses do not want their costs increased by a payroll tax; nor do they want their ability to reward more skilled workers with proper earnings undermined by minimum wage legislation, which would inevitably push up their costs. They do not want a top rate of tax that would be increased by no less than 50 per cent. to batter incentives. Nor do they want a surcharge on savings to finance investment; the hon. Member for Dunfermline, East (Mr. Brown) never responded to that point.

As for industrial relations, the last thing that companies want is to be compelled to recognise trade unions of which only 40 per cent. of their employees may be members; they do not want an increase in the number of sympathetic strikes and secondary action; they do not want more workplace enterprise councils; and they do not want their legitimate ability to employ part-time workers to be eroded by the lack of flexibility that is inherent in the European social charter—which Labour seems prepared to swallow hook, line and sinker.

Companies tell me that they do not want to encounter the kind of bureaucratic nonsense that the Labour party seems intent on foisting on manufacturing industry. They are not interested in regional equality tribunals. They do not see how social audits will improve their competitiveness and their ability to sell goods abroad. They do not want a national investment bank; and, by God, they do not want "British Technology Enterprise", a re-run of the National Enterprise Board which was so unsuccessful when they were last in office.

Manufacturing industry informs me that putting Labour in government would be like putting the fox in charge of the hen house. The result would be akin to the effect of the Western Samoa team on Welsh rugby. I do not believe that it will ever happen, thank heaven. None the less, we must emphasise the damage that Labour policies would do to manufacturing industry, and maintain the policies that caused such an enormous improvement in productivity, investment and manufacturing growth during the 1980s.

8.1 pm

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

Let me illustrate the reality of manufacturing in Conservative Britain. On Monday morning, in my constituency, Rolls-Royce Motor Cars closed down. The employees had been working a three-day week, but no warning was given of the closure, although it had been announced that the firm would close for a fortnight in December; it managed to tell the local radio station before telling the work force.

Rolls-Royce has already announced 1,192 redundan-cies—858 in the car division and 334 in Vickers Precision Instruments. Moreover, my constituency contains one of the great privatisation successes about which we have heard today, although the Secretary of State did not seem to know what it was. I asked him whether he was proud of British Rail Engineering Ltd., which had been sold off at considerable cost to the taxpayer and had made a great deal of money for those who were made directors—so much money, indeed, that an incoming director became a millionaire by buying shares for a tenth of what they were worth. Not only was the right hon. Gentleman singularly silent on the subject of that great success; he gave no answers to our claims that there were serious redundancy problems.

The Secretary of State should, I think, take a certain amount of credit. The local mayor asked him whether he would like to come and see some of the great successes of Conservative planning. It took the right hon. Gentleman some weeks to reply, but eventually he wrote what was plainly an offensive letter saying, in effect, that he had had no difficulty in deciding that we were actually doing quite well. He knew that, of course, because he had been through the constituency on his way to visit a neighbouring area a couple of weeks earlier; stopping in Crewe, however, was beyond him.

I then wrote to the Prime Minister. Would he like to visit my constituency, and tell the people who had lost their jobs at BREL and the people who could no longer hang on to their homes —families who, because of repossessions, were losing those homes at a rate of seven or eight a week—about the great success of Conservative policies? The Prime Minister wrote back to both the mayor and me, saying that the Secretary of State's assessment of the position had been entirely correct. He would, he said, be passing through at some point in the future, but he certainly did not intend to come and see what was actually happening.

When I first came to the constituency, BREL was not only making superb rolling stock; it was known throughout the world for the quality of its manufactured goods. What happened when it was sold off was very simple. Increasing numbers of redundancies were announced year in, year out; at the same time working conditions declined, as did the redundancy payments made to those who left and the so-called privileges of cheap tickets and access to cheap facilities. Some of the staff had been working in the manufacturing industry for 25 years, but, when it came to the point, their employers were not even prepared to maintain their existing pension rights in regard to the payment of subsidiary amounts.

We have lost 405 jobs in that recent closure. Department of Employment statistics reveal that my area has experienced the fourth largest increase in unemployment in the north-west. The figure is 72 per cent. and the three larger increases are all in rural areas. During the period concerned, Crewe has experienced a higher rate of growth in unemployment than any other industrial town: the figure has risen from 4.7 per cent. to 8.1 per cent. above the Cheshire average. The statistics show that we have lost 1,725 jobs, but 2,146 jobs have gone at Rolls-Royce, Vickers and BREL alone: 1,360 of those losses have occurred since the beginning of the year. More significantly, Crewe has the fastest growing rate of unemployment in the north-west.

We now have no apprentices. Even a short time ago, apprenticeships were available for school leavers wishing to go into one or other of the manufacturing units. Two years ago, between 30 and 90 apprenticeships were available in my constituency; this year there are none, and last year some of those units had the magnificent total of 12.

What does that mean for young people in my area? Last year, Crewe had 381 unemployed 16 to 18-year-olds; this year, it has 578. In Crewe, 108 were on a youth training programme and 112 were in jobs, but 358 had no experience in employment or training. That is what the Conservative Government have done to my constituency. They took a solid, happy working unit and managed to destroy the basis of many lives.

The Government did not simply take from those people their jobs and dignity and their future employment. They took their homes, their children's training and their incomes, which, although already low in comparison with incomes in other parts of the United Kingdom, had at least allowed them to maintain family units that had some cohesion and some hope for the future.

The Government have destroyed some of the best-known and most reliable firms in the world. Rolls-Royce and BREL have made it clear that, even if they can claw their way out of the current deep recession with no assistance from the Government, they will never return to their previous employment rates. They will never be able to offer my constituents the same kind of future. On their behalf, I am deeply angered by the superficial clowning at the Dispatch Box of a Secretary of State who could not even be bothered to come and talk to people who, every minute of the day, risk losing their employment and their future.

The Government have a great deal to answer for. They are uncaring and superficial, and their intensely selfish attitude to those who need to work for a living is a price that we are no longer prepared to pay. The closure of Rolls-Royce, with no warning, said more about the reality of Conservative policies than any other gesture could possibly have said. When it comes to maintaining jobs and quality, and actually manufacturing goods, the Government are not only uninterested; they actively wish that the problem would go away.

Almost without exception, the service jobs available in my constituency pay below the national minimum wage. In fact, 60 per cent. of the jobs in my constituency are advertised at below the national minimum wage. That is the future which the Conservative Government hold out for my constituents. I am deeply angered by their lack of care for these most important people. The sooner the Government go, the better it will be for this country.

8.9 pm

Mr. Phillip Oppenheim (Amber Valley)

A theme that ran throughout the speech of the hon. Member for Dunfermline, East (Mr. Brown) and many Opposition speakers today was the need for an industrial strategy and a hands-on approach to industry. It is worth examining that concept closely. The argument against a hands-on industrial policy is not that the market is perfect and can sort everything out on its own. The market is imperfect. However, it is less imperfect than the choices made by politicians and civil servants who know very little about industry and commerce. Their decisions are often influenced by other than commercial factors.

The market is the aggregate of choices and decisions made by the thousands or even millions of people who are most concerned with industry—the people who run industry and those who buy its products. Almost invariably, history has shown us that their aggregate decisions lead to more efficient industry than the choices imposed on industry by politicians and civil servants.

There are a number of reasons for that. Decisions on which industries to subsidise are often distorted by wishful thinking and misplaced national pride. The most obvious examples can be found in the developing countries. For example, India tried to sponsor an Indian rocket programme and Brazil tried to build up a computer industry. Billions of pounds worth of investment went into those industries, with virtually no results. It represented a drain on the capital and the skilled labour and best minds in those countries. It was a colossal waste of money and resources. India and Brazil did not succeed in building up successful high-tech industries. The only result was that the rest of their industries were drained of some of their best people.

Even advanced European countries have made the same mistake. For decades massive state aid was provided in Britain for the computer, semi-conductor and consumer electronics industries. However, we have failed to produce world-class products. Even where appropriate research and development facilities exist, efficient production and effective marketing have, far too often, been lacking. Intervention in industry tends to be driven by political and social rather than by commercial objectives. During the 1960s regional development policies led the British Government to encourage the siting of new vehicle plants in the north-west of England and Scotland, well away from the traditional centre of car manufacturing in the midlands. The theory might have been admirable, but in practice components and engines had to be transported expensively across the country. Eventually, three of the four plants that had been set up under this initiative proved to be totally uneconomic and had to close.

The British steel industry also suffered greatly from such well-meaning but ultimately disastrous political meddling. When, in the late 1950s, Colvilles, the steel works, wanted to build a large strip mill in north Wales close to deep water ports to facilitate the import of ore and the export of finished products, the Government—it was a Tory Government at the time—insisted, for regional policy reasons, that the plant should be split between two sites, one in Wales and the other in Scotland. As we know, the Scottish plant is far away from the main steel markets. It is also well inland, which causes problems over the import of ore and other raw materials.

Subsequently, wishful thinking by politicians led to unattainable targets and overinvestment in the British steel industry. In 1973, the Government decided on a major expansion, aimed at raising output in the, by then, nationalised steel industry from 23 million to 28 million tonnes. Even that was not enough for the trade unions, so the target was increased to 36 million tonnes, which proved to be hopelessly over-optimistic. The market was not there. The net result of two decades of meddling and interference by politicians and civil servants was that Britain was saddled with a massive and expensive over-capacity in steel. British Steel became the world's largest loss maker.

Government interference and intervention in industry have also led to the encouragement of completely unsuitable mergers. The aim of merging companies is the creation of world-class industries. The problem, however, is that such policies pay too little attention to the importance of competition. To forge world-class companies, with good economies of scale, through the selective and toughening process of competition is one thing, but to attempt artificially to create national champions through the choices of bureaucrats and politicians rarely works in practice, especially when, as so often happens, competition is further decreased by trade barriers to protect the national champions.

Another problem is that state grants and subsidies almost invariably do not go to those companies that most need them or that could use them best. They go to industries with the greatest lobbying power. To direct resources to one company or industry invariably takes place at the expense of others. The hon. Member for Warrington, North (Mr. Hoyle), who is no longer here, bemoaned the Government's hands-off approach to Rolls-Royce. He thinks that the Government ought to have ordered British Airways to make sure that it bought airbus aeroplanes and Rolls-Royce engines. That used to happen in the British aerospace industry. The Government told British Airways that it must specify Rolls-Royce engines, and told it to buy a range of planes like the Comet. The result of this interference, of cosseting companies and making them buy British, thereby ensuring that British companies had a guaranteed domestic market, was that they became over-reliant on Government protection and aid. I have many Rolls-Royce workers in my constituency. Whatever the problems that they face, they are in far better shape than they were in the 1960s and 1970s. Since privatisation, I have never met anyone in Rolls-Royce who wanted the company to go back to the bad old days of state ownership.

The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) mentioned British Rail Engineering Ltd. She implied that before BREL was privatised there was a golden age when the sun shone and the birds sang in Britain's industrial heartlands and that BREL was the world's most efficient manufacturing company. For years and years, however, BREL knew that every train that it produced could be sold to British Rail. It knew that British Rail was a guaranteed customer and could go to no one else for its trains. The result was that BREL became steadily less and less competitive. As a result, by the end of the 1970s, BREL was exporting virtually nothing.

Mrs. Dunwoody

The hon. Gentleman knows nothing about it.

Mr. Oppenheim

It is the truth.

One of the justifications for Government aid is that industrial research and development should be boosted. One lesson, however, that we should have learnt from the Japanese is that it is not always necessary or desirable to carry out one's own research and development, especially if the economy of the country in question is not at such a stage of development that it can best exploit the fruits of research. To pour Government funds into advanced projects that are out of line with the fundamental production capabilities of the country in question is likely to distort the economy as a whole and to take the best trained scientists and engineers away from other industries.

The result of Government-directed research grants was that Britain manufactured the first jet airliner, the Comet. In the 1950s we also led the world in high-speed computers. We were the first country to commercialise computers. Ferranti built the world's fastest computer in the 1960s. It went on to pioneer the market for customised semi-conductors. Despite Government aid, none of those industries proved to be sustainable. British companies did not have the production and marketing skills to capitalise on their research. The head of the British Patents Office said recently that European industry wastes £20 billion a year on reinventing the wheel because it insists on carrying out huge amounts of in-house research instead of doing what the Japanese have been so successful at doing for the last 30 or 40 years—scouring the world for patents in existing technology, buying that technology and spending their money on improving it.

If we want to become successful again, industrial strategies, Government grants, research grants, state-sponsored research are irrelevancies. If we want a sustainable manufacturing growth and a successful manufacturing industry, we need, above all, a well-educated population. The Government are implementing their education reforms in order to ensure that we have a rigorous, vocationally oriented education policy. That is something which the Labour party opposes.

The other thing that we need is a pool of capital for industry. Labour policies of penalising savers by imposing an investment income surcharge will reduce the pool of capital available for industry and will repeat the problems that we had in the '60s and '70s. All Labour's policies would damage, not help, manufacturing industry, as happened in the 1970s, when manufacturing output ——

Madam Deputy Speaker

Order. The hon. Gentleman must finish now.

Mr. Oppenheim

May I finish my sentence, Madam Deputy Speaker?

Madam Deputy Speaker

No. I am sorry, but I have to implement the Standing Order.

8.20 pm

Mr. Edward O'Hara (Knowsley, South)

Tweleve months ago yesterday I took my seat in the House. Shortly afterwards I made my maiden speech. It was widely disseminated. The Hansard covering that day was popular and was snapped up like hot cakes—perhaps because my speech followed the resignation speech of the right hon. and learned Member for Surrey, East (Sir G. Howe). I understood then how the B side of a hit record sells as many copies as the A side.

In my maiden speech I described the economic devastation wrought in my constituency by the Government's first recession of the early 1980s. I referred to a nascent revival of industry and commerce in the area, but expressed concern that those delicate buds, to borrow a phrase that I heard someone use the other day, might shrivel in the frost of another recession. This time last year the dreaded "R" word did not pass ministerial lips, although by then the Prime Minister—then the Chancellor of the Exchequer—acknowledged a period of weak activity which he expected to last until early the next year, that is, until six months ago. There was no shortage of other euphemisms for the recession. I remember the Chancellor talking about a downturn. By November 1990, however, it had been admitted that there was a recession. It was forecast that the country would emerge from it by the middle of next year—that is, this year. And here we are.

I took some cold comfort from the unemployment statistics of the ensuing months. The monthly statistics for Knowsley, South registered statistically insignificant fluctuations at first. That made sense, as there seemed only one way in which they could go from their present poor base. In December 1990, according to the Department of Employment statistics, unemployment was 13.5 per cent., but by other methods of calculation which eliminate all the artificial devices that reduce the statistics, it was 21.1 per cent. At that time the recorded number of people registered as unemployed and in receipt of benefit in Knowsley, South was 5,463 and the number of vacancies 83, so 64 were chasing every vacancy. That interpretation also made sense to me because I was aware of the strenuous efforts of the economic development department of Knowsley borough council which was working hard to attract investment into the area by advertising, conferences, advice, assistance and services to potential inward investors, so that at least job losses would be replaced.

I drew cold comfort, if not delight, from the visible trends as I drove home each weekend through the Wilson road trading estate—yes, it is named after him in Huyton. As I drove through. I saw signs of distinguished companies such as BICC Cables, GPT, BT, and Lucas Aerospace. The first three of those companies are symbolic of a great drag on the potential development of my local economy, as BICC Cables, GPT and BT form a consortium poised to develop a world class network of fibre optic telecommunications in this country, but are being held back by the Government policy of allowing a third class system to be developed using foreign technology.

By Christmas 1990 the Prime Minister was admitting that the recession might prove deeper than we had thought —and so indeed it proved for Knowsley. One saw the steady closure of small shops, small businesses succumbing to high interest rates, and small numbers of job losses. Fifty jobs were lost at News International, 20 at the Golden Eagle in Kirby. Then, in the early summer, there was the shelving of a planned technology park—an exciting project, and one of the prides of Knowsley's thrust for economic development. Five hundred potential high quality jobs were lost to the local economy.

Then short-time working began at Fords in Halewood. In the early summer the real job losses followed. In June 1991, at Potterton Myson in Kirby— which lies in Knowsley, North, but it is in the same travel-to-work area —130 jobs were lost in a company with more than a century of production and harmonious relations in the area. In the same month, 100 high technology jobs were lost in Lucas Aerospace on the Wilson road, and 140 jobs at Tolemans, a transporter of cars from factory to dealer. That was a warning, revealing the decline in the sales of cars produced at Fords in Halewood.

This month 500 redundancies have been announced at Halewood, with the prospect of a further 500 by the end of the year, leaving a work force of 3,500 in a factory which employed more than 12,000 car workers in the 1970s just before the Government came to power. Management and workers at Fords Halewood arc pulling their hearts out producing the market leader and meeting productivity targets, but they cannot make people buy cars because they are in competition with an outfit with an even more impressive record of productivity. The outfit is the Conservative Government; the product is recessions.

I have not mentioned other redundancies in peripheral areas, such as the 750 jobs lost at Pilkington, two or three miles up the road in St. Helen's. and the 600 at the GPT factory down Edge lane a couple of miles away in Liverpool. I referred to BT earlier, and our BT outfit is taking our share of the 16,000 job losses in the company.

The result has been an increase in recorded unemployment and a further reduction in the already puny number of vacancies. The statistics are startling. I have already said that in August 1990 unemployment stood at 5,463. In August 1991 it was 6,344—an increase of 16 per cent. One might have thought that the August 1990 figure of 83 vacancies was puny enough. but by 1991 that figure had fallen to 49—a decrease of 41 per cent.

There are a number of morals in this cautionary tale of Knowsley. We see what local initiatives could do to attract investment. Knowsley is a victim of' the lack of a regional policy—a graphic example. Down Wilson road, as I mentioned before, we see Plessey—GPT—BT and BICC, which form a potential British world class fibre optic producer held back by deliberate blind ideological Government policy. Ford shows how in many ways the car industry is a victim of the recession. Companies of all sizes are succumbing to high interest rates and are delaying the renewal of their fleets. Also, individuals saddled with mortgages, being made redundant or scared of being made redundant are not buying cars.

There are no bouquets for the Government from Knowsley, but only Knowsley's crown of thorns: a bouquet of barbed wire culled from the business premises closed down in Knowsley.

8.30 pm

Mr. Christopher Gill (Ludlow)

I oppose the motion because I believe that no Administration have more accurately diagnosed the role of the Government than this one. That role is to create an environment in which businesses can prosper. We have created incentives by lowering personal and corporate taxes. There is more to be done, and I hope that our Government will see fit to scrap capital gains tax, which acts as a severe disincentive for many entrepreneurs. We have brought about sanity in industrial relations: one has only to look at the contemporary strike record to see that that is true. We have brought about stability and consistency. These days we have only one Budget a year and we can predict that it will be about 20 March.

I am proud of my constituency of Ludlow. One has only to scratch the surface to find a great deal of enterprise, inventiveness and small and medium-sized businesses standing on their own feet. They are neither receiving nor seeking grants. That does not mean that we have not felt the effects of other people receiving grants. For example, grants were given to saw mills in Wales, and that has had an adverse effect upon saw mills in my constituency. Ironically, the saw mills in my constituency are still in business, whereas the saw mills receiving grant aid in Wales have failed. There must be a moral in that.

We have also felt the effects of the enterprise zone in Telford. It is common knowledge that 500 jobs were lost in my constituency as a result of Unigate building a new chicken plant in Scunthorpe with £14 million of Government grant. That resulted in 500 jobs moving from my constituency to somebody else's. It did not increase the number of jobs in the chicken industry.

The success that we have achieved in Ludlow is in no small measure due to the independence of the people, the absence of big union domination and remoteness from the hand of Labour-controlled local authorities. There is a moral to that tale, and I should like to endorse the remarks of my hon. Friend the Member for Pudsey (Sir G. Shaw) who called for a little less interference. He also made a plea for the slowing down of the implementation of legislation, particularly that emanating from the European Community.

I, too, experience complaints about legislation. I understand the ambition of politicians, aided and abetted by Government Departments, to pass legislation and have their names on Acts of Parliament. My ambition is uniquely different. I want to remove legislation from the statute book, because we already have too much. The greatest assistance that the House could render to the business community, particularly to small businesses, would be to resist the temptation to legislate. That requires no effort and, more to the point, it costs absolutely nothing.

Some of the additional and irksome legislation is sometimes resented and regarded as unnecessary by my constituents. It is distractive because it bogs down the man who is good at making, marketing and selling products in doing something that he is not good at. Business men resent that. Also, legislation is expensive to businesses and, taken to extremes, can result in businesses becoming uncompetitive against those in other nations. I am sure that the House is aware of how competitive the world is today and the fact that we need to be keen in the way in which we produce, market and price our products.

Legislation can erode motivation, which is the difference between success and failure. The raw materials and markets for all our factories are the same. The difference is the people. The difference in management and motivation can mean the difference between success and failure. Traditionally, the Labour party has been hostile to management. The Government's success is due to the fact that we are not hostile to management and because, over the past 12 years, we have established beyond doubt that managers are now in a position to manage.

I always speak briefly, and I am well inside my allotted time. A former Member of Parliament and a director of the Great Western railway said that things worked best when the Government did least.

8.36 pm

Mr. Martyn Jones (Clywd, South-West)

Not wishing to rely solely on my 19 years in manufacturing industry, when I had a proper job, so to speak, I took advantage of the recess to visit as many companies as possible in my constituency. With the exception of one in a specialised product area, they all expressed dissatisfaction with the Government's handling of the economy and their seeming disregard for manufacturing industry.

Nationally, every working day, 3,000 jobs are lost and 200 businesses fail. Manufacturing is in crisis. How can we believe the Chancellor and the Prime Minister when they say that the recession is over? We have heard such statements before. The Prime Minister said: This period of weak activity should last until early next year".—[Official Report, 8 November 1990; Vol. 180, c. 121.] In November 1990, he said: The country will start to come out of recession around the middle of next year. On 25 May 1991, he said: Our forecasts point to the welcome resumption of growth in the second half of this year. We have not seen much growth.

The Chancellor of the Exchequer said: Pain there may be, but gain there will also be. By this time next year, the prospects will be distinctly brighter."—[Official Report, 21 March 1990; Vol. 169, c. 1144.] When speaking about the downturn in December 1990, the Chancellor said: I think there are reasons why one could believe that it will be relatively short-lived and relatively shallow. In April 1991, the Chancellor said: I expect the recovery in output to begin … in the second half of this year. The statistics are horrendous. They give the lie to the statements by the Chancellor and the Prime Minister. Glendale Furniture in Sandycroft lost 70 jobs this year; Dennis Ruabon lost 20 jobs; Eurodish Technology lost 60 jobs; GCA Windows lost 50 jobs; Pilkington at St. Asaph lost 130 jobs; the British Steel Corporation at Shotton lost 238 jobs; Rubery Owen, Rockwell lost only six jobs; CM B Bottles lost 77 jobs. Brother Ruabon lost 80 jobs; Kinder Cars in Corwen lost 10 jobs; Pilkington lost 29 jobs; Kimberly-Clark in Deeside lost 36 jobs; Meridian Ladieswear in Wrexham lost 25 jobs; Engineering Concessionaires lost 62 jobs; Heaps of Johnstown in my constituency lost 105 jobs; OCF lost 25 jobs; Monsanto in Cefn Mawr lost 60 jobs; Domeglade in Wrexham lost 80 jobs; Pilkington Woodfibre lost 33 jobs; and just last week at least 200 jobs were lost at Point of Ayr.

Mr. Jack Thompson (Wansbeck)

That was an impressive list. It would have been nice if all those companies had been increasing their work force by those numbers instead of reducing it. Is my hon. Friend also aware that, at 2 o'clock this afternoon, just over six hours ago, it was announced that in my constituency, where we have parallel problems, 300 jobs are to be lost at an aluminium smelter? The jobs had to go by Monday of next week. The 300 jobs represent half of the work force. There are two pot lines in the smelter, and one of them is closing down, it is claimed temporarily. However, as I understand it, when pot lines are closed down, that is the end of it. It seems that in my constituency, as in my hon. Friend's, redundancies will go on and on.

Mr. Jones

I thank my hon. Friend for that intervention. I am sorry to hear of the job losses in his constituency of Wansbeck. It just goes to show that the problems are nationwide and that nationwide we cannot believe the Chancellor or the Prime Minister when they say that the recession is over.

My manufacturers certainly do not believe that the recession is over, and nor do my constituents, who are suffering redundancies such as I have described. They believe that the redundancies are engendered by the Government's policies or lack of them. All the statistics mask the real human problems created for those involved.

True inflation has fallen, but we are expected to believe that it is just 0.2 per cent. higher than Germany's rate. However, the Government conveniently forget that Germany's rate excludes mortgage interest and local taxes, which they used to tell us about. If those items are stripped out, the rate is 5.7 per cent., compared with Germany's 3.9 per cent.

My constituents do not believe the Chancellor or the Prime Minister. They do not believe that unemployment is a price worth paying for inflation which is still almost 2 per cent. greater than Germany's. To my constituents, the Chancellor's green shoots of recovery are the green mould of decay. They need hope, not empty words. They want investment, proper training and regional aid, and they will get them from a Labour Government.

8.41 pm

Mr. Peter Hain (Neath)

The Government's policy on manufacturing is a lurid cocktail of incompetence, desperation, waste, lunacy, dogmatism, Micawberism and short-termism. The Government are guilty of incompetence because they are indifferent to the wanton destruction of manufacturing capacity that has left industry reeling as if in a war zone. That is why the Government are viewed with such contempt by industrialists and business men alike.

The Government are guilty of desperation because they make constant predictions that recovery is just around the corner. In the summer the Chancellor spoke with glazed eyes on television about "vague stirrings of recovery". That was quickly corrected by his press officer to the more grammatical "faint stirrings". At the IMF meeting in Bangkok at the weekend he hoped valiantly for growth at a moderate pace". He did not specify whether this growth would be vaguely moderate, faintly moderate or just plain mediocre. But his desperation puts a favourable gloss on a critical economic situation. It also took the form of a promise to cut income tax and inheritance tax. That was a promise of cynical irresponsibility, given the parlous state of the British economy and our social fabric. The Chancellor may offer bribes, but he cannot hide from the responsible citizens at the next general election.

The Government are guilty of waste because they continue to waste our resources with all the abandon of a drunken sailor. Some £93 billion of North sea oil revenues have disappeared as if they had burnt away in the oilfields of Kuwait. Some £76 billion has been wasted on unemployment benefits which could have been invested in jobs. The Government have wasted £10 billion in tax cuts for the rich. The money was squandered in a yuppie consumption bonanza. The Government wasted £10 billion to ease the pain of the punitive poll tax.

The Government are guilty of lunacy because their obsession with leaving everything to the invisible hand of the market is destroying the balance of payments. For example, in south Wales production has been cut to ribbons. Pits have been closed as if there was no tomorrow. The Welsh valleys contain some of the highest quality anthracite in the world, yet as pits close the imports pour in to till the gap. The latest statistics show that last year imports of anthracite shot up by a staggering 83.2 per cent. In the period from January to July of 1990 anthracite imports were 380,900 tonnes. In January to July of this year, the total had almost doubled to 697,900 tonnes. One day that lunacy will come back to haunt Britain as our future is placed in hock to just about everywhere else in the world from Colombia to China.

The Government are guilty of dogma because their kindergarten economics spurns about £500 million in soft loans and about £100 million in grants from the European Commuity and RECHAR programme. That money would be attracted to areas which are entitled to it, such as Neath, which have suffered a contraction of the coal industry and mining. Unlike Germany, Spain, Belgium and France, the Treasury is robbing local coal communities of those European millions simply to satisfy their doctrinaire obsessions.

The Government are guilty of Micawberism because they have no industrial strategy whatever. They just hope, like Mr. Micawber, that something will turn up. Look at some of our major strategic manufacturers such as British Aerospace, Rolls-Royce and Jaguar. They were all privatised and then thrown to the wolves. British Aerospace is our principal defence contractor. It is in crisis because the Government and the DTI would not involve it in any pre-planning of defence cuts. There was no joint strategy for converting the skills and capital that that company possesses to manufacture high-technology, high-quality products for civilian needs.

Rolls-Royce faces a crisis because another privatised industry, British Airways, decided, with apparent Government connivance, to buy American engines. Other countries look at us with total amazement. They cannot understand why our national carrier failed to award such a crucial order to Britain's flagship aero engine industry. So other world airlines naturally turn elsewhere.

The Government are guilty of short-termism because they cannot see beyond the next consumer bribe or the next tax cut. They have elevated short-termism into a science. They are always striving to boost consumption, but they never resource investment. Labour's alternative is a new partnership of Government-sponsored investment in training, research and development and modernisation of industries, as almost every one of our more successful competitors abroad does. We, alone, do not.

In Wales that means that we shall build on the success of the Welsh development agency and encourage it to extend its work in regional industrial development with a new remit to work with banks and venture capital firms in a new partnership to stimulate Welsh enterprise. We shall also create a new Welsh export service that will be available to help hundreds of local firms. We shall bridge Wales's technology gap with a new Welsh technology trust based on universities, colleges, local authorities, research institutes and industries. Together with a Welsh innovation centre, the trust will boost new technology investment. In that way, and together with industry, Labour will help to create a new industrial revolution in Wales and across Britain to build around the skills and abilities of the people of Wales. Come the next general election the people will reject the Government's incompetent economic record and support Labour's investment for the future.

8.47 pm

Mr. Lewis Stevens (Nuneaton)

The motion is the usual pessimism from the Opposition on everything that happens in the British industrial scene. It would be a novelty if, instead of criticising the Government and industries time and again, as the Opposition Front-Bench spokesman started off by doing, the Opposition stopped and looked and said how well some of our companies have done and recognised the transformation of some of our industries. That transformation is not due to the Government's efforts, although the background that the Government have set has done a considerable amount to assist. Companies transformed themselves from the 1970s and through the 1980s into companies which are unrecognisable and successful.

I spent several years in the machine tool industry. That industry was virtually decimated in the 1970s. To all intents and purposes, the British machine tool industry seemed to have disappeared. Today it is seventh in the world. I went to visit the machine tool company which I had visited perhaps 20 years ago. At that time it was making sophisticated machinery for the time. I went to see it this year and could not recognise it. It had modern plants and machinery and was building highly sophisticated computer machines. But there was nowhere near the same number of people on the shop floor.

We hear little from the Opposition about productivity, yet productivity is one of the keys to improving our manufacturing base in engineering and other areas. Often in the 1960s and 1970s attempts by companies to improve productivity, encouraged by Conservative Governments, were resisted by the Labour party and, particularly, by many trade unions. Today, thank goodness, many trade unions and trade unionists take a different approach towards the importance of productivity.

We have seen dramatic rises in our productivity. I have not heard Opposition Members congratulate companies on how well they have done, although the overall improvement in the productivity of our manufacturing industries has been significant and substantial. Surely we should be talking up British industry. Is it not amazing that we have attracted a huge amount of inward investment from abroad—40 per cent. of all that has come into the European Community?

Japanese and American companies have thought that ours was the European country where their businesses would succeed. If they had listened to the Opposition, this is the last place that they would have thought it worth coming to. They would have heard that our industries were not up to it and could not compete. That is the message that comes time and again from the Opposition. In reality, we have a work force that can be trained, introduced to new jobs, take on ideas and methods from abroad and prove to be successful for this country, themselves and the companies that come here.

Training has been mentioned and my right hon. and learned Friend the Secretary of State for Employment is present. The hon. Member for Crewe and Nantwich (Mrs. Dunwoody) said how terrible it was that all apprenticeships had gone. It is true that there has been a vast change and it is a pity if fewer people are trained in areas of need, but we have seen a revolution in training. The types of training that we had undertaken for years were becoming outdated. Some of them were excellent, but a lot were not.

We must recognise, as the Government have done in the past 12 years, that we need different types of training. Yet every time we have introduced new training measures the Opposition have rejected them and those measures have had support only from Conservative Benches. Even some trade unions, which run some excellent training schemes themselves, have got away from necessarily wanting apprenticeships for every trade and skill. They want short, successful, technical courses to introduce skills to and improve the skills of employees in industry. Those are the changes that have come about.

There are opportunities to train, whether on the shop floor in ways similar to those of the old days or in units of training which suit companies and individuals. Open learning has developed over the past 12 years and has been encouraged by the Government. It has a tremendous contribution to make to the employed, the unemployed and companies, in terms of its speed and convenience. Those are steps to improve our manufacturing base, our productivity and competitiveness.

Britain's manufacturing industry has problems indeed, but, my goodness, it is moving forwards, not backwards. That should resound from both sides of the House. Many of our businesses and our engineering and manufacturing companies are looking forwards, not backwards, and some are meeting with considerable success.

The engineering industry is peculiar: its characteristics are different from those of much of manufacturing. The machine tool industry is almost inevitably the first to feel the downward movement of a trade cycle and one of the last to feel the benefits as we come out of a recession in that cycle. Will my right hon. Friend the Secretary of State for Trade and Industry and my right hon. and learned Friend the Secretary of State for Employment consider what possible financial help and encouragement can be given, particularly to some small engineering companies, to develop faster? In particular, will they consider whether, as we move out of the recession, the financial sector and the banks can help and encourage such companies to meet the up-turns faster? I am sure that that would be gratefully appreciated. It is difficult when setting off high capital expenditure in manufacturing to adopt the same approach as in other parts of the commercial world, such as retail outlets. The cycle is different. I hope that both Secretaries of State will bear in mind the pleas made to them by manufacturing, particularly engineering.

The attitude often taken towards our engineering sector suggests that this country is way behind its competitors. That is not so. Higher education is producing high-quality engineers and scientists in proportionately greater quantity than many of our competitors. We are moving in the right direction. Without this Government's measures, that would not have been achieved. We have moved forward step by step over the past 12 years. Highly respected, highly qualified people are coming forward and will take our engineering and manufacturing industries forward.

Those industries have had a lot to contend with. Recession has hit them hard, but the future is not bleak. Industry cannot be bought as the Labour party suggests; it can succeed with Government encouragement. We have seen in the past that industry cannot be bought. The Labour Government could buy neither industrial peace nor the survival of industries that were no longer viable. That is not the right way forward. The right way is to encourage industry. It is certainly to praise industry for its work, not to criticise it time and again.

8.56 pm

Mr. Ted Leadbitter (Hartlepool)

Several hours ago I wandered into the Chamber thinking that I would have a rather restful, pleasant evening. I was looking forward to it, because last evening I celebrated completing 27 years to the day in the House of Commons. I looked around me and I thought, "Well, I have a lot of friends here. The hon. Member for Hartlepool is in an amenable mood. He will be rather placid and listen to an important, interesting debate on the state of the economy."

Somehow or other, it did not take me too long to discover that I had heard it all before. I did not hear about a single new thing, but that does not mean that the whole debate has been mundane or monotonous. Not at all—some arguments are eternally refreshing, because they represent in this remarkable place the fulsomeness of the challenge and the response.

I noticed, for example, that the hon. Member for Ludlow (Mr. Gill), in his nicely presented and brief speech, ended by quoting from a former Member of the House of Commons who said that industry does best when Governments do least. The hon. Member for Amber Valley (Mr. Oppenheim), whose record in the House has been reasonably consistent, preached what has generally been presented as Tory policy—an arm's-length policy of non-intervention in industry. Those two speeches represent the terms of the Government amendment which seeks to leave out from the word "House" in our motion and to add: congratulates Her Majesty's Government on its success in bringing down inflation … and in creating almost three million jobs". Without any prevarication, the Government make it clear that they take the honours for bringing down inflation and for creating 3 million jobs. However, we now have 3 million people out of work—some of us believe that that figure is even greater. Some mental arithmetic reveals that, if we take that figure from the 3 million jobs that have been created, the final answer is nil jobs.

I have a simple proposition for the Government. Why is it that, when they take credit for bringing down inflation and for creating jobs —there is no word about industry and commerce doing it for themselves—without a blush they take no blame for creating the inflation and the unemployment in the first place? They blame everyone else for inflation going up and for the increase in unemployment, but they are happy to take the credit for bringing inflation down.

In this instance, the Government do not have a scapegoat. They cannot turn to the Labour party and say that way back in 1979 we were the cause of the problems.

Such a claim is about as relevant as trying to blame primitive man for the Government's present condition. The Government are caught in the constipation that they have created for themselves. I note that the Secretary of State for Employment smiles through it all.

I have some other propositions for the Government. Do they honestly believe that they have created an economy that is as successful as their amendment suggests? I would bet a pound to a penny—a lot of people have had their pounds taken off them and only have pennies left —that, if things were as good as the amendment suggests, the Government would have had the general election in November. Gosh almighty, the Government would have had that election and the hon. Member for Hartlepool, instead of walking into the Chamber for a restful night, would have been sitting at home retired.

There are the Government, bless them, clinging on. They have nearly lost their grip. They hope that something somewhere will retrieve the situation and will get the headlines so as to cover up the awful mess that they have created. Do they honestly believe that the record number of bankruptcies in this country is something that industry will forget about? Do they honestly believe that all those people who have had their houses repossessed will forget all about that when it comes to the contrived date of the next general election?

When the unemployed go down to the supermarkets or the cheapest places where they can buy food—many are forced into that these days—will they say, "I understand about this inflation business that I have been hearing about on the telly"? Inflation may be coming down, but in the shops the prices are going up. Will those people be amused for one moment when the local authorities, having been rate-capped and all the rest of it, put up their rents by between £3 and £4 a week?

The Government turn round to people and say, "Don't you be greedy now, fellas. Don't be asking for pay increases of any more than 4.5 per cent." Do they honestly believe that the unemployed will forgive them for the torture that they have gone through and the fact that their expectations have been smashed to the ground? Do they believe that the students will forget that during this past holiday they could not get a button to live on? Those young people form the most generous young generation that I have known in all my adult life. They are creative young people who have been pushed by the Government's legislative requirements to go from one town to the next looking for jobs.

Do the Government think that people in the poverty trap who must pay the poll tax and do not know how to get the money together will forgive them? I remember in particular one man who showed me his room. It measured some 12 ft by 5 ft, and he had to have everything in it, but he was paying more poll tax than me. What a crazy world the Conservative party has brought about. It has been like going back to the dark ages.

We do not have a listening Government. There have been some fine people in the Conservative party, but they have been caught up in a dogma that has not been in tune with the mood of the times. For example, after all the years following the war, I should have thought that the manner in which the Government closed down coal mines would have been avoided. If only they had done what we preached. If a mine must close, we have sufficient knowledge and experience of the geology, the market and the technology to consider the decision, but allow a period of some two years in which to regenerate industries in the area. Instead, the Government decide to close a mine and then start to regenerate the area. Those are simple little things that need to be observed.

Only one reference to transport has been made today. Transport is a vital part—indeed it is the bloodstream—of the economy, where Britain does everything wrong. We do not emulate, as we preach from time to time, what is done in Europe. In France and Germany, for example, electronic signalling, stations, track and the general infrastructure are all considered to be part of the social capital. They do not enter the question of finance as they do in Britain. As a result, those countries have a better system and can match up to their freight carriage requirements. They spend several billion pounds a year on developing their railways, whereas in this country £700 million-worth of public service obligation grant will be reduced to some £300 million. That is a pathetic record.

This debate should continue for at least another two or three days, because there is so much to be said and so many challenges to be made. The Government preach a performance that is in the minds of the Walter Mittys of politics. The Conservative party's record is rotten, rotten, rotten.

9.9 pm

Mr. Tony Blair (Sedgefield)

The purpose of this debate is to hold the Government to account for the long-term damage that they have done to Britain's industrial base and for the short-term effects of a recession which has seen almost 1 million more people join the dole queue since it began, and to say that a Government with such a shameful record over almost 13 long years no longer have any right to claim the trust of the British people.

Over the past year we have lost almost 300,000 jobs in manufacturing, 150,000 jobs in the service industries, including 60,000 jobs in banking, and 70,000 jobs in the retail industry. In the construction industry alone, another 100,000 jobs have been lost.

Until today, we have had this year the fastest rising unemployment not only in Europe but in the whole of the western world. That has occurred not just in every sector of industry, but in every region in Britain. In the south, unemployment has risen by 129 per cent; in the south-west it has risen by 91 per cent., in East Anglia it has risen by 79 per cent., in London it has risen by 78 per cent. and in the midlands it has risen by more than 60 per cent. As my hon. Friends —particularly those with constituencies in the north, Scotland and Wales—have said, the light of recovery from the first Tory recession has barely flickered long enough to be perceptible before being snuffed out by the weight of the second Tory recession.

In every part of Britain, in every type of occupation at the workplace, businesses have collapsed, redundancies have been declared and human lives have been blighted. What did the Conservative party tell us at its conference last week? In the light of that record, the Government ask us to trust them. Let us tell them that the men and women who are the victims of the recession do not trust them, but feel a deep and genuine sense of betrayal at what has happened to them. It is not true, as the Government also tell us, that every other country has suffered equally. In many countries—for example, Germany —unemployment has fallen this year. Unemployment has fallen in the Netherlands and even in Spain. Unemployment in Japan remains at 2 per cent., in Portugal it remains at 4 per cent. and in the United States, where it has risen, it is now falling.

In the past year, unemployment in Britain has risen by a greater extent than in the rest of the European Community put together. According to the International Monetary Fund, Britain has not merely experienced the sharpest rise in unemployment, but suffered the largest fall in employment and next year, 1992, we will be the only country of the major countries of the Organisation for Economic Co-operation and Development to suffer a fall in employment.

What has been the attitude of the Secretary of State for Employment? In a debate in the House barely a year ago he said that the scale of what the Government had achieved was far too often taken for granted and that their record on jobs was unequalled in Europe and the envy of much of the world. He said that with impeccable timing, as the next month we became the only country in the EEC to have rising unemployment. As unemployment began to rise, so did the excuses, and the more unemployment rose, the more tortuous and facile the excuses became.

Last May, the Secretary of State told us not to worry because unemployment was rising only in the south. In July, when unemployment began to rise everywhere, he told us that it was concentrated among men, not women. In November, when unemployment stopped that unlikely piece of positive discrimination, he said that the numbers of long-term unemployed were still falling. When, in February, the numbers of long-term unemployed also rose, he opined that it was only the underlying rate of unemployment that mattered, not the increases. When, in May, unemployment fell by less than in April he claimed that it was now an established, downward monthly trend. When, in July, it rose by more than in May or June, he said that he had really meant a three-monthly trend, not a monthly one.

Throughout that period there were plenty of excuses, but not one word of apology. Not one initiative was introduced and there was not one word of admission that unemployment was now rising north and south, among men and women, in services and manufacturing industry and in the long term and short term. If the policies of the Government are not changed, unemployment will carry on rising not just to the end of this year but into 1992.

Mr. Howard

Is the hon. Gentleman's definition of an initiative one that is not boycotted by the TUC? Unless he is using that definition, what he has just suggested about initiatives is a travesty of the truth.

Mr. Blair

We shall come to the employment action scheme, but first I must point out that for 18 months unemployment rose by more than 800,000, yet the Secretary of State did not lift a finger to help the unemployed during that time. More recently he has excelled himself and thrown all caution to the wind. Clearly, he belongs to the school of political thought that believes that the less credible someone's position, the more extravagant the claims in support of it.

Last week on the "Today" programme the right hon. and learned Gentleman was asked by Mr. Brian Redhead about the 1,000 jobs to be lost at the Ford motor company. Did he accept that as a problem, a result of the difficulties caused in the economy? He said: Well, I think people understand, Brian, that in a dynamic economy you have to have change. So: record job losses, rising bankruptcies, soaring business failures are all evidence of a dynamic economy. One almost felt as if the right hon. and learned Gentleman thought it unreasonable of the Ford work force not to be celebrating.

There is no bad news, therefore, that is not good news; no disaster that is not, on reflection, a triumph; no evidence of recession that is not, after all, a sign of recovery. And this is the party that asks us to trust it.

No doubt the 400 jobs lost yesterday at the Norwich Union are evidence of a dynamic economy; likewise the closure of Rolls-Royce in Crewe, the 400 jobs lost at Asda, the 300 jobs at Hawker Siddley, the 740 jobs lost the week before at Ferguson television, the 1,000 lost at Eagle Star and the 300 job losses announced in this debate by a Labour Member. Are these really evidence of a dynamic economy? When, after the next election, the Secretary of State loses his job perhaps he will call that the result of a dynamic economy—it is certainly the only guarantee that we shall get one.

Sir Julian Ridsdale

Will the hon. Gentleman be generous enough to admit that this month Nissan is creating 1,000 new jobs in the north-east?

Mr. Blair

Of course we welcome new jobs, but if I will welcome them, will the hon. Gentleman in turn condemn the Government for allowing unemployment to rise by 750,000?

Trust us, says the Secretary of State. What does he offer to back up this exhortation? He offers us employment action, a scheme which is to reach its peak in March next year and which is then to be run down within a year. It has places for at most 26,000—representing fewer than half those involved in one month's increase in unemployment. It represents fewer than 50 places per constituency at a time when most constituencies will have lost more than 2,000 or 3,000 jobs in the course of the recession.

Mr. Riddick

Having just welcomed the news of the new jobs created by Nissan, will the hon. Gentleman take this opportunity to condemn the TUC for describing Japanese inward investment as "alien"?

Mr. Blair

Not only does the Labour party welcome inward investment, but if the hon. Gentleman comes to my constituency he will see that the single biggest investment there this year will be placed by Fujitsu at Newton Aycliffe —an investment welcomed by Labour local authorities and the trade union movement.

Employment action does not pay the rate for the job; it pays benefit plus £10. It was launched during the Tory party conference and the only well-funded part of the scheme was its advertising campaign, in the form of posters that say, "I can work, I can work, I will work, I will work"—as if the problem of the unemployed were the unemployed themselves, not the recession created by Ministers. It is not the will to work that our unemployed lack, it is the opportunity to work, and that is what the Government should give them.

In the past year almost I million people have gone on the dole, vacancies at job centres have halved, and the increase in those claiming benefit is running at more than 2,000 a day. The Government scheme is woefully inadequate and utterly cynical in the gap between what it can achieve and what is claimed for it, and it shows beyond any doubt that the Government who are responsible for this recession have turned their back on its casualties.

Ministers say, "Trust us." What stands out above all else is not just the depth of the recession, which the Government promised would never happen, but the fact that they have learnt nothing from the recession. Far from disowning the policies that brought the recession, the Chancellor makes it clear that he will repeat them at the earliest opportunity. Over the past few years our central case has been that the mistakes that led to this recession were not merely temporary errors of judgment by an over-confident Chancellor in 1988 but are the mistakes made over 13 years of Conservative government for which all Ministers bear responsibility. Over that time Britain had the bonus over all its competitors of North sea oil, and squandered it. As other countries invested we merely consumed, and the long-term interests of industry were sacrificed to the short-term politics of an unsustainable boom.

In those 13 years manufacturing investment per person grew three times as fast in the Netherlands, twice as fast in Italy and France, and half as fast again in Germany and Japan. It even grew faster in Korea and Singapore than in Britain. Over those 13 years, manufacturing investment in the United Kingdom has declined while it has risen in every other EC country. It rose by 52 per cent. in France, by 48 per cent. in Germany and by 73 per cent. in Italy. Manufacturing output in Britain has risen by 6 per cent. in those 13 years, but it has risen by 62 per cent. in Japan, by 32 per cent. in the United States, and by 26 per cent. in Germany, and is higher in every other OECD country except Greece.

Is not the lesson of those 13 years clear? Unless we change course now and recognise the neglect of our industrial base and take steps to remedy it, and unless, above all, we invest in the skills and talent of our people, we will never achieve the stable growth or enjoy the long-term steady progress that is the hallmark of any successful modern economy. That is our challenge to the Government.

The true dividing line, the real test of competent economic management, is between the Labour party, which has policies for industry and believes in it, and the party which has spent 13 years undermining it. In this, the second Tory recession, we are not seeing a cleaning out of old, inefficient industry or the removal of old, outdated skills. We are losing capacity that we cannot afford to lose and skills that we desperately need to keep. What grounds do the Government have for asking us to trust them in future when they have failed so dismally in the past?

"Trust us with training," they say. Over the past three or four years the training budget has gone down by 23 per cent.—a 1.5 billion cut. I invite the Government to name another country in the Community that would cut its investment in training a year before the single market takes effect. The Government say, "Trust us with industry" which now receives barely one third of the support that it received 10 years ago.

Mr. Howard

Before the hon. Gentleman leaves the subject of training I hope that he will give a specific answer to a specific question. When did the hon. Gentleman make representations to the Transport and General Workers Union, which sponsors him, to reverse its boycott of youth training, employment training and the training and enterprise councils?

Mr. Blair

If the Secretary of State spent half the time that he uses to make pathetic attacks on the trade unions in helping training, Britain would be much better off. The Labour party has made its position clear. My colleagues and I have said throughout the past two years that we would not be doing what the right hon. and learned Gentleman is doing with the youth training programme, which is cutting it.

The right hon. and learned Gentleman says, "Trust us, the Government, with unemployment." Surely the most revealing attitude towards unemployment was set out in the letter from the Chief Secretary to the Treasury to the Secretary of State about his Department's budget. It tells us how much we can trust the Government. Let us leave aside the massive cuts that are proposed and consider what the letter tells us about the Government's attitude to training. The Chief Secretary said: I see no automatic link between higher unemployment and the need for further Government provision for training. Is that what we were told by Ministers when the Government launched employment training? The letter continues: Employment training offers particularly poor value for money. Nor do I believe that even the recession can account for the failure rate of over 70 per cent. which you project for next year. Is that right? Is that projected? Has the right hon. and learned Gentleman fought against the terms of the letter? Will he tell us? Is employment training to be starved again of the resources that are required? Is there to be cut upon cut? Should we trust the Government with employment training when they have introduced cuts?

Does the right hon. and learned Gentleman agree with what the Chief Secretary writes about the Government's programme and the higher technology national training initiative, the only initiative dealing with skill shortages and higher technology that the Government have? What is suggested? I talk of an initiative that has apparently helped about 7,000 people over the past couple of years. That is the number who have gained from it. The Chief Secretary says that it should be scrapped. Is it to be scrapped? Are we to be told whether the initiative is to be sacrificed as a result of the Government's short-term approach?

Career development loans have benefited 16,000 people. The Secretary of State says, "Trust us." According to the Chief Secretary's letter, these loans, too, are to be scrapped.

The business enterprise training programme is designed to help employers with their training courses. The Government say that that, too, should be scrapped. Is not that the clearest warning to the unemployed and to industry that whatever the Government say in public, in private their commitment to training is as skin deep as their commitment to industry?

The Government say, "Trust the people." I say that the real issue is why the people should trust a Government with such a record.

Mr. Allen McKay (Barnsley, West and Penistone)

Has my hon. Friend considered the fate of Astra Services and the training centres? Has he considered what has been done to a loyal work force, many of whose members have provided long service? My hon. Friend will be aware that £11.7 million was provided to retain the civil service rates of redundancies and retirement, which were then blatantly disregarded. The result is that some of my constituents are losing about £27,000 each. Will the £11.7 million of taxpayers' money be paid back or will it go into the directors' pockets?

Mr. Blair

My hon. Friend is prescient. I was about to refer to skill centres.

As I have said, the Government ask us to trust them. They do so on the basis of their record. Let us consider what has happened to the 60 skill centres that Britain used to have. It was only a year ago that the 60 centres—centres of excellence for training—were privatised. We, the Opposition, opposed that privatisation and warned against it. Forty-seven of those 60 went to the company called Astra Services. It is a new company. At the time, the Secretary of State said: These proposals will be seen to be giving them tremendous opportunity for the future, enabling them to build on the excellence of the centres and ensuring that they can provide training of even higher quality. I have a copy of a letter that Astra Services sent to its staff. I believe that it was to this that my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) was referring. The company is announcing that it is having to scrap the voluntary redundancy scheme for its employees and that it may have to make compulsory redundancies among its own trainers. The reason that is given for this is cuts in Government funding and the recession, which makes it more difficult for the company to exist as a centre of training excellence.

Is that right? Are trainers really to be made redundant at a time of critical provision for Britain? Is the company to be allowed to do that? What explanation does the Secretary of State have, bearing in mind the assurances that we were given that the centres would improve and the reality of what is now taking place?

Worse, four of those skill centres were sold to a consortium headed by a Mr. Lakin. Those four skill centres were dotted around the country, again providing training that we desperately need, but I am told tonight that they are now in liquidation. Is that right? If so, why were we told at the time of privatisation that they had a great new future when we now see them laying off trainers and some even going into receivership and liquidation? "Trust us," the Government say.

The information technology centres, giving information technology training to the unemployed, provide a vital service. Many of my right hon. and hon. Friends will have such centres in their constituency. A year ago the Opposition warned that cuts would put those centres at risk. Today we have been told that within the past few months 40 of those centres have not merely faced cuts but have closed altogether, and at many others there are now substantial queues for the young and unemployed.

The list is endless. Cobalt UK in York has closed with 13 staff made redundant, along with Jobstream in Nottingham and South Durham Enterprise. ApexTrust has closed 17 of its centres. The National Council for Voluntary Organisations reports that 2,000 trainers have been made redundant in the past year. Yet the Government say that we should trust them with the nation's training.

Because unemployment is rising, matters will get worse. I challenge the Secretary of State to tell us tonight whether it is true that many young and unemployed people are not being given the guaranteed training places which the Government promised but are being shoved from the dole queue to the benefit queue to the training queue; being forced to queue up for the training that they were promised.

Mr. Ian Bruce (South Dorset)

Will the hon. Gentleman give way?

Mr. Blair

No, I am sorry, but I must get on.

Today the Secretary of State will be sent a letter from the National Joint Council for the Building Industry, comprising both employers and unions, telling him of a 45 per cent. cut in new apprentices for the building industry —2,000 fewer to be given training now and due to funding cuts the construction industry training board will have some 6,000 fewer trainees.

We see the collapse in those training programmes, the closure of training centres and the cuts in Government provision. Every responsibility has been shirked, every promise broken, every trust betrayed. That is the Government's record for which we hold them to account. Why should we trust them to improve the nation's training when they have cut its spending and despise even their own initiatives? Why should we trust them to bring down unemployment when the Ministers who created it are entirely without policies to combat it? Why should we trust them to revitalise and regenerate Britain's industrial base when for 13 years they have undermined it and even questioned its importance?

Trust in the first year of a Government may be built on promises, but after 13 years it must be built on the Government's record. Why should the public buy the Government's promises when it already knows the Government's record? They do not deserve our trust and they know it. If the Government were confident of the nation's trust this would not be the first Opposition day of a new parliamentary term but the opening day of a general election campaign to decide the government of Britain. The only reason that it is not is the same reason that there was no election in March, June or October. It is because the Government dare not call an election, precisely because they know that they do not have the trust of the British people, so they sit on, clinging with no purpose, no direction, no motivation except fear of action, desperately looking for something to give them the impression that they still exist as a Government.

The Government's business has been derailed by indecision. They are led by a Cabinet stuck in a political waiting room and presided over by a Prime Minister with neither a timetable nor a destination. They are Her Majesty's Opposition in waiting. Whenever they have the courage to call an election it is the Opposition who will have the people's trust to win it.

9.34 pm

The Secretary of State for Employment (Mr. Michael Howard)

Perhaps the least edifying part of the debate has been the way in which the hon. Members for Dunfermline, East (Mr. Brown) and for Sedgefield (Mr. Blair) vied with each other to spread bad news and to run our country down. The way to get ahead in the Labour party is to run our country down, to find some unflattering comparisons that put British industry, British products, and British workers in an unfavourable light, and to gloat over them with gruesome glee.

Both hon. Gentlemen made much of what has happened to the economy in the past year. They may care to recall that, on average, each day since the Government first took office in 1979, 220 jobs have been created, 440 new businesses have been founded, and new homes purchased by 880 families.

I will deal straight away with the facts about British manufacturing industry—the facts about output, productivity, profitability, and exports, which Labour always chooses to ignore. It is typical of the Opposition to confine their arguments to those statistics which relate exclusively to the recent recession. We all know that there has been a recession in Britain, and we all know that recessions are painful, so Opposition Members have hardly added to the sum total of human knowledge with their litany of woe.

It is important to look at the whole picture over the period since this Government came to office to put the situation in context. If one looks at that picture, one finds that the output of our manufacturing industries has increased under this Government. It fell under Labour. The profitability of our manufacturing industries increased seven times faster in the 10 years to 1989 —the latest period for which figures are available—than it did under Labour.

In the 1960s and 1970s, Britain was bottom of the international league in the growth of manufacturing productivity, but from 1980 to 1990 this country's manufacturing productivity grew on average by 4.7 per cent. per year—the fastest growth rate of all the major industrialised countries. To put it another way, under Labour manufacturing productivity grew by only 7 per cent., whereas under a Conservative Government it has grown by nearly 50 per cent. —at an annual growth rate two and a half times greater than that achieved under Labour. It is already clear that manufacturing productivity has been increasing again, even during the recession. That is an excellent sign for the future.

Manufacturing exports did not increase at all under Labour. Under this Government, they have increased since 1979 by more than half, at an average rate of 3.5 per cent. a year. According to the latest United Nations figures, since 1983 Britain's exports of manufactured goods grew faster than those of all our competitors in the major exporting countries. If Labour Members really cared about what is happening in this country, they would listen to these figures, take them seriously, and take them on board instead of just looking for the bad news to try to run our country down.

Mr. Ian Bruce

Did my right hon. and learned Friend note, as I did, how much was said by the hon. Member for Sedgefield (Mr. Blair) in the course of 34 minutes about Labour's policies —namely, nothing? Has my right hon. and learned Friend received any representations from Labour Members to do away with wages councils? Negotiations between employers and trade unions produced a figure of £2.75 per hour for 18-year-olds, but Labour Members, who say that they believe in wages councils, are proposing a figure of £3.40 at today's values, increasing to £4.20 as soon as possible.

Mr. Howard

My hon. Friend the Member for South Dorset (Mr. Bruce) is right to point to the paucity of policies from the hon. Member for Sedgefield in particular, but we are used to that. We gave up hope long ago of Opposition Members advocating imaginative policies. The hon. Member for Sedgefield said that we had no policies and then ran through a long list of the initiatives that we have introduced and bemoaned the fact that he thinks that they will be cut. I shall not be deflected from the good news about the Government's record, and about what has been happening to manufacturing industry.

Perhaps Opposition Members would care to reflect on manufacturing exports. Perhaps they think that those are of no account and they are not interested in what has been happening to them. The average growth in the value of Britain's manufacturing exports between 1983 and 1990 was 13.9 per cent. —higher than the 11.5 per cent. of the United States, higher than the 10 per cent. of Japan, and higher than those of Germany, France and Italy. We have halted decades of decline in Britain's share of the world trade in manufactures. Last year it rose for the second year running.

It is worth noting—Conservative Members will pay attention to the fact—that that is a truly remarkable achievement. It is not only the reversal of a trend that has been running throughout this century. It comes at a time when the competition from other countries involved in exporting manufactured goods is steadily increasing—in Europe, in Latin America, in Asia. Yet now, despite the ever-increasing presence in manufacturing exports of Taiwan, South Korea and others, and on top of that of Japan, Germany, and the United States, we are increasing Britain's share of that trade. And in the three months to August we recorded a surplus in manufacturing trade for the first time in nine years. That in anyone's terms is a record of success.

Mr. Robin Corbett (Birmingham, Erdington)

If that is the case, can the Secretary of State explain why the Jaguar body plant in my constituency is working only three weeks out of every four and why, half a mile up the road, a GKN subsidiary, Hardy Spicer, which makes front-wheel drives, is on similar short-time working? Is that a success?

Mr. Howard

Has it escaped the notice of the hon. Member for Birmingham, Erdington (Mr. Corbett) that the United States, which is the most important market for Jaguar, has been undergoing its own recession? Has he not paid any attention to what has been happening to the United States? Is he not aware of what has been happening in the countries which have been Jaguar's markets? The same applies to many other countries. The hon. Gentleman's question disqualifies him, by the depth of his ignorance, from playing a serious role in these debates.

Mr. Tony Worthington (Clydebank and Milngavie)

Will the hon. Gentleman give way?

Mr. Howard

No, I want to press on.

Britain's manufacturers themselves are much more confident about their performance and their prospects. A recent survey by Investors in Industry showed that no fewer than 83 per cent. of respondents thought that British manufacturers were better able to cope with the recent recession than that of ten years ago.

The CBI has spoken of "the transformation" of British manufacturing industry in the 1980s. It is the common consensus of those who actually work in Britain's manufacturing industries that they are incomparably better placed to face the 1990s than they were at the beginning of the 1980s. The only doubting Thomases are those like Opposition Front-Bench Members who by background and inclination are more at home on the picket line than on the production line.

With regard to manufacturing employment, it is true —I wish it were otherwise—that employment in manufacturing is falling, but that is hardly a new phenomenon. It has been in decline for a quarter of a century, since 1966. And it is still the case that on the latest available figures there are more people employed in manufacturing industry in Britain than in either France or Italy.

The fact remains that there are still substantially more jobs in the British economy overall than there were in 1979 —and more than 2.5 million more than there were as recently as eight years ago. Furthermore, there are clear signs of new manufacturing jobs being created during the next few years. Many of those jobs will be home grown. Many will be the fruits of foreign investment. In the 1990s we shall continue to build on the record American and Japanese investment in manufacturing in this country which we secured in the 1980s.

Earlier, my right hon. Friend the Secretary of State for Trade and Industry referred to a Nomura Research Institute survey which showed that Japanese investment alone would—over just the next four years—create nearly half a million jobs, contribute £4 billion to our trade balance and add 2 per cent. to Britain's gross national product. Cumulative Japanese manufacturing investment will increase from £1.3 billion in 1990 to £7 billion by 1995. It will increase the output of cars produced by Japanese companies in the United Kingdom from 78,000 in 1990 to 458,000 in 1995.

That investment should be welcomed by hon. Members on both sides of the House. We know, however, that some people in our country still regard Japanese investment in our manufacturing industry as unwelcome. The Opposition Front Bench refused to answer my hon. Friend's question about the TUC vote in September on a motion which described that investment as "alien". The hon. Member for Sedgefield refused to respond.

There the Opposition sit, looking for all the world like a gang that has just been arrested—determined to say nothing that would incriminate them, and ready to pounce on the first of their number who grasses on the boss.

Mr. Brian Wilson (Cunninghame, North)

Will the Secretary of State give way?

Mr. Howard

When I last gave way to the hon. Gentleman, he asked a question so frivolous and irrelevant that I made a firm resolution not to give way to him again.

Our manufacturing industries are immeasurably stronger today than they were 12 years ago, and their prospects are excellent. Of course we have experienced difficulties; of course no recession is ever welcome. What is astonishing, however, is that Labour Members, who are ever eager to pick over the entrails of recession, are so much more reluctant to talk about its cause. They are equally reluctant to acknowledge that the recession is a world-wide phenomenon. Unemployment is rising in every European Community country except Spain, and in every country in the European Free Trade Association, and it is higher today than it was a year ago in every G7 country.

I do not deny that part of the cause of the recession lies closer to home:, nor do I deny that some of our recent problems stemmed from mistakes that were made in 1987 and 1988. With the benefit of hindsight, it is possible to see that interest rates were cut too far and too fast in the aftermath of the world-wide stock market crash. That, of course, is why the Opposition are so reluctant to discuss the causes of the recession. What were they demanding at the time? Still further and still faster cuts in interest rates.

The right hon. and learned Member for Monklands, East (Mr. Smith) had only just become shadow Chancellor in October 1987, but he was already stuck in the groove in which he has remained ever since—the belief that interest rates are invariably too high, and should always be cut by 1 per cent. His belief in the panacea of a 1 per cent. interest rate cut was being trotted out even then.

It is clear that if the right hon. and learned Member for Monklands, East—Mr. One Per Cent.—had been in office at that time, the inflationary surge that we have faced over the past two years would have been much worse, the task of reversing it would have been much more difficult, and the problems that we are now overcoming would have been infinitely more acute. That is the reality. The Opposition's policies would have made matters very much worse had they been in office—and, as I shall show in a moment, they would make matters very much worse if Labour were to take office at any time in the future.

The hon. Member for Sedgefield talked about training. I agree with his remarks to the extent that it is indeed clear that the future performance of our economy in general, and of our industries in particular, will be greatly enhanced by our national training efforts. As ever, however, the hon. Gentleman then presented a grossly misleading and misrepresentative picture of what is happening to training in this country. Having accused us of taking no initiatives, he then proceeded to list all the initiatives that we had taken, and to express his fear that they might be cut.

What the hon. Gentleman engaged in was a systematic slander of all those involved in the training revolution that is currently under way, and of the new training and enterprise councils —one of the most exciting initiatives that the country has ever seen, and one that the hon. Gentleman claims to support.

Mr. Blair

Does the right hon. and learned Gentleman think that it was a mistake to cut £1.5 billion off his training budget over the last few years?

Mr. Howard

Unlike the hon. Gentleman, who consistently refused to answer the questions that were put to him, I will answer that question directly. What we did —the hon. Gentleman knows it well—was to look again at the way in which we help unemployed people back to work and to appreciate that, although training is an important way to help them, it is not the only way and not always the best way to help them. We are providing more help to unemployed people, but in different ways. That is why we have a wider range of measures than ever before to help unemployed people back to work.

Mr. Blair

So that we get this clear, is the right hon. and learned Gentleman accepting that in real terms the training budget has declined over the last few years in the way that I have described?

Mr. Howard

I have told the hon. Gentleman exactly what happened. I told him that we looked at the way in which we were helping unemployed people back to work. We are determined to make that help as effective as possible. That is exactly what we are doing and the hon. Gentleman knows it well.

As for the reality of the training picture, let us look first at what the private sector is doing. In the six years to 1990 the number of employees receiving job-related training rose by 85 per cent. The latest CBI surveys continue to show that three and a half times as many employers expect to maintain or increase their spending on training as expect to cut it, even during the present economic difficulties. Only latest week, the last survey of employers showed that no fewer than 92 per cent. of employers have maintained or increased their off-the-job training since last year. We know, too, that the quality of training is improving steadily. Gone are the days of rigid, centralised time-serving apprenticeships. Instead we have a much more flexible and dynamic training system which is steadily increasing the proportion of the work force who have qualifications.

Between 1984 and 1990 the number of people with a qualification increased by a quarter to nearly 75 per cent. of all economically active people of working age. The number who hold a qualification at A-level or above increased by a fifth to nearly one out of every two people available for work.

Earlier this month an academic report comparing the training provision available to young people in Britain and in Germany concluded that young people in Britain benefit from training that is more flexible and more relevant to the world of work than that in Germany. Progress on training is now being made every day.

This morning I presented the first Investors in People awards to 28 of Britain's companies, each of which has reached this very challenging standard of commitment to and quality of training. I was able to announce that a further 500 companies have also committed themselves to reaching the Investors in People standard. That is a major step forward in employer commitment to training. It is part of a steadily and sharply improving picture. If anyone were in doubt about the magnitude and momentum of the training revolution that is under way in this country, I wish they had been present at this morning's event just across Parliament square. It would have done the hon. Member for Dunfermline, East the world of good if he had spent his morning there instead of preparinng his cheapskate speech, which served only to reveal the depth of his ignorance of the training that has taken place in this country.

The most damaging single policy for British industry put forward by the Labour party is, of course, its absurd commitment to a national statutory minimum wage. My warnings—that that policy would destroy hundreds of thousands of jobs—have been backed by an ever-increasing chorus of expert opinion. The hon. Member for Sedgefield has tripped, twisted and turned on this issue time and again. Earlier this year he wrote a now notorious letter to The Independent in which he said: I have not accepted that the minimum wage would cost jobs … I have simply accepted that econometric models indicate a potential jobs impact. Last week on "Any Questions?" the hon. Gentleman stated flatly that no jobs would be lost as a result of the introduction of a minimum wage. Can he name one independent analyst who agrees with that judgment?

Perhaps the most interesting aspect of that programme was that the hon. Member for Sedgefield lectured the director general of the CBI, who knows just a little bit more about industry than does the hon. Gentleman, on the ways in which, he said, a minimum wage would increase British industry's competitiveness. As the CBI has stated that the first stage alone of Labour's minimum wage policy would destroy between 200,000 and 300,000 jobs, it beggars belief that the hon. Gentleman has the impertinence to lecture industrialists on how to make themselves competitive.

Mr. Stuart Bell (Middlesbrough)

rose——

Mr. Howard

I have not much time left. I must press on.

On "Any Questions?" the hon. Member for Sedgefield claimed that the only difference between his proposals for a minimum wage and the arrangements in Germany was that the minimum wage in Germany is higher. He knows perfectly well that there is no national statutory minimum wage in Germany at all.

Mr. Blair

rose——

Mr. Howard

Ah, the hon. Gentleman is prepared to contribute to our deliberations.

Mr. Blair

As I have often said, in Germany a minimum wage operates in every industrial sector. Does the Secretary of State accept that?

Mr. Howard

The wage is agreed between employers and trade unions. It is legally binding only because all collective agreements in Germany are legally binding. If the hon. Gentleman wants all collective agreements to be legally binding, I hope that he will support the proposals in our latest Green Paper.

Mr. Blair

Let us get this absolutely right—the agreements are binding not merely on unions and the industry but on everyone who works in that sector. Will the Secretary of State confirm that?

Mr. Howard

Collective agreements are legally binding in Germany. They are collective agreements, not something imposed by national statute. If the hon. Gentleman does not know the difference between a national statute and a collective agreement, he is unfit to hold even his shadow portfolio.

I could go on to point out the number of surveys which have shown how many jobs will be lost as a result of the national statutory minimum wage. I could point out how the Leader of the Opposition has withdrawn from Labour's commitment to the second stage of their policy.

I want to say a word about another crucial aspect of Labour's minimum wage policy—its effect on skill differentials. The only conceivable basis on which the immediate negative impact of the minimum wage on jobs, inflation and growth could be minimised would be if it were possible to ensure that there would be no restoration of differentials whatever. Labour Front-Bench spokesmen have been patting themselves on the back because they claim to have secured the agreement of the TUC to the proposition that differentials would be eroded rather than restored if a minimum wage were introduced. They do not seem to understand that differentials are not the exclusive concern of union negotiators. Proper differentials are vital to employers and to the health of our economy as a whole.

How can one claim to support training, as the Opposition suggest that they do, when one destroys the differentials that give people the incentive to acquire skills? How can one improve the productivity of the economy when one destroys the differentials that give people the incentive to perform more efficiently? One cannot. The most significant aspect of the Labour party's minimum wage policy is not the damage that it would do to jobs, nor the devastation that it would cause the economy, but the extent to which it reveals the depth of the Labour party's economic illiteracy.

The Government are fully committed to the success of British manufacturing industry. The Labour party is always right behind British industry because it is the best place from which to wield the knife to stab it in the back. We offer constructive policies for the future to build upon the proven successes of the 1980s. The Labour party offers nothing more than smears, fears and crocodile tears. That is the difference between us, and that is why the interests of British industry make it imperative that the Government are returned.

Mr. Derek Foster (Bishop Auckland)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

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

The House divided: Ayes 220, Noes 306.

Division No. 230]	[10 pm
AYES
Adams, Mrs Irene (Paisley, N.)	Campbell-Savours, D. N.
Allen, Graham	Canavan, Dennis
Alton, David	Carlile, Alex (Mont'g)
Anderson, Donald	Carr, Michael
Archer, Rt Hon Peter	Clark, Dr David (S Shields)
Armstrong, Hilary	Clarke, Tom (Monklands W)
Ashdown, Rt Hon Paddy	Clay, Bob
Ashley, Rt Hon Jack	Clelland, David
Ashton, Joe	Clwyd, Mrs Ann
Banks, Tony (Newham NW)	Cohen, Harry
Barnes, Harry (Derbyshire NE)	Cook, Robin (Livingston)
Barron, Kevin	Corbett, Robin
Battle, John	Corbyn, Jeremy
Beckett, Margaret	Cousins, Jim
Beith, A. J.	Cox, Tom
Bell, Stuart	Crowther, Stan
Bellotti, David	Cryer, Bob
Benn, Rt Hon Tony	Cunliffe, Lawrence
Bennett, A. F. (D'nt'n & R'dish)	Cunningham, Dr John
Benton, Joseph	Darling, Alistair
Bermingham, Gerald	Davies, Rt Hon Denzil (Llanelli)
Blair, Tony	Davies, Ron (Caerphilly)
Boateng, Paul	Davis, Terry (B'ham Hodge H'I)
Boyes, Roland	Dixon, Don
Bradley, Keith	Dobson, Frank
Bray, Dr Jeremy	Douglas, Dick
Brown, Gordon (D'mline E)	Duffy, Sir A. E. P.
Brown, Nicholas (Newcastle E)	Dunnachie, Jimmy
Brown, Ron (Edinburgh Leith)	Dunwoody, Hon Mrs Gwyneth
Caborn, Richard	Eadie, Alexander
Callaghan, Jim	Eastham, Ken
Campbell, Menzies (Fife NE)	Edwards, Huw
Campbell, Ron (Blyth Valley)	Evans, John (St Helens N)

Ewing, Harry (Falkirk E)	Martin, Michael J. (Springburn)
Ewing, Mrs Margaret (Moray)	Martlew, Eric
Fatchett, Derek	Maxton, John
Fearn, Ronald	Meacher, Michael
Field, Frank (Birkenhead)	Meale, Alan
Fields, Terry (L'pool B G'n)	Michael, Alun
Fisher, Mark	Michie, Bill (Sheffield Heeley)
Flannery, Martin	Michie, Mrs Ray (Arg'l & Bute)
Flynn, Paul	Moonie, Dr Lewis
Foot, Rt Hon Michael	Morley, Elliot
Foster, Derek	Morris, Rt Hon A. (W'shawe)
Foulkes, George	Morris, Rt Hon J. (Aberavon)
Fraser, John	Mowlam, Marjorie
Fyfe, Maria	Mullin, Chris
Garrett, John (Norwich South)	Murphy, Paul
Garrett, Ted (Wallsend)	Nellist, Dave
George, Bruce	Oakes, Rt Hon Gordon
Gilbert, Rt Hon Dr John	O'Brien, William
Godman, Dr Norman A.	O'Hara, Edward
Golding, Mrs Llin	O'Neill, Martin
Gordon, Mildred	Orme, Rt Hon Stanley
Gould, Bryan	Patchett, Terry
Graham, Thomas	Pendry, Tom
Grant, Bernie (Tottenham)	Pike, Peter L.
Griffiths, Nigel (Edinburgh S)	Powell, Ray (Ogmore)
Griffiths, Win (Bridgend)	Prescott, John
Hain, Peter	Primarolo, Dawn
Hardy, Peter	Quin, Ms Joyce
Harman, Ms Harriet	Radice, Giles
Hattersley, Rt Hon Roy	Randall, Stuart
Haynes, Frank	Redmond, Martin
Heal, Mrs Sylvia	Reid, Dr John
Healey, Rt Hon Denis	Richardson, Jo
Henderson, Doug	Robertson, George
Hinchliffe, David	Robinson, Geoffrey
Hoey, Kate (Vauxhall)	Rogers, Allan
Hogg, N. (C'nauld & Kilsyth)	Rooker, Jeff
Home Robertson, John	Rooney, Terence
Hood, Jimmy	Ross, Ernie (Dundee W)
Howarth, George (Knowsley N)	Rowlands, Ted
Howell, Rt Hon D. (S'heath)	Ruddock, Joan
Howells, Geraint	Salmond, Alex
Howells, Dr. Kim (Pontypridd)	Sedgemore, Brian
Hoyle, Doug	Sheerman, Barry
Hughes, Robert (Aberdeen N)	Sheldon, Rt Hon Robert
Hughes, Roy (Newport E)	Skinner, Dennis
Ingram, Adam	Smith, Andrew (Oxford E)
Janner, Greville	Smith, C. (Isl'ton & F'bury)
Johnston, Sir Russell	Smith, Rt Hon J. (Monk'ds E)
Jones, Barry (Alyn & Deeside)	Smith, J. P. (Vale of Glam)
Jones, leuan (Ynys Môn)	Snape, Peter
Kaufman, Rt Hon Gerald	Soley, Clive
Kilfoyle, Peter	Spearing, Nigel
Kinnock, Rt Hon Neil	Steel, Rt Hon Sir David
Lambie, David	Steinberg, Gerry
Lamond, James	Stott, Roger
Leadbitter, Ted	Strang, Gavin
Leighton, Ron	Straw, Jack
Lestor, Joan (Eccles)	Taylor, Mrs Ann (Dewsbury)
Lewis, Terry	Taylor, Matthew (Truro)
Litherland, Robert	Thompson, Jack (Wansbeck)
Livingstone, Ken	Turner, Dennis
Lloyd, Tony (Stretford)	Vaz, Keith
Lofthouse, Geoffrey	Warden, Gareth (Gower)
Loyden, Eddie	Wareing, Robert N.
McAllion, John	Watson, Mike (Glasgow, C)
Macdonald, Calum A.	Welsh, Michael (Doncaster N)
McFall, John	Williams, Rt Hon Alan
McKay, Allen (Barnsley West)	Williams, Alan W. (Carm'then)
McKelvey, William	Wilson, Brian
McLeish, Henry	Winnick, David
Maclennan, Robert	Wise, Mrs Audrey
McMaster, Gordon	Worthington, Tony
McNamara, Kevin	Wray, Jimmy
McWilliam, John	Young, David (Bolton SE)
Madden, Max
Mahon, Mrs Alice	Tellers for the Ayes:
Marek, Dr John	Mr. Martyn Jones and
Marshall, Jim (Leicester S)	Mr. Thomas McAvoy.

NOES
Adley, Robert	Durant, Sir Anthony
Aitken, Jonathan	Dykes, Hugh
Alexander, Richard	Evans, David (Welwyn Hatf'd)
Allason, Rupert	Evennett, David
Amery, Rt Hon Julian	Fairbairn, Sir Nicholas
Amess, David	Fallon, Michael
Amos, Alan	Farr, Sir John
Arbuthnot, James	Favell, Tony
Arnold, Jacques (Gravesham)	Fenner, Dame Peggy
Ashby, David	Field, Barry (Isle of Wight)
Aspinwall, Jack	Finsberg, Sir Geoffrey
Atkins, Robert	Fishburn, John Dudley
Baker, Rt Hon K. (Mole Valley)	Forman, Nigel
Baker, Nicholas (Dorset N)	Forsyth, Michael (Stirling)
Baldry, Tony	Forth, Eric
Banks, Robert (Harrogate)	Fowler, Rt Hon Sir Norman
Batiste, Spencer	Fox, Sir Marcus
Beaumont-Dark, Anthony	Franks, Cecil
Bellingham, Henry	Freeman, Roger
Bendall, Vivian	French, Douglas
Bennett, Nicholas (Pembroke)	Gardiner, Sir George
Benyon, W.	Garel-Jones, Tristan
Biffen, Rt Hon John	Gill, Christopher
Blackburn, Dr John G.	Gilmour, Rt Hon Sir Ian
Blaker, Rt Hon Sir Peter	Glyn, Dr Sir Alan
Body, Sir Richard	Goodhart, Sir Philip
Bonsor, Sir Nicholas	Goodlad, Alastair
Boscawen, Hon Robert	Goodson-Wickes, Dr Charles
Boswell, Tim	Gorman, Mrs Teresa
Bottomley, Peter	Gorst, John
Bottomley, Mrs Virginia	Grant, Sir Anthony (CambsSW)
Bowden, A. (Brighton K'pto'n)	Greenway, Harry (Ealing N)
Bowden, Gerald (Dulwich)	Greenway, John (Ryedale)
Bowis, John	Griffiths, Peter (Portsmouth N)
Boyson, Rt Hon Dr Sir Rhodes	Grist, Ian
Braine, Rt Hon Sir Bernard	Ground, Patrick
Brandon-Bravo, Martin	Grylls, Michael
Brazier, Julian	Hamilton, Rt Hon Archie
Bright, Graham	Hamilton, Neil (Tatton)
Brown, Michael (Brigg & Cl't's)	Hampson, Dr Keith
Browne, John (Winchester)	Hannam, John
Bruce, Ian (Dorset South)	Hargreaves, A. (B'ham H'll Gr')
Buck, Sir Antony	Hargreaves, Ken (Hyndburn)
Budgen, Nicholas	Harris, David
Burns, Simon	Haselhurst, Alan
Burt, Alistair	Hayes, Jerry
Butler, Chris	Hayward, Robert
Butterfill, John	Heathcoat-Amory, David
Carlisle, John, (Luton N)	Heseltine, Rt Hon Michael
Carlisle, Kenneth (Lincoln)	Hicks, Mrs Maureen (Wolv' NE)
Carrington, Matthew	Hicks, Robert (Cornwall SE)
Carttiss, Michael	Hrggins, Rt Hon Terence L.
Cash, William	Hill, James
Chalker, Rt Hon Mrs Lynda	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, Rt Hon Alan (Plymouth)	Howe, Rt Hon Sir Geoffrey
Clark, Dr Michael (Rochford)	Howell, Rt Hon David (G'dford)
Clark, Rt Hon Sir William	Howell, Ralph (North Norfolk)
Colvin, Michael	Hughes, Robert G. (Harrow W)
Conway, Derek	Hunt, Rt Hon David
Coombs, Anthony (Wyre F'rest)	Hunt, Sir John (Ravensbourne)
Coombs, Simon (Swindon)	Hunter, Andrew
Cope, Rt Hon Sir John	Irvine, Michael
Cormack, Patrick	Irving, Sir Charles
Couchman, James	Jack, Michael
Cran, James	Jackson, Robert
Currie, Mrs Edwina	Janman, Tim
Curry, David	Jessel, Toby
Davies, Q. (Stamf'd & Spald'g)	Johnson Smith, Sir Geoffrey
Davis, David (Boothferry)	Jones, Gwilym (Cardiff N)
Day, Stephen	Jones, Robert B (Herts W)
Dickens, Geoffrey	Jopling, Rt Hon Michael
Dorrell, Stephen	Kellett-Bowman, Dame Elaine
Douglas-Hamilton, Lord James	Kilfedder, James
Dover, Den	King, Roger (B'ham N'thfield)
Dunn, Bob	Kirkhope, Timothy

Knapman, Roger	Nelson, Anthony
Knight, Greg (Derby North)	Neubert, Sir Michael
Knight, Dame Jill (Edgbaston)	Newton, Rt Hon Tony
Knowles, Michael	Nicholls, Patrick
Knox, David	Nicholson, David (Taunton)
Latham, Michael	Norris, Steve
Lawrence, Ivan	Onslow, Rt Hon Cranley
Lee, John (Pendle)	Oppenheim, Phillip
Leigh, Edward (Gainsbor'gh)	Page, Richard
Lennox-Boyd, Hon Mark	Paice, James
Lester, Jim (Broxtowe)	Patnick, Irvine
Lilley, Rt Hon Peter	Pawsey, James
Lloyd, Sir Ian (Havant)	Peacock, Mrs Elizabeth
Lloyd, Peter (Fareham)	Porter, Barry (Wirral S)
Lord, Michael	Porter, David (Waveney)
Lyell, Rt Hon Sir Nicholas	Portillo, Michael
McCrindle, Sir Robert	Powell, William (Corby)
Macfarlane, Sir Neil	Price, Sir David
MacGregor, Rt Hon John	Raison, Rt Hon Sir Timothy
MacKay, Andrew (E Berkshire)	Rathbone, Tim
McLoughlin, Patrick	Redwood, John
McNair-Wilson, Sir Patrick	Rhodes James, Sir Robert
Madel, David	Riddick, Graham
Malins, Humfrey	Ridsdale, Sir Julian
Mans, Keith	Roe, Mrs Marion
Maples, John	Rost, Peter
Marland, Paul	Rowe, Andrew
Marlow, Tony	Rumbold, Rt Hon Mrs Angela
Marshall, John (Hendon S)	Ryder, Rt Hon Richard
Martin, David (Portsmouth S)	Sackville, Hon Tom
Maude, Hon Francis	Sainsbury, Hon Tim
Maxwell-Hyslop, Robin	Sayeed, Jonathan
Mellor, Rt Hon David	Scott, Rt Hon Nicholas
Meyer, Sir Anthony	Shaw, David (Dover)
Miller, Sir Hal	Shaw, Sir Giles (Pudsey)
Mills, Iain	Shaw, Sir Michael (Scarb')
Miscampbell, Norman	Shelton, Sir William
Mitchell, Andrew (Gedling)	Shephard, Mrs G. (Norfolk SW)
Mitchell, Sir David	Shepherd, Colin (Hereford)
Moate, Roger	Shepherd, Richard (Aldridge)
Monro, Sir Hector	Shersby, Michael
Montgomery, Sir Fergus	Sims, Roger
Moore, Rt Hon John	Skeet, Sir Trevor
Morris, M (N'hampton S)	Smith, Sir Dudley (Warwick)
Morrison, Sir Charles	Smith, Tim (Beaconsfield)
Morrison, Rt Hon Sir Peter	Soames, Hon Nicholas
Moss, Malcolm	Speller, Tony
Moynihan, Hon Colin	Spicer, Sir Jim (Dorset W)
Mudd, David	Spicer, Michael (S Worcs)
Neale, Sir Gerrard	Squire, Robin
Needham, Richard	Stanbrook, Ivor

Stanley, Rt Hon Sir John	Viggers, Peter
Steen, Anthony	Wakeham, Rt Hon John
Stern, Michael	Walden, George
Stevens, Lewis	Walker, Bill (T'side North)
Stewart, Allan (Eastwood)	Walker, Rt Hon P. (W'cester)
Stewart, Andy (Sherwood)	Waller, Gary
Stewart, Rt Hon Sir Ian	Walters, Sir Dennis
Stokes, Sir John	Ward, John
Summerson, Hugo	Wardle, Charles (Bexhill)
Taylor, Ian (Esher)	Warren, Kenneth
Taylor, Sir Teddy	Watts, John
Tebbit, Rt Hon Norman	Wells, Bowen
Thatcher, Rt Hon Margaret	Whitney, Ray
Thompson, D. (Calder Valley)	Widdecombe, Ann
Thompson, Patrick (Norwich N)	Wiggin, Jerry
Thorne, Neil	Wilshire, David
Thornton, Malcolm	Winterton, Mrs Ann
Thurnham, Peter	Winterton, Nicholas
Townend, John (Bridlington)	Wolfson, Mark
Townsend, Cyril D. (B'heath)	Wood, Timothy
Tracey, Richard	Young, Sir George (Acton)
Trippier, David
Trotter, Neville	Tellers for the Noes:
Twinn, Dr Ian	Mr. David Lightbown and
Vaughan, Sir Gerard	Mr. John M. Taylor.

Question accordingly negatived.

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

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

Resolved, That this House congratulates Her Majesty's Government on its success in bringing down inflation to German levels and in creating almost three million jobs since 1983; recognises that the defeat of inflation is essential in maintaining international competitiveness, and in further job creation; welcomes the dramatic transformation which has taken place in training in this country and the continuing successes in export markets and in attracting inward investment; recognises that sustained growth depends upon quality and innovation and welcomes the Government's policies to stimulate these; and notes the revival in business confidence, which would be put at risk by the inflationary, job destroying and anti-industry policies of the Opposition, in particular their commitment to nationalisation, state intervention, punitive taxation, renewed union power and a national minimum wage.