Industry (Government Policies)

HC Deb 06 February 1992 vol 203 cc477-554 4.49 pm

Mr. Gordon Brown (Dunfermline, East)

I beg to move, That this House condemns the Government's economic mismanagement which has caused a second recession bringing unacceptably high levels of bankruptcies, closures and job losses in every sector of industry, and the fastest rising unemployment in Europe hitting every occupation, industry and area of the United Kingdom; condemns the Government's neglect of the needs of the unemployed and training generally and the deliberate rundown of regional policies in Scotland, Wales and the regions of England; and calls urgently for policies that take seriously the needs of industry in order to halt the huge decline in investment, to create jobs, and to improve skills.

Mr. Speaker

I have selected the amendment in the name of the Prime Minister. In view of the late start and the number of right hon. and hon. Members who wish to participate in the debate, I propose to put a limit of 10 minutes on speeches between 7 o'clock and 9 o'clock. If hon. Members who are called before 7 o'clock are brief, and if the Front-Bench spokesmen do not take too long, it may be possible to relax the limit.

Mr. Brown

The motion states that the Government have created and compounded, but are failing to correct, a recession which threatens not only a short-term rise in unemployment but a long-term loss of industrial capacity and strength for Britain. The motion calls for action, with a new skills fund for training so that we can have the best-educated, best-trained and best-skilled work force in Europe. It calls for action on unemployment so that we can halt the fastest rising unemployment in western Europe and for action on investment with a new investment incentive, which we and others including the Confederation of British Industry have advocated, backed by an industry policy for Britain—in contrast to a Government who cannot he trusted with the economy and have no policy for Britain but to repeat the mistakes of the past.

With 3,000 jobs being lost almost every day, 1,000 businesses going under every week and sales, investment and employment still falling, let us recall the background to the debate. The Chancellor told us that we would have recovery within three months. That was on 11 March 1991, 11 months ago, since when 700,000 men and women have lost their jobs. The Government should apologise for misleading the House and the country.

The Chancellor then told us that he had seen "vague stirrings" of recovery which no one but he could see. That was on 2 June 1991, more than eight months ago, since when 35,000 companies have gone under. The Government should admit that Ministers were at best economical with the truth about the economy, and they should apologise to all who have suffered.

Then, the Prime Minister told us that recovery was "coming in weeks". That was on 19 June 1991, more than seven months ago, since when another £500 million in manufacturing capacity has been lost. The Prime Minister should apologise to companies and to work forces which have suffered for what one might call, in American terminology, past statements that are no longer operative.

The Chancellor then told us that he could see the "green shoots of spring". That was on 9 October 1991, five months ago, during which time manufacturing investment has fallen by another few hundred million pounds. The Ministers here today should tell us what they are going to do to make amends to all who have suffered.

Finally, the Prime Minister told James Naughtie on "The World at One" that the recovery had started "as we speak". That was on 1 January, more than a month ago. He should apologise for a confident statement which has turned out to be a terminological inexactitude at the least. A Government who were wrong in March were wrong in May, June, July, August and December, and they are wrong now. If the Government had the courage and were not running scared, we would be settling these matters not in a Thursday Commons debate but in a Thursday general election. It is because the Government will not admit that they have been wrong all along that they can do nothing to put the economy right.

What of the Secretary of State for Trade and Industry? Conservative Members—especially those from the north-west where redundancies have risen by 20,000 in the past six months, from the midlands, where unemployment is rising by nearly 10,000 every month, from the south, where unemployment has shot up by 20,000, and from Scotland and Wales— will be surprised that, not to be outdone, the Secretary of State issued a press release from Conservative central office in the autumn when addressing what is called the World Economic Forum at the Hyde Park hotel.

What did the Secretary of State say? Did he say that the Conservatives accepted responsibility for the British recession? No. The headline of his press release of 3 September 1991 was "Conservatives lead the way to world recovery". I could understand the headline, "Conservatives led the way to British recession" but not "Conservatives lead the way to world recovery". They are inventing a British recovery that does not yet exist, all because they will not accept responsibility for a British recession which is of their own making. Because they will not accept responsibility for the problem, they are disabled from taking the action necessary for its solution.

The facts are—

Mr. Richard Tracey (Surbiton)

Does the hon. Gentleman realise that he is fast becoming the Ron Glum of British politics? I believe that he has never managed a company or been in a position in which he needed to motivate workers. The sort of talk that we hear from him, which is wholly contrary to what we hear from the CBI and others, will progressively talk down British industry. Is that what the Labour party is all about?

Mr. Brown

It is not I who am talking down British industry—it is British industry which wants a Government who will tell the truth about the British economy.

These are the facts. Exactly a year after the Chancellor predicted that we would have a recovery by the middle of 1991, eight months after the Prime Minister told us that a recovery would start in a few weeks, and months after the Chancellor detected the green shoots of spring, employment is still falling by more than 30,000 a month, manufacturing employment is still falling by nearly 20,000 a month, sales are falling, industrial production is falling and, worst of all, the key to our future—investment—is falling this month and next month and, if the hon. Gentleman listens to the CBI, he will learn that unless the Government take action, it is likely to fall during the year.

Mr. David Ashby (Leicestershire, North-West)

The hon. Gentleman obviously agrees that it is in manufacturing engineering that the greatest problems have arisen as a result of the recession. A company with which I am involved has lost a large part of its turnover in the past year, largely as a result of the fact that its manufacturing was done for American companies which, because of the recession in America, have taken the manufacturing back to America, thus depriving this country of it. Is it not because there is a world recession and, in particular, a recession in America, that we have the problems that we have now? It is my experience that there has been a recovery in the past couple of months and, in the company with which I am involved, it is British-led. It is British workmanship which is leading us out of it.

Mr. Brown

The hon. Gentleman makes the point that the Prime Minister has been trying to make for a few days. [Interruption.] Let us deal with that point. He is saying that the problems in Britain arose not because of anything intrinsic to the British economy but because of a world recession. Why, if these problems are not intrinsic to Britain but part of a world recession, has Britain been bottom of the league of European Community countries for output, investment, employment and growth in 1991? Why, even in 1992, is the latest forecast that we shall be 12 out of 12 for employment in Europe?

Mr. Phillip Oppenheim (Amber Valley)

As the hon. Gentleman is so dissatisfied with industrial performance in this country, will he cast his mind back to the balmy days when Labour was last in power, when British Airways was rated below Aeroflot by its customers, when British Leyland was the butt of international jokes and when British Steel was the world's largest loss maker? Bearing in mind the fact that he has never manufactured anything except dodgy policies, how does he expect to do better?

Mr. Brown

And when we had a surplus in manufacturing trade with the rest of the world. The hon. Gentleman, who repeats the same question every time, would do well to read the manifesto that he issued to the electors of Amber Valley, which said that the Conservative Government had put an end to fast-rising prices once and for all—just before inflation doubled.

Let us deal with the world recession. When Conservative Members claim—as the hon. Member for Leicestershire, North-West (Mr. Ashby) has just done—that this is a world recession in which all countries are somehow suffering equally and try to tell us that it is not a British recession which is the fault of Ministers but a world recession which has nothing to do with them, let us be clear about the facts.

With the European Community as a whole growing by 1.4 per cent. in 1991 and expected to grow 2.1 per cent. in 1992, there is no falling output and therefore no recession in the EC as a whole last year or forecast for this year. With the countries of the Organisation for Economic Co-operation and Development as a whole growing by 1.2 per cent. in 1991 and expected to grow 2.2 per cent. in 1992, there is not falling output and, therefore, no recession in the OECD countries as a whole last year or forecast for this year. When the G7 as a whole—

Mr. Patrick Nicholls (Teignbridge)

The hon. Gentleman has been complaining for the last few moments about a lack of investment. How on earth would British industry be helped by investment policy if his party got the opportunity to introduce its 9 per cent. tax on savings income? How would that help investment?

Mr. Brown

The policies that we advocate for manufacturing industry have been welcomed by the CBI, and are similar to the policies—[Interruption.] Conservative Members are determined that I shall not be heard.

Madam Deputy Speaker (Miss Betty Boothroyd)

Order. The debate has been going on for only a few minutes. I suggest that hon. Members on both sides of the House sit back and listen.

Mr. Brown

I am grateful to you, Madam Deputy Speaker.

I can tell the hon. Member for Teignbridge (Mr. Nicholls) that Budget submissions from the CBI, the Engineering Employers Federation, and many chambers of commerce and other industrial organisations, advocate a new investment incentive for British industry, to get the economy moving out of recession.

It is remarkable that the Chancellor of the Exchequer—

Mr. Andrew Mitchell (Gedling)

rose—

Mr. Brown

I shall not give way again.

It is remarkable that the Chancellor of the Exchequer will not rule out personal tax cuts or cuts in inheritance tax in the Budget, yet even before he began his Budget discussions, he specifically ruled out, in front of the National Economic Development Council, the one measure about which there is a consensus in industry—a new industrial investment incentive to get the economy moving again.

If Conservative Members would stop being completely embattled by their ideology, they might be able to learn from British industry.

Mr. James Hill (Southampton, Test)

Will the hon. Gentleman give way?

Mr. Brown

I shall give way to the hon. Gentleman, and that is the last time.

Mr. Hill

I have listened intently to what the hon. Gentleman has said about the OECD reports. I can give him a practical example, if he wishes. My daughter and her husband run a company just outside Bordeaux, in France. In the past few months, the recession there has been far worse than they have ever experienced before. One should take in some of those practical facts instead of listening only to statistics.

Mr. Brown

If the hon. Gentleman wants to make such points, perhaps he should go round the regions and listen to British industry. Perhaps he should read the report about machine tool orders—new orders are 47 per cent. down over a year. That is the result not of a world recession but of mistakes that have been made here in Britain.

Mr. Andrew Mitchell

Will the hon. Gentleman give way?

Mr. Brown

I shall not give way again.

Let us be absolutely clear: business investment last year did not fall in the EC as a whole in the G7 countries or in the OECD countries, but it fell in Britain. Employment did not fall in the EC, the G7 countries or in the OECD countries as a whole either, but it fell in Britain.

The Prime Minister tells us that Japan is in recession. Let me tell him, and Conservative Members, that, according to the latest report, in 1992 investment there is expected to rise by 2.4 per cent., employment by 1.3 per cent., and output by 2.4 per cent. That comes on top of a position in which, last year, business investment rose by 7 per cent., employment by 2 per cent., and output by 4.5 per cent. There is no recession in Japan, where the economy is growing, not declining, and unemployment is at 2.2 per cent., compared with 9 per cent. here.

Where is the world recession when the Prime Minister needs it? There is no world recession. Surely the only conclusion—[Interruption.] Let us see what the IMF says. It says that the world economy grew by just 1 per cent. in 1991, but that it will grow by 2.8 per cent. this year. There is no fall in output in the world as a whole, and there is no recession. Where is the world recession? There is none. The only conclusion must be that the Prime Minister is condemned as—in his own words—economically illiterate.

Sir William Clark (Croydon, South)

The hon. Gentleman says that there is no world recession. Has he seen the statistics coming out of the United States? There is a recession there.

Secondly—[Interruption.] Has the hon. Member for Clydesdale (Mr. Hood) finished? Secondly, if our economy

Mr. Brown

We had better examine the overall level of investment in the economy. At the beginning of 1990, manufacturing investment was £12 billion on a year-to-year basis. It is now £8 billion—that represents a 35 per cent. fall in manufacturing investment. If that is not evidence of a recession that needs correcting by Government action, I do not know what is.

This is a recession initiated in Britain by Ministers, and prolonged in Britain because of their mistakes. It is a recession which, thanks to the Government, still shows no sign of ending.

What about the future? The CBI says that, unless action is taken, investment will continue to fall in 1992, and that, on the eve of the single market, investment will have fallen by 35 per cent. over two years. What does that mean in practice? It means that this year the Germans will invest about £3,000 for each manufacturing worker, and the Italians and the Americans about the same. The Dutch will invest more than £6,000. Yet no more than £1,800 will be invested in each British manufacturing worker. Britain has more to do, because it has done less over the past 13 years, yet Britain will invest 50 per cent. less than the Germans and the French, and less than half what the Japanese and some other countries invest. And the Prime Minister says that we have had a manufacturing renaissance in this country.

The Chancellor's autumn statement, in November, said that output would grow by 2.5 per cent. Now the consensus is that it will grow by about half that rate in 1992. He said that investment would increase by 1.2 per cent. The consensus now—he has admitted it himself—is that those figures were over-optimistic, and that, according to the latest forecast, investment could fall. The autumn statement said that manufacturing production would rise by 2 per cent. The consensus now is that it will stagnate over the coming months.

Hon. Members will recall the night when a lady from Hampshire was told by Michael Fish, the weather forecaster, that there would be no hurricane. Michael Fish is remembered for one colossal failure of prediction, but the Chancellor's record is rather different. The right hon. Gentleman's record is remarkable for its consistency—he gets it wrong every time. The one thing that we can say about the Chancellor is that he is utterly reliable—he will always let you down.

How can we trust the judgment of people who tell us that there will not be a recession, and then, when it is upon us, that there is no recession? How can we trust the judgment of men who tell us successively that the recession will have ended by spring 1991, June 1991, autumn 1991, December 1991 and January 1992, and who are even now telling us that it is all over, when the evidence is against them?

How can we trust the Government's judgment, when they are the very same people who in 1988 told us that they had created an economic miracle? They are the people who encouraged others to act as if they had no worries about borrowing, and who failed to warn about the risks — even, in some cases, to family homes— of debt, recession and high interest rates. Even as things got worse for millions of people, those men denied that there was a problem.

How can we trust the judgement of men who told us that their 1988 Budget, which gave £4 billion to the very rich, would increase output, growth, productivity, incentives, and even charitable giving? All of those have fallen as a result of Government mistakes in the past three years.

The Government are the people who have the audacity to put up billboards around Britain, in a campaign built round one central theme—that one cannot trust Labour. It is not the Labour party which has misled the country and cannot be trusted; it is the Conservative Government who have forfeited any trust.

What is leading the recovery that we hear about from the Prime Minister? Is it housing-led, as the Chancellor promised? The Council of Mortgage Lenders has just said that there is no housing recovery. Is it retail-led, when companies such as John Lewis say that they are dealing with the worst conditions for 30 years? Is it construction-led, as the Chancellor hinted that it would be, when the construction industry says that it will not recover until 1993?

Is the recovery consumer-led, as the Chancellor promised at one stage, when in January, trade sales figures are stagnating and in some cases falling? Is it industry-led? Is it manufacturing-led? Is it investment-led? No. The truth is that if there is a recovery, it is not investment-led or industry-led; it is a Conservative central office-led recovery. It is a recovery led by press releases, buoyed up by mistaken forecasts and advancing on the crest of a wave of pre-election hype. It is a recovery led not by car makers or aeroplane makers, but simply by phrase makers. The only companies talking it up are the Conservative advertising companies. This recovery leaves hundreds more companies going under, thousands more family homes repossessed and hundreds of thousands more unemployed. Is it an ICI-led recovery? Is it a GEC-led recovery? Is it a Wimpey-led recovery, or is it simply a Saatchi and Saatchi-led recovery?

It is a recovery dreamed up over a working breakfast and sketched by the Saatchi image makers. It is a recovery that begins and ends as advertising copy. It is a recovery that reaches as far as the nation's billboards, but not to its high streets, jobcentres or dole queues. It is a recovery led not by commercial activity, but simply by commercials. It is a recovery that has created a few jobs in a small section of Smith square in the press relations department, of Conservative central office, but none in any offices or factories throughout the country. After 13 years in government, the Conservatives are no longer asking how they can achieve better growth, better investment or better employment prospects. Their highest aspiration in government is simply better advertising in the run-up to the election.

What does Saatchi and Saatchi, whose good news machine proclaims that the economy is prospering, actually say about the real state of the economy to the people who matter to it most—the shareholders? Does Saatchi and Saatchi report to its shareholders that the Conservative Government are performing well, that Britain is best off with the Tories and that the recession is merely a blip?

Let me read the annual report of Saatchi and Saatchi. The chief executive says—

Mr. Ian Bruce (South Dorset)

Will the hon. Gentleman give way?

Mr. Brown

The hon. Gentleman would do well to listen—[Interruption.] Conservative Members do not want to hear.

Let me read the chief executive's report. He says: I do not expect trading to be any easier this year than last. The length of and the severity of the current recession are unresolved. That is Saatchi and Saatchi reporting to the people who matter to it—the shareholders. It says that there is recession, that it is severe and that its length is unresolved. That is bad news indeed, but presumably it is, in the PrimeMinister's words, just another prophet of doom and just dismal Jimmy Saatchi at it again.

Not even the messengers believe the message. What does the other Tory propaganda machine — the Daily Mail—tell us about the recession and recovery? Let us look at its headlines in the past few months, which include "Britain bounces back", and Small firms defy the prophets of doom". What did the owners of the Daily Mail report when clear thinking was needed because their own directors' fees, dividends and salaries were at stake? Did they say, "Britain doing well, likely to do better, prospering and nothing to worry about"?

I quote from the report of Associated Newspapers plc: Such limited signs of recovery in the United Kingdom economy as are visible remain patchy and do not give us any grounds for optimism … The first months of the financial year have not indicated any recovery from recession. The owners tell millions of their readers the good news from the Tory party while admitting in private, for all practical purposes of their own, that the news is bad.

What about the Daily Express? In November, its headlines said: At last we have lift off. Economy up. Surely that encourages couples to bid up for their homes and encourages families to think that their debt problems are over. What does Lord Stevens tell his shareholders? He does not speak about signs of lift-off at the annual general meeting. He stated specifically: Contrary to the optimism of Government Ministers that the economy is turning, there are so far few tangible signs the advertising volumes … are picking up. The people who ask us to believe in the Tory record do not even believe it themselves.

What about The Sun? It uses headlines such as, "It's looking good", "Britain on the way" and "We're OK in the UK". If then says: "It that's depression let's have more of it."

But what does News International plc report to its shareholders in its most recent annual report on 9 September? It said: Economic conditions as they affect the media are not expected to improve during the next year. Its best assessment of our economic prospects to the people who matter to it is that there will be no recovery for a year—until next September. Yet News International is happy to put the interests of the Tory party before the interests of its readers.

Mr. Tim Bell is always ready to tell the good news on billboards, in full-page advertisements and in party political broadcasts. What did his company say about the real world of business at Christmas, only a month ago? It said that the company was having to make a last, desperate attempt to make any profits this year.

Here we have it. The entire Conservative propaganda machine—central office, Saatchi and Saatchi, the Daily Mail, the Daily Express and Tim Bell—the whole ministry of truth, when pressed, makes a sharp distinction between the message it puts to voters and the one that goes back to the directors and shareholders when serious commercial interests are at stake. There is one truth for the public, whom the Conservative propaganda machine is prepared to deceive, and another truth for the directors, the shareholders and the City audience on which it depends.

The public are being treated with contempt by people who know exactly what is wrong with the economy. They admit it to themselves every day and then proclaim a completely different story—a wholly different account—to the public in multi-million-pound Conservative advertising campaigns. Perhaps that deceit, that self-interest and that hypocrisy are nothing remarkable, but simply the prerogative of the Tory press throughout the ages. Saatchi and Saatchi say, "You can't trust Labour." All the evidence is that one cannot trust what Saatchi and Saatchi says about Labour, about the economy or about the Tory party.

Even within the Conservative party, I came across a document entitled "The Transformation of Britain", which was described as the new mass market magazine and as the party's flagship publication. It has an introduction by the right hon. Member for Bath (Mr. Patten), the Conservative party chairman. The third section entitled

"The 1990s" looks at the fruits of success in the lives of British people". It is not so much the record of the Tory transformation of Britain as an attempt at the transformation of the Tory record. There is only one edition so far, but in 100 glossy pages, the magazine manages only three advertisements. One is for a Tory joke book, one is from Selfridges and one is from Arthur Andersen which says: UK plc could be in better shape. This is the Conservative party's own publication. It's time to get Fit again. Getting fit is hard work… Getting back in trim will not be easy for UK business. The exercise will be painful. Very often it means nothing less than a total restructuring. The Tory party's house magazine is now telling us that, after 13 years of this Government—

Mr. Ian Bruce

On a point of order, Madam Deputy Speaker. I have read the motion carefully. Could you help the House and the hon. Member for Dunfermline, East (Mr. Brown)? Will it be in order for us to discuss the Labour party's proposed policies, if it came to office? We have listened to the hon. Gentleman for 32 minutes, but we have yet to hear a single policy proposal from the Labour party.

Madam Deputy Speaker

The motion is wide. If the hon. Gentleman is called, I shall be pleased to hear what he has to say.

Mr. Brown

Conservative Members do not like what they are hearing about the fable.

Do Ministers themselves believe the good news? What does the Secretary of State for Trade and Industry say when pressed in cross-examination? In an interview in the magazine The Engineer which has just been drawn to my attention, does he share the confidence of the Saatchi and Saatchi advertisement? Does he repeat the pre-election talk of a transformation of Britain? What did he say in that interview a few months ago? What did he say when pressed on the problems of British industry? Did he talk about a blip or say that the recovery was just about to happen? He said: The problems are deep rooted and complex and only the most fundamental cultural, academic and educational changes are going to bring about reform. I think that message is getting over. It certainly is. When the messengers do not believe the message, when the Conservatives' party propaganda cannot sustain it and when Ministers cannot hold the line, can we trust the Government? Can there be any greater deception to the millions of victims of this recession —the small business men and women, the unemployed, shopkeepers and people in manufacturing? They need to be told the truth.

The Government are conjuring up a recovery that does not exist with a propaganda machine that does not even believe in it, and all for no other reason than that they are about to be called to account in a general election. A Government who treat the electorate with contempt will be treated with contempt by the British electorate.

The problem, however, is that we are talking about the difficulties not of the past three years, but of the past 13 years. In that time, we have consistently argued for the creation of a modern manufacturing strength, training, investment in skills, technology and training, and investment in the regions. What has happened under the Government? Let us look at what has happened in the past 13 years in terms of manufacturing growth. It has risen by 26 per cent. in Germany, 33 per cent. in America and 60 per cent. in Japan, but it has risen by only 4.9 per cent. in Britain.

What about investment in manufacturing?

Sir William Clark

rose—

Mr. Brown

I gave way to the right hon. Gentleman a few minutes ago and I answered his question.

In the past twelve and a half years, investment in manufacturing has grown in real terms by 47 per cent. in Germany, by 52 per cent. in France, by 73 per cent. in Italy and by more than 100 per cent. in the Netherlands. However, it has fallen in Britain under this Government. We have the worst record for growth in manufacturing of all the OECD countries, with the exception of Greece. We have the worst record for manufacturing investment bar none. That is the Government's record at the end of 13 years in which they had the unparalleled advantage and the once-for-all windfall of North sea oil. However, we are now investing less and hardly producing any more in our manufacturing industry than we did in 1979.

This is a Government who boasted that they created an economic miracle. No wonder they are going to the country relying not on their achievements, but only on their advertising. The last thing they want to talk about is their record. They will not act on falling investment. They have refused to listen to the Confederation of British Industry and other organisations that have demanded a change in policy. While other countries are making proper preparations for 1992, the Government have done absolutely nothing to improve investment in the regions in particular.

We cannot trust the Government to take the necessary action and nowhere is that more true than in their attitude to our regions. Nowhere has the neglect of British industry and its future prospects been more obvious than in the Government's attitude to regional policy. That policy has been subject to modernisation in other countries, but it has been virtually abandoned in Britain.

Nowhere is that more true than in the Government's attitude to RECHAR and our mining communities. The reason we have not reached an agreement in Europe is that the Ministers concerned are more anxious to wage ideological war with the Commission than to secure the funds that will create jobs, improve training and help small businesses grow in many of our rundown mining communities.

The document from the Department of the Environment says that the Government's case is no longer viable and that it represents an own goal. It states that the position must change. Jobs had been lost and help to small businesses had already been delayed when the Secretary of State for Trade and Industry told the House of Lords Select Committee: The problem is a metaphysical one. It is a metaphysical dispute about additionality". Is it a metaphysical problem when Ministers put a miner of 47 on the dole with no prospect of ever working again and block the very measures that would help him?

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Lilley)

Will the hon. Gentleman tell us whether he has ever asked his former right hon. Friend, Commissioner Millan, who was Secretary of State for Scotland, to operate the same rules as we do? Is Mr. Millan quite content to hand over that money to create those jobs or is the hon. Gentleman trying his best to dissuade him from doing so now?

Mr. Brown

The right hon. Gentleman knows full well that the rules on regional policy were changed in 1988.

Let me remind the right hon. Gentleman what his right hon. Friend the Secretary of State for the Environment said in his document. He said that the current arrangement is not transparent, that it is not additional, that it does not satisfy the objectives of grant recipients, and that it is not neutral. He actually admitted that the political criticism had not been met and that Britain was virtually isolated in the Community. That is what the Secretary of State for the Environment said from within the Government of which the Secretary of State for Trade and Industry is a member.

Mr. Lilley

The hon. Gentleman failed to read out the sentence that says that none of those comments refer to RECHAR.

Mr. Brown

The precise reading of that document is: This leaves the RECHAR programmes and other future ERDF receipts in jeopardy". The right hon. Gentleman clearly does not talk to the Secretary of State for the Environment, and he does not even read the documents that come before him.

Is it a metaphysical problem when miners and their families who have travelled throughout Scotland and the north, and from Scotland to Yorkshire and further south and are faced not just with the prospect of unemployment, but of no further employment opportunities because the RECHAR money is being blocked? They are communities not of metaphysicians, but of miners and former miners laid low by closures and devastated by unemployment. Now, because of Government intransigence, they are deprived even of hope, at least until the Labour Government come to power.

How can we trust the Government to help mining communities or any of the hard-hit regions in Scotland, Wales and England, when they have cut regional assistance, axed regional development grants and will not back European regional measures? Our regional policy is now being presided over by a Minister who said in a pamphlet that he regards regional policy as one of the phoney activities of Government.

Nothing in the record of the Government is more damning than their failure to act on unemployment. Unemployment is now higher here than in all the Community countries except Ireland and Greece. It is still rising faster here than anywhere in Europe. That is on top of a doubling in unemployment since 1979.

What about employment action, which is a Government creation? There are only 263 people on employment action schemes in Scotland, which is an average of only three people in every constituency where employment action operates. Two years after the Government were first warned of the recession and 20 months after unemployment started to rise, employment action is offering places to 5,800 people in Britain. That is an average of nine people for constituencies which, in some cases, have more than 10,000 people unemployed. We now know that the Government have even raided the unemployment training budget in the past few days.

How can we trust a Government who say that they will help the unemployed, when the best that they can do for the 2.5 million unemployed is to create an average of only nine employment action places for every man and woman even in some of the hardest-hit constituencies in the country? No Government have the right to treat unemployed men and women with such contempt by doing virtually nothing to assist them. No Government have the right to condemn thousands of teenagers to unemployment leaving hundreds of them without training or benefits.

In the past 13 years, the Government have created neither economic efficiency nor social justice. They will be remembered as the Government who dissipated the oil wealth, left us with more unemployment, more poverty, more homelessness. They promised an economic miracle, but they have left Great Britain investing less and producing not much more from our manufacturing industries than in 1979.

The Government know that they cannot go to the country on their record. They are relying on a huge public relations offensive to conceal that record. But even their own public relations companies know that they cannot escape their record. They have undermined manufacturing by cutting investment in our future. They do not deserve another five years to do more damage. They have undermined public services as well as our industries. This Government must not have another five years to do even more damage. They have forced unemployment up by 1.5 million in 13 years and then they abandoned the unemployed even though they have had the North sea oil. They do not deserve another five years to throw more people out of work.

Britain has suffered enough. The Government do not deserve re-election. Labour will govern in their place.

5.29 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; recognises the importance of maintaining the fight against inflation to maintain competitiveness; acknowledges the success of British manufacturing industry in reaching record figures for exports despite depressed world markets; rejects the high tax; high spending policies of the Opposition which City forecasters predict would cause an increase in interest rates and inflation and would be an impediment to recovery; condemns their anti-industry policies of nationalisation, state control, a national minimum wage, renewed union power and unqualified support for the social charter which would have damaging consequences for jobs and industry; and notes that all these policies have been rejected by business.".

Once again, the hon. Member for Dunfermline, East (Mr. Brown) devoted the bulk of his speech to his choice selection of gloomy statistics, gloomier forecasts and the gloomiest quotes he can find. He overdoses on gloom. He cannot get enough of it. I fear that eventually it will consume him entirely and he will end up like one of those unfortunate old men in Oxford street between the sandwich boards proclaiming, "The end is nigh". [HON. MEMBERS: "It is."]

Several Hon. Members

rose—[Interruption.]

Madam Deputy Speaker

Order. Let us hear the Minister.

Mr. Lilley

The hon. Gentleman's speech contained not a mention of Britain's success in increasing our share of world markets for the third year running. It contained not a word about our success in exports, nothing about Britain's record low level of strikes and nothing about British industry's productivity achievements. He clearly believes that he can talk Labour support up by talking the economy down.

A key part of the process of economic recovery is the restoration of confidence and the revival of optimism. Either the hon. Member for Dunfermline, East does not recognise that, or he does not care and wants to delay and defer recovery. Fortunately, his words are unlikely to have much impact on the course of the recession, but if his party's policies were ever implemented, they would almost without exception aggravate the recession and abort recovery. Labour's plans to raise taxes would be particularly damaging. Apart from their long-term impact on incentives, their short-term effect on demand would be disastrous.

That danger was pointed out by Hamish McRae, no Tory hack, in a lucid article in The Independent, which is not a Tory rag. He took into account only Labour's plans to increase the top rate to 50 per cent. and to abolish the National Insurance ceiling. He wrote: Labour's tax proposals would exacerbate current economic problems … [They] would be an economic experiment at the wrong time. At worst, it would lead to a sharp rise in personal bankruptcies. Further, by tipping house prices into a new decline, it would hit consumption and make recovery more difficult. The changes projected … by the Labour party … would mean those affected would face the sharpest ever peacetime tax increase. He concluded: Dare Labour risk kicking an economy that is already down? On top of that, Labour proposes to tax savings— [Interruption.]

Mr. Richard Tracey (Surbiton)

rose—

Hon. Members

Give way.

Mr. Lilley

How Labour Members can claim to favour investment while penalising savings baffles me, and I suspect—[Interruption.]

Madam Deputy Speaker

Order. I ask the House to settle down and listen to the Minister.

Mr. Tracey

Does my right hon. Friend also remember that when, a couple of years ago, the Leader of the Opposition was asked what Labour would do to control inflation, he said, "To cut a long story short, we don't know."

Mr. Lilley

I remember that extremely well. That interview has probably never been broadcast. I hope that it will receive an airing soon.

It is not just domestic savings and domestic investment that the Labour party's policies would jeopardise. Inward investment would also be at risk from the xenophobia of the Labour movement. The TUC conference, by an overwhelming majority, condemned inward investment as alien. I have, since then, challenged the hon. Member for Dunfermline, East five times to dissociate the Labour party from that attitude. On each occasion, he has refused to disown the views of his party's paymaster. Now that some TUC leaders have backed off from that policy, surely he can do likewise. I give him the opportunity now to dissociate the Labour party from the attack on inward investment. How extraordinary— [Interruption.] Either he still believes—

Several Hon. Members

rose—

Hon. Members

Give way.

Madam Deputy Speaker

Order. This is an intolerable House this afternoon. The Minister will give way when he wants to give way.

Mr. Lilley

I wish to give way to the hon. Member for Dunfermline, East, but he is uncharacteristically rooted to his seat. He refuses to withdraw his support for trade union opposition to investment into this country. The Americans have a saying, that an honest politician is one who, when he is bought, stays bought. The hon. Gentleman carries that to extremes. He stays bought even when he is being sold out. As I say, the trade unions have themselves withdrawn now from that position. I suspect that the hon. Gentleman carries integrity to the point of ineptitude.

The three conditions of sustained recovery are clear. They are low inflation, reduced interest rates and renewed confidence. Labour's policies are tailormade to undermine all three of those conditions. The Government have brought inflation down to a little more than half the lowest level ever achieved by the last Labour Government, and it is set to fall below the German level for the first time in a generation.

Mr. Robert Sheldon (Ashton-under-Lyne)

I entirely agree with the right hon. Gentleman about the need to reduce interest rates. With the highest level of real interest rates that we have ever had for such a long time, our balance of payments is in deficit. If he wants to reduce interest rates, how would he cure the balance of payments deficit?

Mr. Lilley

The right hon. Gentleman is a supporter of the exchange rate mechanism, so I hope that he believes that we should not recklessly reduce them. We must maintain interest rates at levels compatible with our membership of it.

But I am dealing with inflation, and Labour's policies would send inflation soaring again by their extravagant spending programmes; by the higher taxes and borrowing that would be needed to finance those programmes; by the prospect of monetary relaxation; by fears of devaluation with which every Labour Government have been associated; by their minimum wage policy, which would jack up the whole pay structure; and by strengthening trade union power, which would ratchet it up further—[Interruption.] The hon. Member for Dunfermline, East might learn a little if he would desist from the conversation that is progressing on the Opposition Front Bench, although we appreciate that he is not in the learning mode.

We have got interest rates down by 4.5 points from their peak to below the average of the last decade, and within a whisker of continental levels. City forecasters are almost unanimous that a Labour Government would be obliged to put interest rates up, both to counteract the inflationary consequences of their own policies and to maintain the pound in the exchange rate mechanism before or after devaluation. The commentators differ only about how much Labour would have to raise interest rates.

The Nomura Research Institute, for example, says: It seems clear that the markets would exact a price in the form of a significant interest rate premium upon the election of a Labour government. Labour would have to assuage the market's doubts by being ready to raise interest rates. An immediate rise in interest rates of 2 per cent. might have the required effect. Credit Lyonnais is less optimistic: Our simulations suggest that the higher inflation, borrowing and balance of payments deficit under Labour would push short-term interest rates sharply higher to defend the pound—by up to four percentage points by the end of four years. This raises the possibility of a mini U-turn—similar to that by the Socialist government in France in the early '80s." Of nine major research houses which have analysed the impact of a Labour Government, every one forecasts higher interest rates.

So I have a simple question for the hon. Member for Dunfermline, East. If, as virtually every commentator expects, there was a run on the pound following a Labour election, would Labour put up interest rates to maintain present parity, or would it devalue? Every Labour Government have had to face that choice. If the hon. Member for Dunfermline, East cannot answer that question, I shall give him a clue. Every Labour Government have done both. They have first put up interest rates and then bottled out and devalued. The fact that the hon. Gentleman refuses to say what he would do suggests that a future Labour Government would probably follow the same path.

Recovery would be aborted not only by Labour's macro policies. Even the policies which Labour claims would boost activity would defer it—for example, its proposed temporary increase in tax allowances for investment in what it describes as "new technology" and "genuine innovation". I presume that business men would have to go to the Inland Revenue before making investments to obtain confirmation from their friendly local neighbourhood tax man that their investment met the definition of "new technology" and "genuine innovation" before they could go ahead with the investment, with the prospect of receiving higher allowances.

Imagine the Inland Revenue having to vet every item of investment in plant and machinery —some £40 billion a year—to decide whether each piece of equipment is sufficiently technically sophisticated. It is hard to imagine anything more guaranteed to defer or delay virtually every investment, but that is Labour's policy.

Labour's nationalisation plans would have a particularly adverse effect on parts of the economy that are now buoyant. Privatisation has liberated water, electricity and telecommunications from the constraints of the public sector borrowing requirement. As a result, all those industries have massive investment programmes. The water industry plans to invest £30 billion over the next few years, and its suppliers expect this to be a record year.

Labour could not possibly afford to invest £10 billion of taxpayers' money in renationalising the water companies without savagely cutting investment in water. It plans to renationalise the national grid for electricity and use it to control the whole generating and distribution industry. That would not merely depress spending on transmission, which is currently buoyant, but would choke off much of the huge private investment planned in conventional generating plant, orders for which amount to as much in capacity as the whole of our nuclear industry.

Mr. Donald Dewar (Glasgow, Garscadden)

If the Secretary of State is so keen on liberated water with all its virtues, why does he imagine that it has not happened in Scotland?

Mr. Lilley

Why does the hon. Gentleman not tell us where the Labour party would get the £10 billion needed to renationalise water in England and Wales? How would Labour maintain the investment programme if it did that?

Labour's policies would certainly prolong and deepen the recession. It is a mistake to assume that recoveries come about only in response to artificial fiscal stimuli. The recoveries in 1981 and 1975 did not. The retrenchment that causes a recession eventually brings about conditions that make recovery possible. Destocking runs its course and orders resume; increased saving is used to pay off debts; balance sheets are strengthened; savings flow back into capital markets; and stock markets then rise, as has happened recently, cutting the cost of capital. Companies improve their competitiveness in world markets and, as output grows again, it generates the income that provides increased demand. However, that will happen only as confidence is restored, and confidence at home depends crucially on continued success in the battle against inflation. We are winning that battle.

Mr. Gerald Howarth (Cannock and Burntwood)

Is my right hon. Friend aware that one reason why industry is hesitating about investment is because it has seen the opinion polls and the fact that there is a prospect of Labour forming a British Government? Industry knows that Labour Members have absolutely no experience of business, and industry in my constituency is horrified at the prospect of them gaining power. Is my right hon. Friend aware that, so in touch are Labour Members with manufacturing industry, the hon. Member for Derby, South (Mrs. Beckett) came to launch Labour's "Made in Britain" campaign in the West Midlands by going to an excellent company in Cannock that distributes American capital equipment.

Mr. Lilley

My hon. Friend is absolutely right. Confidence depends on another Conservative election victory, which is why markets rise when we are ahead in the polls and fall when our support flags.

Despite what the hon. Member for Dunfermline, East says, the recession is not exclusive to this country. It has happened in many other countries, including America, Canada, Australia, New Zealand, Finland and Sweden, and it is spreading elsewhere. Confidence in the world economy is crucial.

Mr. Stuart Bell (Middlesbrough)

Will the Secretary of State give way?

Mr. Lilley

I shall give way in a moment.

That is why the Government attach so much importance to a speedy and successful conclusion to the GATT Uruguay round. Success will boost confidence and stimulate trade. Failure would destroy confidence and revive protectionism. In the 1930s, protectionism turned a severe recession into a prolonged slump. Labour Front-Bench Members never mention that issue, and the reasons are clear—they do not understand its importance and they have always been hostile to free trade.

Mr. Bell

The Secretary of State gave a list of countries experiencing recession, but he did not mention Japan. Is Japan experiencing a recession or not?

Mr. Lilley

The Japanese message delivered at Davos, along with that of many other countries, showed that it is clearly experiencing a very marked slowdown in its economy. If any Labour Member pretends that recession is not affecting other economies in the world, he is living in a dream world.

Mr. Brian Wilson (Cunninghame, North)

May I pursue that point a little further? The other day, the Prime Minister specifically said that Japan was in recession. Does not the Secretary of State agree with the Prime Minister?

Mr. Lilley

I shall say quite clearly that that economy, like many others, is slowing down and experiencing the effects of a world recession.

It is always difficult to be sure, until several months after the event, when a recession has given way to recovery. The question is not which precise month the recovery did or will begin but how we can ensure that growth is sustainable, soundly based and enduring. We are set to ensure that. The outlook for this decade is even better than for the 1980s. It remains tough for many businesses, and no one is more aware of that than I am, as I am in constant contact with businesses from every sector and every region of the economy.

I know that demand remains weak, but industry is fundamentally strong—much stronger than it was a decade ago, when we were emerging from the last world recession—because of the profound changes that we introduced during the 1980s. We have improved industrial relations, restored incentives, removed burdens and released enterprise. As a result, we have started to reverse a century of relative decline. The 1980s were the first decade in peacetime, for more than a century, when our economy grew faster than that of France or Germany.

The changes have been greatest in our weakest areas. For example, manufacturing productivity grew faster than not only our main European competitors but any other major industrial country, including Japan. Our industrial relations have been transformed, from among the worst in the world to among the best in living memory.

The competitiveness of our industry is demonstrated by its success in world markets. During the past 10 years, the volume of our exports of manufactured goods has risen more rapidly than those of France, Germany, the United States and even Japan. The ultimate credit for those achievements goes to the business men and women and those they employ. Our policies merely open the opportunities, restore incentives and remove obstacles. The businesses have seized the opportunities, responded to the incentives, created the wealth and won the markets.

Why cannot the Labour party ever bring itself to acknowledge the achievements of British industry? Can any Labour spokesman show me a single speech that he has made paying tribute, not to the Government, but to British industry and the successes that it has chalked up in recent years?

Mr. Ian Bruce (South Dorset)

Is it not surprising that the hon. Member for Dunfermline, East (Mr. Brown) spoke for more than 40 minutes on a subject chosen by the Opposition but did not say one word of how Labour party policy would improve this country's industrial performance?

Mr. Lilley

It is extraordinary, but characteristic. We rarely hear anything much from the Labour party about its own policies.

Mr. Frank Cook (Stockton, North)

On a point of order, Madam Deputy Speaker. Is it not characteristic that the Secretary of State has allowed Government interventions, not Opposition ones?

Madam Deputy Speaker

That is not a matter for me, but for debate.

Mr. Lilley

It is extraordinary that Opposition Members do not intervene even when given the opportunity to disassociate themselves from policies if they wish to do so.

Mr. Paul Flynn (Newport, West)

Will the Secretary of State join me in welcoming the enormous success of the British invention—the transputer—a computer on a chip, which has been marvellously successful throughout the world? How does he react to this afternoon's announcement that the factory that produces it in Britain is to close and the jobs go overseas because the Government have failed to invest in the company? The Government abandoned that British company—the investment of British taxpayers—and sold it at a knockdown price. The computer will continue to be manufactured and be hugely successful, but it will be manufactured in France, Italy and the United States of America—[Interruption.]

Mr. Lilley

I do not respond with the relish shown by Opposition Members. I shall talk on the precise subject of the encouragement of innovation, and research and development in a few minutes—[HoN. MEMBERS: "What about the answer?"] I shall first deal with a recent Opposition broadcast—[HoN. MEMBERS: "Answer the question."] What I have to say is relevant.

The Labour party's most recent party political broadcast constituted—

Several Hon. Members

Answer the question.

Madam Deputy Speaker

Order. Give the Minister the opportunity to answer the question.

Mr. Lilley

It was no surprise that none of the Labour spokesman on industry were considered fit to present the broadcast, as we know that not one of them has any experience of industry, let alone manufacturing industry. But what was strange was the choice of David Puttnam as presenter. I like his films, but he represents service industry, not manufacturing, and is best known as one of the country's rejected exports. He left this country for Hollywood amid great fanfares, declaring that it was too small for his talents—

Mr. Tom Clarke (Monklands, West)

Will the Minister reflect on what he has just said about the British film industry? He said that it was a service industry, not a manufacturing industry. Is that why we have lost so much in terms of our balance of payments under this Government and why the film industry has been hit so hard by the recession?

Mr. Lilley

Having told us how wonderful it would be in America, David Puttnam came back here, and in the broadcast he asserted that a range of equipment in a typical British home— from televisions to personal computers—was mainly made abroad. That is simply not true. Britain exports many more television sets than it imports. The Leader of the Opposition should know that, because there are three television factories in south Wales, not far from his constituency.

Mr. Neil Kinnock (Islwyn)

I shall bring the Secretary of State back to the subject that he evaded earlier. There was a transputer factory in south Wales that employed my constituents and those of my hon. Friend the Member for Newport, West (Mr. Flynn). That factory is now closing down. The company,. Inmos, was established under a Labour Government and sold by the Conservative Government to EMI, which sold it to the Thomson company, which is nationalised. Does the right hon. Gentleman derive any joy from the fact that a British innovation— developed here, financed by taxpayers' money and turned into a profitable success—will now be produced entirely in France? Will he give us an honest answer?

Mr. Lilley

I do not derive any joy from that, but I do not agree with the right hon. Gentleman that the Government should invest taxpayers' money in the company. If, God forbid, the right hon. Gentleman were ever to become Prime Minister, would he invest taxpayers' money in it?

Mr. Kinnock

The right hon. Gentleman knows very well that the reason Thomson took the company into France was that it operates within an infrastructure of enterprise that we shall establish here. That is why, even in the circumstances that the right hon. Gentleman describes as a world recession, France is still more successful, in every respect, than Britain under this Government.

Mr. Lilley

That is a frank admission that the Labour party will reconstitute the National Enterprise Board. I shall remind the right hon. Gentleman of its history. It invested in 102 companies, 35 of which went to the receiver or went bankrupt. Some 27 of those companies were sold at a loss, and only 30 of them returned the taxpayers' money. That is the industrial record of the policy to which the right hon. Gentleman wishes to return.

However, I am not surprised that the right hon. Gentleman wants to turn attention away from the embarrassing party political broadcast that the he entitled "Made in Britain", while denigrating the achievements of British industry. The broadcast pretended that nothing in the kitchen was made in the United Kingdom, but 85 per cent. of kitchen units are made in this country. It pretended that all hi-fis were made abroad, but What Hi-Fi? magazine puts British manufacturers top for quality turntables, CD players and speakers, and states that the single best hi-fi product is a British-made amplifier. That industry can do without denigration from the Labour party.

Mr. Puttnam was equally wrong about personal computers. Britain not merely invented them, but leads Europe in producing them. Nearly one in 10 personal computers sold in the world is made in Scotland. The Confederation of British Industry recently hailed the transformation in Britain's manufacturing base during the 1980s. Its report, "Competing with the World's Best" showed that Britain's importation of manufactured goods as a proportion of gross domestic product was almost identical to that of Germany—so much for the message that the Labour party was trying to convey.

Mr. Roger King (Birmingham, Northfield)

My right hon. Friend suggested that there was no connection between David Puttnam and a Labour Member in terms of the party political broadcast, but there is a tenuous but realistic link. David Puttnam produced an excellent film, "Chariots of Fire"; chariots have wheels. The message of the Labour party's political broadcast was that we should all buy British. It was no wonder that Opposition Members could not present a buy-British policy, as Labour Members buy chariots in the form of French cars.

Mr. Lilley

That is absolutely true. To mark the very day of Labour's "Made in Britain" campaign, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) invested in a Citroen.

The Government's priority is to strengthen further our industrial base, particularly by encouraging innovation. Economies grow not by doing the same old thing in the same old way but by constant innovation—not necessarily by quantum leaps and new inventions but by constant improvement of the products and processes in incremental steps.

Mr. George Howarth (Knowsley, North)

What computers does the right hon. Gentleman's Department use?

Mr. Lilley

A whole range, including a large number of British computers. I have recently met one of the largest manufacturers of small computers and endeavoured to see that he had the maximum possible access not just to my Department but to the whole Central Computer and Telecommunications Agency network—

Mr. Howarth

So the Department uses foreign ones too?

Mr. Lilley

British and foreign, of course. But we do not pretend that the British ones are foreign.

We need to accelerate the pace of innovation as each decade follows the previous one. Labour's approach to this problem, in so far as it has one, is far from innovative. It is a knee-jerk call for more Government spending on research and development, for more complex tax fiddles and for more state-run quangos. Those are precisely what we do not need.

Already, a higher proportion of research and development in this country is financed by the state than it is in most of our competitors' countries—far more than in Japan, for instance. Tax fiddles do not work; they distort decisions, and their costs are often twice their benefit. Quangos without commercial motivation are likely to impede rather than ameliorate successful innovation. The fact is that the Government spend a higher proportion of our GDP on civil research and development than the Japanese Government. Our research is often immensely successful academically. We win more Nobel prizes than any other country except the United States of America—more than Germany, three times as many as France and 14 times as many as Japan.

There is, however, all too little spin-off into commercial development and industrial activity. The answer is not more public spending but to break down the barriers that impede commercial exploitation and the development of our intellectual capacity in the academic science base, to bring industry and the science base closer together.

There are two kinds of barriers: institutional and cultural. We have already done much to reduce the institutional barriers and to remove the internal obstacles. As a result, contract research at unversities has much more than doubled since 1984, and collaborative research under our Link programme is growing fast. Already, about £350 million has been committed to it.

In many ways, the cultural barriers are more deep-rooted and are harder to remove. They pervade academic, business and social attitudes. Cultural attitudes cannot be changed by legal fiat. They can be changed and encouraged only by a series of small steps, individually insignificant but cumulatively effective. That is why the Government have established an innovation unit in my Department, manned not just by officials but by secondees from business, people of the highest calibre with successful experience innovation in industry.

We believe in taking advice from industry, not in telling business what to do. The unit's remit is to analyse, formulate and help to implement changes that will remove institutional and cultural barriers to innovation in business and the science base.

One cultural barrier in this country is the low esteem that used to be accorded to engineering. It is vital that we recognise the crucial importance, demanding intellectual nature and economic relevance of the engineering profession. I welcome the steps being taken by the professional bodies to unite. That will give the profession a more powerful voice.

Mr. Robert Litherland (Manchester, Central)

I have been listening to the right hon. Gentleman's words of wisdom about engineering. This weekend I shall be going to GEC, where I will relate the words of the Minister to cheer up the workers who, however, will be on a picket line because 142 of them are being sacked. The inner-city area of Manchester has lost 20,000 jobs. What will the right hon. Gentleman do about that? Will he intervene and invite Mr. Weinstock to a meeting to talk to the workers and keep GEC going?

Mr. Lilley

One does not succeed in business by propping up and artificially sustaining given manning levels, however tragic it may be—and I agree that it is—when jobs are lost. If we are to have long-term solutions rather than short-term responses, one of the key actions to take is that of enhancing the prestige of the engineering profession. That is why I attach such importance to it.

I was pleased to give Government support to the premier engineering award recently—the McRobert award— to enhance the profession's prestige and standing. Today the first national innovation lecture is being given before a distinguished audience at the Royal Society, jointly sponsored by us, the Royal Society and the engineering bodies. I am delighted to add that the lecture is being given by Akio Morita, the founder of Sony and one of the outstandingly successful innovators in the world. He is also a good friend of this country.

Finally, I welcome the CBI's recent excellent report on manufacturing, "Competing with the World's Best", which sets the objective of attracting more of the brightest and best young people into careers in engineering and manufacturing. The CBI rightly emphasises the renaissance of manufacturing which began in the 1980s, and it condemns those who deny that fact and the achievements of our industry.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

I am sure that the right hon. Gentleman accepts that Rolls-Royce is synonymous with quality. Indeed, it is the only remaining wholly British-owned company in the car business. Would he like to send a message to my constituents who have experienced a 47 per cent. increase in unemployment, including their utterly brutal ejection from their jobs by Rolls-Royce?

Mr. Lilley

My Department has recently taken up on behalf of Rolls-Royce cars some of the problems in the American market that severely affect it. I presume that the hon. Lady does not share the belief of the hon. Member for Dunfermline, East (Mr. Brown) that there is no severe recession in the United states: there is, and the problem has been aggravated by the tax on luxury cars there. We are doing all in our power to have that tax withdrawn so as to help the company and the hon. Lady's constituents.

Earlier today, the Labour party issued an eight-page press release about the recession, including not a word about Labour's policies. The hon. Member for Dunfermline, East made only the most cursory reference to his party's policy. Why does Labour shrink from spelling out the details of its policies? The answer is that it has been intellectually paralysed by the collapse of socialism throughout the world, on which its whole political thinking used to be based.

This is not just my view; it is the view of Robert Harris, a Labour sympathiser, and he reached it in an article which merits reading out: The truth is that Labour … is perilously close to brain dead … Where is the brainpower to galvanize the country and return a Labour Government? Sometimes in the right light Labour looks more impressive than it has for a generation: disciplined, talented, responsible, well-presented"— and lovely suits, one might add— then you stand still for a moment and listen and you can hear … nothing. It is eerie. It is like walking down a street built on a film set: the technicians have put up wonderful frontages, but behind them—thin air. He concludes: It is often said that previous Labour Government were blown off course. But at least they had a course to be blown off.

That is why Labour Front-Bench spokesmen fall apart under questioning—they lack any underlying intellectual coherence. They have given their policies no sustained thought. They have had 13 years in opposition to rewrite their lines and to rehearse them, but they have been, for them, 13 wasted years.

All this shows up in the drama over the Opposition's policy for the recession. In act I, the right hon. and learned Member for Monklands, East (Mr. Smith) announces a £1 billion cure for the recession. In act II, his right hon. Friend the Member for Sparkbrook is asked how it will be financed and replies that it will have to wait for the economy to grow and generate some spare money. What a bizarre cure; it can only be administered when the patient is on the mend. It amounts to giving the economic body a blood transfusion only when it is strong enough to be a blood donor.

In act III, the right hon. and learned Member for Monklands, East disowns his right hon. Friend the Member for Sparkbrook and says that the package would start straight away. He thus destroys Beckett's law, whereby Labour has only two pledges for immediate implementation. The right hon. Lady the Member for Derby, South (Mrs. Beckett) wisely remains silent.

The final act came this morning, when the hon. Member for Dunfermline, East revealed that not a penny of the proposed tax cuts in the emergency package for industry would reach industry before October 1993. We are back to deferred blood transfusions.

Labour's emergency package amounts to a few hundred million pounds down on employment measures, plus a temporary tax cut on account. It is simply not credible that the growth of the gross domestic product of this country, which is worth £600 billion, can be entirely dependent on Government spending of one thousandth of that amount, more or less.

In the absence of policies, what have the Opposition got in the way of people? If not measures, let us look at the men.

The hon. Member for Dunfermline, East aspires to be Secretary of State for Trade and Industry. There is no harm in that; many people want the job, and most people do hold it from time to time. But I wonder how the hon. Member's job application would look. I suppose that it would read something like this: name, Brown, James Gordon; age 40¾ business experience, none so far; good degree in history; student rector of Edinburgh university 1972–75; temporary lecturer 1976; only job in the private sector, TV producer; believes this experience would fit him to run British industry, pick winners, select strategic investment, invest taxpayers' money, set up a state bank and take over water, electricity and eventually the other utilities.

Mr. Dewar

rose—

Mr. Lilley

After today, I do not think that he would get an interview.

Mr. Dewar

I just want to suggest to the Secretary of State that the trouble with this bit of character assassination is that the hon. Members to whom he is talking have just heard my hon. Friend the Member for Dunfermline, East's speech, and they have heard his.

Mr. Lilley

They have heard from the hon. Member for Dunfermline, East not a word of policy, not a positive proposal for British industry, no recognition of the importance of innovation, sneering at free trade, despising competition. They have heard his right hon. Friend the leader of the Opposition saying that we are going back to the National Enterprise Board, to intervention, to policies which failed in the 1960s and were a dismal disaster in the 1970s.

It is clear that Labour's policies would make recession worse and delay recovery. They would hit industry at every level. Their minimum wage would destroy job opportunities for the most vulnerable. Their national insurance increases would hit vital middle management. Their top-rate increase would cripple enterprise and those who create new jobs and businesses.

Our policies have laid the conditions for sustained viable recovery. That depends above all on confidence at home and a stable world trading environment abroad. Only a Conservative Government can secure that at home and pursue that abroad.

I urge my right hon. and hon. Friends to reject the Opposition's destructive motion.

6.13 pm

Mr. Alex Carlile (Montgomery)

During the speeches of the hon. Member for Dunfermline, East (Mr. Brown) and of the Secretary of State, my mind, I am afraid, drifted away from time to time to thinking about the difference between Dennis the Menace's dog Gnasher and Lord Snooty and his pals. It strikes me that there is only one difference between those two caricatures: Gnasher uses maximum energy to minimum effect; Lord Snooty uses minimum energy to minimum effect. What we have heard in the last one and half hours or so has sounded very much like that.

We come to the House to listen to the hon. Member for Dunfermline, East with keen anticipation, for he is a very fine debater. Indeed, had he joined my profession, the law, I am sure that he would have made an enormous success of it, whether in Scotland or in England and Wales. However, in his speech today he did not do much more than set the great conundrum of our time, as he would have it: is there or is there not a recession? It was as if the future of British industry and the British economy depended upon the answer to that conundrum. I thought that he would come up towards the end of his speech, like a great panjandrum, with the answer to the great conundrum. He talked about the Conservative messenger who did not believe the message. Yet he sounded a bit like the Labour messenger who had forgotten to carry the message with him.

We heard from the hon. Gentleman a litany of entirely merited criticism of the Government's policies without any positive indication of what a Labour Government would do which I think that this House and the country are entitled to hear in a major debate, in Opposition time, the debate being of Labour's choosing, on our economy and industry.

I am not sure if it matters a jot whether we label what is happening a recession. Whatever it is, it is happening; whatever it is, we know the symptoms; and whatever it is, we, as members of political parties in the House, owe the country the duty of telling it what we regard as beiing the cure, without the snarling and snapping that is giving the House a bad name.

Something else occurred to me during the speech of the hon. Member for Dunfermline, East. He appeared to claim that there are those in industry and business who want a Labour Government, because they believe that a Labour Government could manage the economy, make the economy stronger and provide the base for manufacturing industry to grow. Yet he did not tell us who those people in industry are. He did not tell us which industrial organisations or chambers of trade—it is certainly not the Confederation of British Industry—want a Labour Government. He did not begin to address the important credibility gap, not just at home but abroad, by saying what would justify industry and business in supporting a Labour Government.

Internal confidence needs external confidence. The Labour party has failed quite wretchedly to find any external support in the financial institutions or economists of the world to encourage internal confidence if we had a Labour Government.

Labour is right in saying that the French have done better. The Government are wrong to say that we are merely victims of a world recession. The French evidence mentioned by the Leader of the Opposition was good enough to show that. The German economy is still growing at a rate of 3.2 per cent. That is a remarkable success story, particularly when one considers the problems that Germany has had with unification. It is not in recession, at least to anything like the extent of the United Kingdom. It has managed to enjoy positive economic growth, while our GDP fell by 2.5 per cent. during 1991.

The Treasury took a long time to recognise that Britain had suffered the biggest one-year drop since the great depression of the 1930s. The autumn statement projection of 2.25 per cent. growth for 1992 has been utterly discredited, and plainly was influenced by the prospect of a November election that never happened. It is likely that the fourth quarter figures due later this month will show that the economy was flat.

The cumulative cost in terms of lost output has hit £100 billion—an average of £5,000 for every British family. The Government claim to be able to call on external confidence, but they fail to do anything to fuel the internal confidence that would justify a more optimistic view of the British economy for the future.

Mr. Barry Field (Isle of Wight)

The hon. and learned Gentleman makes much of forecasts that he claims were arranged in line with the timing of a possible general election. I remind him of the words of the Liberal Democrat pocket guide to Conservative party policy, published in 1991, which stated, to its credit: The Conservatives in 1979 recognised the need for change after three decades of stultifying corporatism. If that was not a forecast of better economic prospects, what was? What would be the effect on the rural economy and on national inflation of the 50p increase in petrol prices that the Social Democrat leader advocated earlier this week?

Mr. Carlile

The hon. Gentleman is a little off the point, and he is very selective in his reading. His first quotation related directly to trade union law reforms that he knows perfectly well were supported by my party. His second point was also selective. If he will read all our policy, he will find clearly stated our determination to ensure that rural areas are protected against the petrol price rises that the Conservatives, Labour, and my own party recognise are otherwise inevitable in due course to protect the environment. The Tory party has not said that it would ensure that rural areas do not suffer disproportionately as a result. The hon. Gentleman has made an entirely peripheral intervention. I will return to the subject of the debate.

Part of the Government's failure can be seen every week in our constituency surgeries, at which small business people complain about the way in which their firms failed. Often, that happened not because they were poor managers but because they were unable to collect debts owed by other businesses that went broke. This serious problem led to the record 47,000 business failures that occurred in 1991.

Although prominence has been given to south-east England being especially badly affected by recent economic trends, Dun and Bradstreet surveys show that, in terms of percentage increases in insolvencies, Scotland and Wales were hardest hit, with increases of 77 per cent. and 74 per cent. respectively. It is not a south-east phenomenon, but has hit us all—including the rural areas where business expansion plays such an important role.

The Government's forecasts have already been caricatured by the hon. Member for Dunfermline, East, and they were bizarre. Every season in 1991 the Government presented another inaccurate forecast. In the spring, we were promised that the recession would be "short-lived and shallow", and that growth would begin again towards the middle of the year. In the summer, we were told that Britain was coming out of the recession. In the autumn, we were informed that the green shoots of economic spring are appearing once again. In the winter, the Government were driven to the desperation of calling upon alchemy— what Disraeli once called the alchemy of time. The problems of manufacturing industry will be solved not by alchemy but by sound economic policies. That means managing the economy—not the use of alchemic tubes to produce some mythical solution.

Industry has identified its own problems very clearly. The best economic predictions have come from the Confederation of British Industry, and particularly from its chief economist, Andrew Sentance. The CBI's latest quarterly industrial trends survey shows that confidence is virtually non-existent, and that new orders are expected to continue falling. Export orders declined significantly for a sixth successive quarter. Output showed a negative balance of 29 per cent., and, after a slight improvement in October, 34 per cent. of business men were less optimistic about their companies' prospects.

I ask on behalf of my party, and of small business people in particular: why do the Government not take the steps that could be taken in an enterprise economy, without nationalisation and corporatism, to revive our service and manufacturing industries? I urge the Secretary of State to say why, when business person after business person tells him, "Of course, we must have a single European currency," he continues to insist on the opt-out that is so unrealistic and damaging to British industry? Is there one senior figure in British industry and commerce who really believes that we are not bound to have a single currency in the end? Why not accept that, and play a leading role in creating it in as beneficial an environment as possible?

Why does not the Secretary of State accept the example of the German economy? Even allowing for different national characteristics, which are not unimportant, their experience is something that we could usefully follow. German interest rates have been taken out of the hands of politicians. They still exercise some influence, but they do not make the decisions. The independence of the German central bank, which is not immune to political influence, provides a guarantee of confidence in the German economy.

Why did the Government choose, when the time was right, to ignore the good sense of going into the narrow bands of the exchange rate mechanism?

Why will the Government not agree to reforming corporation tax, to guarantee its neutrality against inflation, and to index it to provide more certain benefits to business than capital allowances—which would ensure that business inflationary gains would not be taxed?

Why have the Government been so half-hearted about infrastructure projects? An obvious example is the channel tunnel. If one goes to Calais, one will see a few miles away the motorways to the channel tunnel that have already been constructed, and the train grand vitesse that is waiting to whisk travellers all over France—once they have managed to struggle to the tunnel. Why are the British Government not prepared to follow the example set by the Franch and to make it clear that the whole of Britain should benefit from the channel tunnel?

Why is it that areas where industry is growing, such as the rural areas in my constituency, not only remain deprived of road infrastructure but are subjected to the destruction of the rail infrastructure by a British Railways Board intent on setting itself up for privatisation rather than providing the services that the public need?

Why will the Government not refocus training and enterprise councils when it is clear that, although they are doing a good job in a limited area, TECs could achieve so much more if they could refocus on retraining people who are already in work rather than concentrating virtually all their resources on training those who are out of work? Both jobs need to be done. The TECs are failing to carry out the necessary retraining because they have not the resources to do so.

Why do not the Government help the small businesses that face liquidation and bankruptcy by legislating for late payment of debt to be subject to statutory interest after 30 days?

Why will they not reduce the administrative burdens on small firms by indexing employees' national insurance contributions and income tax, coupled with employee end-of-year self-assessment of tax? Why have they not provided a seedcorn capital investment programme to fund the administration costs of new projects? Such projects could be supported by regional private venture capital funds.

We did not hear the Labour party mention any of those possible measures; nor did we hear the Government tell us what they would do to drag business out of the recession that has affected it so badly. I find no difficulty in telling the House that those measures can be taken, and that the people are entitled to be told what those measures are.

Ours remains a great trading nation, it remains a manufacturing nation, and it remains one of the great financial and legal centres of the world. All those sectors of our economy, however, have suffered under recent Government policy.

Mr. John Lee (Pendle)

All this is very fine, but may I ask a question about infrastructure? What would the hon. and learned Gentleman say to the many Liberals throughout the country who—as he knows full well—Opposed the expansion of the M65, especially in north-east Lancashire?

Mr. Carlile

The hon. Gentleman knows that I have a connection with that area. On occasion, I have made the railway journey from London to Burnley. It is fine until Preston; it then becomes picturesque—I think that that is the most complimentary description that can be applied. Our policy is to put as many passengers and as much freight as possible on to a decent railway system, as opposed to a system that is constantly being dismantled by British Rail.

We will not revive the British economy by means of state intervention; nor will we revive it by nationalising either our own industries or those in other countries on which we spend money; nor will we revive it by taking our hands off and not intervening in any way. There are many precedents for a well-run but not over-managed enterprise economy—an economy stimulated by fiscal measures in particular, which would generate confidence within business, and external confidence in the United Kingdom.

I have offered the House just a few of those measures. There are many more, and it is a pity that we have not heard about any of them this evening from other parties.

6.33 pm

Mr. Kenneth Warren (Hastings and Rye)

I declare an interest: I was in industry for 20 years, and I have been in Parliament for 20 years. As I listened to the remarkable, fiery speech of the hon. Member for Dunfermline, East (Mr. Brown), an amazing thought came to me. I was reminded of a phrase that is often heard in industry: he passed through at supersonic speed, generating much heat but no light.

I presume that the hon. Gentleman has now gone out to take a shower and cool off. I am sorry that he has left us, because I feel that he should be here to learn what it is like to be in industry, and what it is like to know how to deal, when fighting in foreign markets, with the effect that his speech will have on our exporters. I am sorry that Mr. Morita was not present to listen to the hon. Gentleman, for I hope to be with my right hon. Friend the Secretary of State listening to Mr. Morita. I think that Mr. Morita would be extremely worried, given his possible plans for investment in this country, not to have heard Labour's plans for the taxation of industry and its encouragement if it ever achieves power. I hope that we shall hear the answer from the Opposition Member who winds up the debate.

Mr. Alan Williams (Swansea, West)

Will the hon. Gentleman give way?

Mr. Warren

Well, seeing it's you.

Mr. Williams

As the hon. Gentleman will know, I was in charge of inward investment under a Labour Government. I negotiated with Mr. Morita in Japan, and met him in this country. He knows that we are very supportive, and, indeed, that we initiated much of the Japanese investment that has taken place.

Mr. Warren

I am not so sure how successful the right hon. Gentleman really was. I know that he meant well, but I remember that he started the Inmos programme and completely failed to invest the amount that was necessary. He made it possible for the company to set up its headquarters in the United States. That seemed to have been forgotten when the Leader of the Opposition intervened earlier.

Let us consider how industry will have received the speech of the hon. Member for Dunfermline, East. I have some questions to pose on the basis of my industrial knowledge, which I hope may help hon. Members on both sides of the House. There is no doubt that, over the past few yeaers, the country has achieved a remarkable reduction in inflation and a remarkable improvement in the level of exports. As an ex-trade union official, I also welcome the improvement in industrial relations across the country.

We have a great basis for the revival of British industry, but that revival will require a combined effort—the kind of team work that has not been affected in government for 20 or 30 years. We may not have understood as well as we should that, when we face great competitors like Mr. Morita and his colleagues—and our competitors in West Germany —we should examine the way in which they compete with us. Those countries show a unique dedication, in industry and financial services and in their Governments, to trying to act as a team. I should like to see much more of that here. I should like to take industry out of the cauldron of dissension in which it is so often placed when it is debated in the House.

The hon. and learned Member for Montgomery (Mr. Carlile) mentioned the problem of small businesses, and the difference between what they need and what is done to them by the financial services organisations. I am sure that every hon. Member has repeatedly been approached by the small business men who come to tell us that the banks are threatening to put them out of business. We know that, in fact, the banks are trying to recoup their top management errors—failed ventures in the second and third worlds.

When it is suggested to a local bank manager that it may be better to try to keep a little business going than to lose even more money by making it bankrupt, it seems that such matters can no longer be decided at local branch level. All the local knowledge of bank managers is no longer used. Only today, I heard of a major bank that apparently requires a second manager to vet all loans—a manager who has no knowledge of the small businesses to whom such loans might be made.

The banks in particular need to look at their investment policies. They need to see themselves as essential collaborators with industry. I hope that the Government, as the country's largest single customer, will examine the way in which it can play a part in reviving British industry and its opportunities. The fundamental problem is that we are not competing in world markets as well as we could be.

In terms of the manufacturing share that we have captured, we are better off per capita than those who export from the United States or Japan. Ahead of us, however, lies not only the problem of the unity of those countries in endeavouring to hold on to the markets and deny them to us, but the way in which the Japanese themselves are surging forward.

Before I say more about that, let me deal with the return on investment in this country, and the need for the Government to address the problems—which are long-standing and have spread over many periods of office—to establish whether, as the Budget draws near, some solution might be found.

Between 1976 and 1990—I say this to please the right hon. Member for Swansea, West (Mr. Williams)—the return on investment in manufacturing industry has been 8 per cent. In West Germany, it has been 15 per cent. and in Japan 22 per cent. With the return on investment being so small, it is no surprise that people do not want to invest in manufacturing industry. If one has some money to save, it seems sensible to place it where it will gain the best return. So we end up with the problems with which we are familiar. Over the same period, in the United Kingdom, £2,000 per man was invested in industry. In West Germany, it was nearly £3,000 per man, and in Japan it was over £5,000. It is a better bet. The team spirit across the economy encourages people to invest in industry in those countries and helps them to hold on to world markets.

We must not despair, as we so often do, about the ability of British industry to rise when it is given the opportunity. The Japanese have invested in Britain and brought the team spirit here. One has only to look at the performance of Mr. Morita's Sony and the Nissan company in Sunderland to see that British workers, given the opportunity, out-perform the parent companies in Japan. It is splendid to know that Japanese televisions from south Wales and motor cars from the north-east are being exported back to Japan. If we can get our act together, we can beat them all. That is not just rhetoric. We know from experience in our constituencies and our opportunities to visit factories that there is the willingness, determination and ability to conquer.

That is a base—I am again referring to the Budget—from which more should be done. From my industrial experience, I believe that we are doing all that from too narrow an educational base. In West Germany and Japan, twice as many young people complete studies up to A-level. If one is to do a good job in engineering, one needs to be equipped not just with the tools of the trade but with the intellectual breadth of learning that can enable one to use those tools most effectively. I should like to see the Government look at ways of raising the quality of education and keeping more people in our education system up to A-level.

I should like to remind the Government, whom I loyally support, that there is a need to look at research establishments, whether they are Government sponsored or in private industry. We are funding far too few alpha-rated research projects. Only about 30 per cent. or 40 per cent. of the projects put forward are receiving funding. Those projects are the seedcorn for five, 10 or 15 years' time. In domestic electronics, it is a couple of years before patents are out in the marketplace, and in the pharmaceutical industry it can be 10 to 15 years. Greater attention needs to be paid to sowing the seedcorn to ensure that it grows.

In the forthcoming Budget, we could also look at training. British industry is achieving great things, but technicians and craftsmen attend, on average, one course in 14 years of employment. Think what we could do if we had the same level of training as West Germany or France. Overall, employees in industry attend one course in 33 years or one course in a 45-year period in industry. That is not good enough. However, the Government alone should not be responsible for that. The captains of industry should look to the way in which they are running the training courses for their employees. They should not sit back and wait for Government action. If we are to meet the problems that we will face in the future, we need more investment in training.

The Japanese and the Germans—our major competitors—are waging a patent war against us, and major problems will arise. We turn in about 24,000 patents a year. The Germans turn in 31,000—a substantial increase on our figure—but the Japanese turned in 10 times that amount—309,000—in 1988, the last year for which figures are available. The Government should look to their agencies to try to produce data more up to date than those over three years old. It is immensely difficult to do corporate planning, let alone produce political manifestos, if one has to rely on statistics that are so out of date.

Mr. Stuart Randall (Kingston upon Hull, West)

The hon. Gentleman is highly regarded on industry policy, and we always listen to him with care and interest. He talked about a poor return on investment—I think that he used the 8 per cent. figure. How does he advocate breaking in to the chicken-and-egg problem of getting investment going but not being able to do it when the return is so low? Does he support the Government's almost totally hands-off industrial policy, or does he feel that some greater level of intervention is necessary in order to achieve a better return and thereby higher rates of investment in industry?

Mr. Warren

With great respect, not because I am a Conservative, but because of my experience in industry, I would stick to our policy rather than that of the Opposition.

I have talked about planting the seedcorn and about training. The initiatives must come particularly from industry to make it more worth while to invest. The problems of industry will not be solved simply by throwing money at them. Throwing taxpayers' money at those problems is simply a waste of workers' wages. We must raise the quality of those working in industry so that they can be more competitive. That will attract investment. We must get away from the candy-floss opportunity for investment and show that it is far better to put money into production lines.

The Government should look seriously at the fact that they are the largest single customer in the country. The Government buy £4 billion-worth of goods and services each year in information technology. Half that is taken up by the defence industry. The Government buy 20 per cent. of all British output. That is not a form of interventionism. The Government are buying what they need. Surprisingly, government is the most labour-intensive business in the country, and it certainly needs more information technology.

The Government must look at the way in which such purchasing power affects the corporate strategy of British companies. People queue up to sell to Boeing and to Marks and Spencer. I should like to see them queuing up to sell to the Government, because they are a good customer. If we can get better buyers in government, we will get better value for money and lower taxation. That is the intervention of common sense.

Having listened to the stirring of muddy waters from the Opposition Front Bench, I must convey a feeling that I know runs throughout industry. Industrialists and workers do not have confidence in the Labour party, and I trust that it will not succeed in the vote tonight or in the election to come.

6.48 pm

Mrs. Audrey Wise (Preston)

There is a place in my constituency called Strand road. Preston is an attractive town, but I cannot pretend that Strand road is an attractive place. However, it is an important place. It has been the heart of industry in my constituency. It has two large factories—British Aerospace, which is in the process of closing, and GEC, where the workers are worried about their prospects and the lack of orders for trains. If one goes around Preston, one will find closed factories, factories with greatly reduced work forces and factories with worried workers.

After 13 years, the Tory Government still keep talking about long-term solutions. I have a five-year-old grandson so I know exactly what five-year-olds are like. A five-year-old from 13 years ago is now an 18-year-old wondering about the prospects for the future. To that 18-year-old, those 13 years have offered ample opportunity for many a long-term solution, but all he or she faces is a long-term mess.

Manufacturing employment in the north-west has fallen by 37 per cent. since 1979; 322,000 jobs have been lost. Even according to the rather fraudulent means by which employment figures are now calculated, unemployment in the north-west is more than 152,000 higher. The Secretary of State says, "Be optimistic." I rather favour optimism, but if one is in a snow storm, optimism cannot keep one warm. I favour positive thinking, but, as a gardener, I know that it will not protect geraniums from the frost. Optimism is very nice and is very useful, but it does not guard against the harshest facts of climate or economic climate.

The Government's amendment does not mention unemployment, but it complains about the social charter and the national minimum wage. Presumably the Government think that workers must try to maintain their jobs by being willing to accept any wages and conditions. I do not think that that is what workers in my constituency want. They want useful, secure jobs that pay good wages and offer good conditions. A Government worth their salt should be prepared to say, "Yes, it is partly our responsibility to create the conditions in which that will happen."

Tory Members in my area seem to think that it is my fault that jobs at British Aerospace are under threat and that I am responsible for the Government's defence procurement policy. That is remarkable. I have a straightforward view on defence. It is essential to defend the country, which will cost money, but we should ensure that it costs as little as possible and that the primary purpose of defence expenditure is saving and creating jobs in our country. I also think that that makes defence sense. From an industrial, economic and defence point of view, British Aerospace workers rightly object strongly to the build up of non-UK arms industries.

Mr. Roger King

What is the hon. Lady talking about?

Mrs. Wise

I am talking about the fact that British Aerospace's management has told me that they are hindered by the Government's procurement policy, which consists of going into the marketplace as if they are buying butter and seeing what is cheapest, regardless of its effect on the company's capacity to plan ahead.

Mr. King

I was guilty of saying, "What is the hon. Lady talking about?", because I understand that Labour's policy is to slash defence expenditure and not to encourage overseas arms sales, to which British Aerospace is resolutely committed. It confidently expects to conclude a substantial arms deals in the Persian Gulf area shortly. Would an incoming Labour Government tear that up?

Mrs. Wise

I have tried to explain in words of one syllable that, despite the Government's policy of high arms expenditure, defence jobs have melted away like snow in summer. I have also tried to explain that I favour a rational policy of forward planning and of ensuring that defence expenditure keeps our workers in employment. I am sorry if the hon. Gentleman cannot follow that.

Mr. Lee

Will the hon. Lady give way?

Mrs. Wise

I have just given way to the hon. Member for Birmingham, Northfield (Mr. King). That is quite enough.

I do not share the enthusiasm of the hon. Member for Northfield for arms exports. I do not want workers in my constituency to depend on other people's wars and suffering for their jobs. That is not the way in which they would prefer to earn their living, given an opportunity for useful and peaceful production. A Labour Government will lead us towards useful and peaceful production. I shall do my share to encourage that.

An Opposition Front-Bench spokesman visited Preston today and spoke about the defence diversification agency, which I believe will be of much value to British Aerospace workers in my area. That constructive policy will build for the future and will not depend on other people's wars or on giving dictators and repressive regimes the means to keep their people down.

The contract for maintenance work on tornado aircraft has just been awarded to RAF St. Athan. I believe that taxpayers' money should be used most effectively. The skilled workers who built the Tornado, who know it through and through, are in my constituency. Seven hundred jobs are at stake. I do not understand the logic of investing £40 million to maintain the Tornado at St. Athan. The Royal Air Force personnel will inevitably be less efficient, because the trained workers are in Preston.

We fear that, because it may prove extremely difficult to find enough Royal Air Force staff at St. Athan, some of the workers from Preston will take the civilian jobs that may become available there and end up doing the same work but away from their families. That is not a logical way to go about things. The Ministry of Defence must invest in maintenance by using civilian workers who are already familiar with the aircraft they maintain.

Next door to the British Aerospace factory which is closing is GEC, which needs orders for trains. It is years since British Rail ordered any high-speed trains. I should like to give some international comparisons. InterCity uses class 91 (IC225) first generation trains. Class 93 (IC250), if produced, would be the second generation. Although InterCity has become the only profitable railway system in the world, it has been required to cut over £90 million from its 1991–92 budget to help ease the overall British Rail financial crisis. That is cloud cuckoo land.

While British Rail is compelled to slash its investment programme, the Swedes are now on their second successful generation of the X train, and Japan is on its third generation of the bullet. The French are on the third generation of the TGV and are exporting it in mass to Spain and America. The French Government have decided that the TGV Atlantique is of economic benefit to a depressed region and have provided additional investment finance.

Why has British Rail had to slash its investment? Because there is no coherent transport policy in this country. I am pleased that Labour is committed to a coherent transport policy which will consider at one and the same time transport needs and the industrial development brought about by supplying those transport needs, including export shop windows. That would also save employment and improve the environment.

All we have from the Government are quarrels among their Front Benchers about how to privatise British Rail, not about how to get investment or to keep trains running. They are quarrelling about the exact forms of the companies under privatisation, no doubt because they want whatever form of privatisation will give the best return to their friends. My constituents in GEC need Labour's transport policy. With that, there would be orders for trains. With orders for trains, the work force at GEC would have secure jobs.

Lest anyone thinks that that is just my gloss on matters, Labour's programme for transport says that there will be a substantial and sustained increase in investment in new transport infrastructure.

The position is the same with buses. We have seen the killing of a coherent public transport bus system. I get complaints from some people that too many buses run past their doors because they are on lucrative routes. I get complaints from others that there are no buses. If people live two miles outside a town, and have toddlers or are elderly, they might as well live on the moon.

Labour stands for the development of public transport, which needs buses. Good public transport needs new buses. Deregulation opened the way for a good secondhand market in buses, but it did nothing for Leyland Bus. Vigorous trade in clapped-out vehicles is no good for safety or for the environment, and it is deplorable for Leyland Bus in the Lancashire area. Labour will go a long way towards curing our transport ills.

Although I have concentrated on manufacturing, I must remind the House— I may be the only hon. Member to do so—that all that has a knock-on effect on retailing. It takes longer to get through, but it has got through now. In Preston, Lewis's has a fortnight's stay of execution. It is a perfectly good shop. Why did it go bust? The answer is that people cannot afford to buy. Employment in retail trade also depends on a healthy economy.

In not mentioning unemployment in their amendment, the Tories are guilty of a give-away. They have talked about high tax. That shows nerve, coming from the party which increased VAT from 8 to 17.5 per cent., with adverse affects on retailing and everyone apart from the best off. Not too many pensioners pay income tax, but all pensioners pay VAT. VAT is well known as a highly regressive tax.

When the Prime Minister tables an amendment which complains about high taxation, he should take the message to heart. We stand for fair taxation. Fair taxation would help to bring about a healthy economy, because ordinary people would have more money to spend in the shops. If we have a sensible policy on investment in manufacturing, people will be able to spend their money on goods made in Britain, thus keeping jobs. In that way, the British economy would cease to be a leaky bucket and would have recycling and increased creation of wealth. I look forward to that day.

Several hon. Members

rose—

Mr. Deputy Speaker (Mr. Harold Walker)

I must remind the House that between now and 9 o'clock speeches will be limited to 10 minutes.

7.6 pm

Dame Jill Knight (Birmingham, Edgbaston)

Is it not interesting that, whether we are talking about the level of teenage pregnancies, drug-taking, homelessness, the retention of hedgerows in the countryside, crime or the economy, the Labour party's reaction is as boringly predictable as Pavlov's dogs: everything is always solely the fault of the Conservative Government. Like Auntie Maggie's home-made remedy, which I should like to sing, that judgment applies to everything, without exception. But unlike Auntie Maggie's highly prized medicament, it is certainly not "guaranteed never to fail". It will fail because the electorate can see straight through it.

The hon. Member for Dunfermline, East (Mr. Brown), who opened the debate for the Opposition, has given a lulu of a hostage to fortune in that wonderful quote: There is no world recession. My word, that will come back to haunt him; it will probably rank in future with that famous phrase, "I see no ships." There are one or two other examples.

The voter knows well that every major trading nation is having trouble with its economy. The Labour party is unhappy that news should come out that there is a recession in places such as America, Australia and New Zealand. With injunctions being very much in the news, I fear that the Labour party may slap an injunction on any news about recession in any part of the world. I see no point in denying that Britain is in recession too, or that I worry about unemployment and am deeply concerned about the number of bankruptcies. But there is good news, too.

British industry is in a much better condition than it was 12 years ago. Inflation is below the EC average, corporation tax is the lowest in the industrialised world and, in spite of some of the things that have been said, we attract far more inward investment than our competitors. I am thinking especially of France and Germany.

I was interested to read in the Financial Times that, of the top 500 companies in Europe, 181 are British, 63 are French and 63 are German. The Economist and Director magazine commented that, of the top 400 European industrial companies, 120 are British, 75 French and 71 German. So we are not doing badly in comparison to our neighbours across the channel. We are sound and competitive and we are no longer the sick man of Europe, although I remember when we were.

I shall suggest one or two ways in which the Government could help businesses in trouble. As the hon. and learned Member for Montgomery (Mr. Carlile) said—he has now left the Chamber—one of the major problems faced by small and medium sized businesses is bad debt. I agree with him about that, but I was interested to hear that his party is apparently committed to doling out lots of taxpayers' money to help any firm that happens to be in difficulty. That way disaster lies, but bad debt is another question.

In Birmingham we are proud of our spanking new convention centre. It incorporates the finest concert hall in the world, a theatre and every possible adjunct for every possible conference on any subject. Many firms were engaged in building it and did a fine job. The scheme cost about £160 million and we understood at the time that it would create 2,000 new jobs directly and 10,000 support jobs before very long. That was good news, but more than 100 companies which helped to build the centre have not been paid. Some have been forced into bankruptcy because of that non-payment, not because the major firm has gone out of business.

A constituent came to see me in desperation only last Friday. He was on the verge of calling in the receivers. If he does so, that will mean the loss of 50 more jobs in my area. I have not yet been able to find out exactly why that is happening. Perhaps the city council has not handed over the money or perhaps there is a dispute about the final bill, but what matters to me is that good, honest, hard-working small business men are being made bankrupt not because they are inefficient or because of bad workmanship but because money owed to them is not being paid

Some time ago we debated the possibility of the enforcement of the payment of interest on outstanding bills. The Federation of Small Businesses is not in faovur of that, although there is an argument for it. The federation calls for a reform of the small claims court and wants any judgment for payment outstanding after 28 days automatically to trigger an enforcement hearing. That might be the answer, but I want my right hon. and hon. Friends to consider the terrible problem of bad debts.

Mr. Flynn

Will the hon. Lady give way?

Dame Jill Knight

No, I am short of time.

In the west midlands, nothing is more important than the motor industry. Tens of thousands of small businesses provide components for cars and the west midlands stands or falls by the success of the car industry. Nothing would help us more than the removal of the 10 per cent. surcharge on new car sales, which I believe to be a tax on a tax. The industry badly needs such a shot in the arm.

I do not like businesses being unpaid tax collectors, but that has been happening for some time. However, I hope that it will not be extended. I do not like the requirement to make deductions from employees who do not pay the community charge, and there are one or two further issues that I would mention if I had the time.

There is a problem with a European Community law on contaminated land. It is very important in my area and, in others that derelict land is reclaimed and revitalised and that all its possibilities are exploited. In the west midlands there is a very important firm called Richardson Developments. It bought about 10 or 12 years ago an ex-Ministry ordnance works which manufactured Royal Navy guns and gunnery equipment. There were 20 units on the site which were in reasonable condition and 20 more have been built, so it is now a reasonable size of about 40 small industrial units.

The site borders Coventry canal and one day a tenant washed a machine and caused slurry to go into the canal. Richardson Development, not the tenant, was yanked into court, which was a terrible thing to happen to such a firm. Nothing happened to the firm because the judge threw out the case. Richardson was given a conditional discharge for two years and there was no financial penalty but it was a waste of time and money. I am concerned that banks are now issuing warnings about the draft EC directive which say that firms could be liable for the clean-up costs of their industrial customers. It is a complicated matter but one which I hope my hon. Friends will consider. We shall not take any lessons from the Labour party about how to handle the economy. Labour's policies would ruin it and we would lose all that we have gained. We should once again be in thrall to militancy and the unions. The harm done by militant trade unions to the car industry in the 1970s was incalculable. It all but ruined that industry.

I am worried now that the Labour party say that it will end capping. Birmingham city council is spending the most amazing sums on the most extraordinary projects and I hope that the burden of these crazy ideas will not be put on industry because that would be just one more death knell.

7.16 pm

Mr. Alan Williams (Swansea, West)

In the 10 minutes available to me I shall touch on a subject which is virtually taboo, especially in the run-up to an election. What I have to say is inevitably anathema to both Front Benches, although I understand why that should be so. However, it is an issue about which hon. Members from all parties are concerned. I am talking about the rate of exchange in relation to recovery.

Before we enter into any silliness such as sloganising and catcalls of "Labour devaluers", let me point out that the Heath Administration effectively devalued by 20 per cent. and the Conservative party lived happily for 20 years with a floating exchange rate. They never thought that it was a sacred cow which could not be discussed.

Let us at least try to be realistic, because we all want to get out of this mess. I recognise the fact that neither Front Bench can say the things that need to be said, but, in the light of my experience in four economic Departments and as one who is an economist by academic background, I am absolutely convinced that the goal that we seek is not attainable with the present rate of exchange.

The Prime Minister said that we were set for steady and sustainable growth. I want to explain why that is not possible and I shall bore the House with three figures which demonstrate the magnitude of the problem. From the North sea we have had a £130 billion balance of payments benefit in a decade, but, in that same period, with that bonus to the balance of payments, we ran a deficit of £25 billion. Therefore, our basic non-oil deficit is £155 billion. That is where Conservative Members start and also where we start on the other side of an election. So I hope that we can try to consider the matter in a mature and sensible way—I do not mean that patronisingly.

The Prime Minister and the Chancellor have said that the Government's chosen option is a consumer-led recovery. But a consumer-led recovery is an illusion. We have heard of fool's gold; a consumer-led recovery is fool's IOUs.

For long-established reasons, people in Britain have a tendency to spend 36 per cent. of the extra money in their pockets on imports. If we get the consumer-led growth for which the Chancellor aims, and £9 billion is put into circulation as a result of the change in mortgage interest rates, it will draw in an extra £3 billion worth of imports.

If Conservative Members think that I am being alarmist, I ask them to read the autumn statement—the Chancellor made provision for the balance of payments deficit to increase by £3.6 billion in this financial year, because he recognised the inevitability of the process that I have described.

I have three precedents to show that this is a not a short-term or new situation. I do not pretend that it is caused by one party or another. It so happens that my precedents are taken from Conservative Governments, but I do not make the point in a party-political sense. I wanted to take one precedent from each decade.

In 1958, Harold Macmillan went for growth. In October of that year, for the first time since the war, the Government got rid of all credit controls. Twelve months later, there was the never-had-it-so-good election. Car sales had gone up by 30 per cent. and sales of domestic consumables by 20 per cent. Six months after the election, all the credit controls had to he restored, and by 1964 we were running a deficit which in terms of today's currency was £5 billion.

In the 1970s, the Heath Administration's having inherited what in today's terms would be a £5 billion surplus, Lord Barber—then a Member of the House and Chancellor of the Exchequer—made a dash for growth. Again, he removed all credit controls. Within a short time, inflation had risen to 15 per cent.—that was before the oil crisis hit us— and the balance of payments was in deficit again.

The Labour Government inherited that 15 per cent. inflation—and a fourfold increase in oil prices was still to come. Again, the dash for growth via consumer spending did not work; it ran into the ground. Conservative Members are very unkind to their colleagues sometimes —as no doubt we are, too—and the Chancellor of the Exchequer who was lionised for winning the 1987 election for them has now been attacked because his credit policies are in danger of costing them the 1992 election.

Those are three clear precedents that demonstrate what I am trying to explain to the House. Hon. Members can check them all for themselves. The lesson is that the higher the consumer-led growth, the higher the consequent trade deficit—and therefore the greater the pressure on the pound, the higher interest rates have to go, and the deeper the subsequent deflation —or even recession—becomes.

We all share the aspiration to get inflation down until it equals that of our competitors, but let us not believe that that is the way out. Reducing the changes in our prices to the level of the changes in our competitors' prices merely stops the gap widening. At least from that time we should be competing on equal terms, but the existing gap in our basic competitiveness would remain. We should have to get our inflation below the level of our competitors' inflation and, in the case of Germany, we all realise that that is an improbable target.

The only way out is export-led growth—in that I include import substitution. That can be achieved only if, at a stroke—to use a political phrase—we make our industry more competitive in the short term by removing our current competitive disadvantages. That means realignment of the currency.

Even that would work only if it were matched by a massive programme of increased manufacturing investment. It is no good devaluing without investing. We must have investment in order to take advantage of the situation. We have slack in our capacity now, so we should have an initial boost, but in order to reap the medium and long-term benefits of a devaluation, manufacturing investment must be there, to carry forward the export benefits established.

I should like to kick aside a silly argumentative delusion that is being allowed to gain currency—I am mixing every metaphor in the book. That delusion is the idea that inward investment is dependent on the existence of a single currency, or on absolutely stable exchange rates. History and the experience of everyone in the House show the opposite.

In the 1970s. when the Labour party was in government, we got inward investment to the highest level that had ever been achieved—that was with a floating pound. In the 1980s the Conservative Government, too, got inward investment to the highest level that had ever been achieved until then. That, too, was achieved with a floating pound. So the idea that I mentioned is an irrelevance which we can ignore.

The tragedy is that after 12 oil-rich years we are in recession. There has been no miracle —the Government have walked not on water but on oil, and now they are trying to walk on hot air. All that we have is a promise from the Prime Minister that British industry is the most competitive that it has ever been. I take that with a pinch of salt. The Prime Minister did not see the recession coming, and he did not see it when it arrived, yet he has seen the end of it before anyone else is aware of any light at the end of the tunnel. Sadly, the Government are living a long and a big lie. They hope that they can hold the election before the public discover the truth.

7.26 pm

Mr. John Lee (Pendle)

My constituency has 55 per cent. of its people employed in manufacturing—the highest level in the country. Our dominant industries are textiles, aerospace and furniture. I have a personal involvement in tourism, in manufacturing, in construction and in investment, as detailed in the Register of Members' Interests. I therefore welcome the opportunity to contribute briefly to the debate.

I start by looking back to 1979, when the Government came to power. Industry and business were demoralised; taxation on individuals had gone up to 98p in the pound; there were controls on prices, pay and dividends. Business men were talking about emigration rather than expansion. The cry from business was, "Set us free, and we shall deliver the goods." That is what the Government did when they came to power.

We scrapped dividend controls, price controls and pay controls. Tough decisions were taken in the early 1980s. In constituencies such as mine, things were difficult. Textile mill after textile mill closed and unemployment rose to 16 per cent. in those difficult years. But during the 1980s, industry recovered and confidence returned. We succeeded in generating an enterprise culture in this country. Our enterprise zones—such as those at Lomashaye and White Walls, in my constituency—have been a great success. They are now chock-a-block. Our enterprise allowance scheme, too, was a great success.

Management became more professional. Increasingly, we became a strike-free country. The economy grew and, as the Financial Times said in an article today, about 500 new businesses were created each day during the 1980s. Sadly, towards the latter part of the 1980s, we had an excess of credit, an excess of borrowing, an excess of optimism and some over-inflated egos in the business community; the bubble burst. What lessons can we learn from that?

Too much of the expansion then, usually by acquisition, was away from the core business. There was an excess of borrowing and bankers too often threw caution and financial prudence to the wind. Too many financial deals and business deals were fee-driven, and the merchant banks and stockbroking firms had vested interests in deals being done. Too frequently, entrepreneurs ignored the time factor and failed to realise that it takes many years to build a successful business. Too many tried to develop too quickly.

Over the past two years, we have been through a difficult and tough world recession. Trading conditions are difficult now. It is tough out there—unless, of course, one is a receiver. The conditions in my region in the north-west in relative terms have improved. Unemployment in Pendle, although it sadly rose, is now just short of 7 per cent. compared with the 16 per cent. of the 1980s, and our unemployment is now below the regional and the national average. As I said last week in the House, the north-south divide has ceased to exist as an issue.

The Labour party's proposals offer industry very little. The hon. Member for Preston (Mrs. Wise) talked about a defence diversification agency. She is not here now, which is sad because I had planned to ask her whether she could give us some examples of products that those industries might manufacture. The Labour party has talked about a minimum wage. As Neville Bain, the chief executive of Coates Viyella plc and one of the leading figures in the textile industry, has pointed out, if a minimum wage were introduced, a considerable number of textile jobs would be transferred overseas. The higher taxes which the Labour party proposes would be unlikely to stimulate business men to invest. Labour seems to imagine that if there were a Labour Government and a Labour Chancellor, he would find a lever in the Treasury labelled "economic growth" which no one else had been able to see.

I want to speak briefly about tourism. I was Minister with responsibility for tourism and I am now involved in tourism as chairman of County Holidays Ltd. and of ALVA, the Association of Leading Visitor Attractions. By the year 2000, tourism will probably be the world's No. 1 industry, yet in this country, we treat it as relatively minor and unimportant. Rocco Forte, the chief executive of Forte plc and the president of the British Hospitality Association wrote in an excellent article in the Evening Standard this week, tourism employs one in 15 of the world's population and one in 10 in Europe. In the latter 1980s, tourism and hospitality created almost 1,000 net new jobs a week. I urge the Government when they consider the possibility of reorganising the structure of government and Departments to consider after the election bringing together tourism, the arts, heritage and, perhaps, the film industry under a senior Minister to raise the overall profile of those sectors.

I look forward to the Budget on 10 March as one that will help industry and which will stimulate investment. I hope that there will be measures to help the motor car industry, as other hon. Members have said. I hope that the Budget on 10 March will provide the backdrop for a further and steady reduction in interest rates. The recovery in the economy will certainly come. The general election itself is causing many business men to hold back from investing. They are waiting for the result of the election. After the election, when we have been returned to office, there will be a surge in confidence and the country will then be on its way to recovery.

7.34 pm

Miss Joan Lestor (Eccles)

The Secretary of State for Trade and Industry seemed to be saying two or three things. One was that there was a world recession which meant that there was nothing that the Government could do and that it was not their fault. He spoke as if that absolved him from any responsibility for what has happened in the country generally and especially in my region over the past few years. If it is true that the recession is a world recession, which I do not accept, the Government have no right to say to the electorate, "Vote for us and we will put everything right," because they have said that there is nothing they can do because the forces are outside their control.

My hon. Friend the Member for Dunfermline, East (Mr. Brown) made a speech of his usual standard and was very commanding. The Secretary of State taunted my hon. Friend for having no business experience and he taunted others by saying that they had no industrial experience. He said that we needed men and women with such experience. If the result of 13 years of this Government is lying at the feet of people who have had business and industrial experience, and if we consider the unemployment, the closures of business, the poverty, the misery and the cuts in services which have swept across the country, especially in the north-west, all I can say is thank God some of us are business and industrial virgins. Those with experience have not made a very good job of it.

I was interested in the speeches by my hon. Friend the Member for Preston (Mrs. Wise), who is no longer here, and by the hon. Member for Pendle (Mr. Lee), who also comes from my region. I am glad, because I visited Pendle recently, that unemployment has begun to fall there. However, 7 and 8 per cent. are high levels of unemployment. That is a lot of jobs many people in his area and in mine are suffering the worst possible effects of unemployment.

The Government said that we spread doom and gloom around. Things are very gloomy in the north-west. It is very miserable in the north-west especially for many of the young people who grow up, leave school and then have nowhere to go. Business failures in the north-west rose more than 50 per cent. between the third quarter of 1990 and the third quarter of 1991. There was a 63 per cent. rise in bankruptcies and a 43 per cent. rise in liquidations. Most of those involved small businesses, many of which had been encouraged by the Government and by the banks to invest and to get on the road to prosperity.

Many of those involved come to see me about their difficulties, and I am sure that other hon. Members see similar people. Their difficulties include interest rates which went so high for many people after they had started their businesses and bad debts which they are unable to collect. The Government, having encouraged them to go forward, stood back and did nothing to help them.

In our region, we have had 322,000 job losses, one of the worst figures in any region. Although there has been a small rise in jobs in the service sector, which we were told would be the compensation, it has been the smallest rise of any region, at 6.4 per cent., which has not compensated for the enormous loss of jobs in manufacturing industry.

We have had an increase in unemployment of 98.6 per cent. in the north-west since 1979. That is a lot of jobs and a lot of people. Many people have been unemployed for at least one year and many others have been unemployed for more than six months. The tragic figure is that 36.6 per cent. of those unemployed are aged between 18 and 25. Many below that age have never had a job. Many of those between 18 and 25 have never had a job.

What has happened to that group of young people in this recession? What has happened to those who have never had a job has rubbed off on their younger brothers and sisters in our schools. They see no prospects and they have no hope. Daily from the television screens the message that comes out to them is that if they have not got a car—ours is among the smallest proportion of car owners in the country—if they have not got a telephone—the same applies to telephones—and if they do not have all the signs of prosperity, they are failures.

I agree with the hon. Member for Hastings and Rye (Mr. Warren) about the need for training. Our policy on training is important because we have lost so many skills through unemployment. People have been unable to be trained to keep pace with new developments. Therefore, the important part of our policy, which must be put into operation the moment we become the Government in the next few weeks, is to start training not only those coming on to the labour market, but those who have been without a job for a long time. People find that the developments of technology and industry have overtaken them because they were not trained in the necessary skills. That is a waste and a tragedy.

Mr. Christopher Hawkins (High Peak)

Is the hon. Lady making a pledge that the Labour party will find the money to increase the training budget?

Miss Lestor

That is an interesting question. It has saddened me over the years that the Government have always found the money—be it very little—to pay people not to work. Armies of unemployed people are dependent on social security and many are hard up. However, when people such as my hon. Friend the Member for Preston, who pointed to the needs of the country, suggest that we put money into training people to work, the hon. Member for High Peak (Mr. Hawkins) asks what money we shall use. The Government have wasted millions of pounds in revenue from North sea oil by telling people not to work and that there is no job for them. When hon. Members ask such questions they should consider reality.

The Government have talked about regional assistance, but, in the north-west region, preferential assistance has been cut by 80 per cent. since 1978—the largest cut in any region. As the hon. Member for Pendle said, the north-west has suffered from a deep decline in traditional industries that have not been replaced. Rather than invest, as is our policy, the Government have made cuts. My hon. Friend the Member for Preston referred to the job losses in our area and the fact that thousands of people have been put out of work. Jobs have been lost at Pilkington, in British Rail Engineering Ltd., in Bass, Marconi and British Aerospace in my constituency. Those skills will have been lost should those jobs ever return.

An important by-product of the recession in the north-west and in many other parts of the country is its effects on the young. A survey by Birmingham education department and the Low Pay Unit recently came up with the horrific figure that 43 per cent. of children in this country—some of them aged 10 but many others aged 11 or 12—are working illegally in supermarkets, garages, hairdressers, retail shops, takeaway outlets and so on. It is appalling that the Government have allowed that to happen by failing to implement the Employment of Children Act 1973. They have repealed legislation that protects young people. The Government have allowed illegal working because it is a way of ensuring that the kids of the unemployed can work. They are being exploited and the Government are keeping quiet about that and will not protect them. That is absolutely disgraceful.

The Government say that they are the party of experience and of industry and that they understand such things because that is their background. However, the people of this country, particularly those in the north-west where there are many marginal seats, will say that, if the country has got into such a state under those men and women of experience, they should be replaced by those who have been out of power for so many years, but who understand what they have suffered and know how to put it right.

7.44 pm

Mr. Ray Whitney (Wycombe)

The hon. Member for Eccles (Miss Lestor) gave us just one positive glimmer of Labour party policy, which was the need for training. The hon. Lady should know that the Government have increased expenditure on training in real terms by two and a half times from what it was under the previous Labour Government. We have a proud record. One can add to that the amount that is spent on training by industry itself —and I have to take issue with my hon. Friend the Member for Hastings and Rye (Mr. Warren) on this, because he grossly underrated the amount spent by industry. That figure is, by definition, not calculable, but it is at least £20 billion and it could be as much as £30 billion.

The hon. Lady, for the most part, followed her hon. Friend, the well-known doomster from Dunfermline, the hon. Member for Dunfermline. East (Mr. Brown) in denigrating British industry and the British economy. We are of course all accustomed to that, but the sad aspect is the damage that he does outside the House through his remarks.

The point of the debate is not whether there has or has not been a recession. Of course there has been a recession in virtually all parts of the industrialised world. We have to identify the true position in Britain and get away from the fog of doom and gloom of the Labour party. We then have to consider which policies offer us the best way out. That is difficult, because we have heard nothing from Labour Members about their policies.

The Opposition choose to ignore the situation in the rest of the world and the transformation that has occurred in this country since 1979. It utilises the sad national propensity to denigrate ourselves. We all suffer and understand the problems created by the media and the fact that good news ain't news: bad news is news. The intellectuals rush to spread the bad news as quickly as possible.

In 1979, a group of 16 left-wing economists published a book entitled "Is Britain dying?". Of course, there were 16 answers of yes. In 1981, a group of 365 left-wing economists asked a similar question.

Mr. Irvine Patnick (Lords Commissioner to the Treasury)

Three hundred and sixty-four.

Mr. Whitney

I am grateful to my hon. Friend. Again, those economists got the answer wrong. Now, the latest pundits such as Jeremy Paxman—socialists to a man and woman—have seen their theories collapse. Socialism has collapsed throughout the world, and all they can do is attack the free-market economy.

Such economists and the Opposition are harming Britain, but reality is very different. Everyone understands that, despite today's difficulties, management skills are stronger and management direction and industrial relations are very much better. In the 12 months to November 1991, only 800,000 days were lost in strikes, compared with an annual average of 13 million days in the 1970s. We all remember the winter of discontent and the fact that, during the last 12 months of the last Labour Government, more days were lost in strikes than during the whole of the past five years. That is the background.

We have heard much of profitability and it is important to put on the record the fact that the profitability of British industry has increased. The latest "Economic Situation" report of the Confederation of British Industry pointed out that the United Kingdom's profitability rose markedly in the 1980s and that profit margins in the United Kingdom appeared to rise faster since 1980 than in either France or Germany. That is a fact which we do not hear from the denigrator of Dunfermline or any of his hon. Friends, but it is a fact.

The average annual increase in inward investment in Britain in the 1980s was 6.8 per cent. The average in the other G7 countries was 4£6 per cent. Such facts are either not known or not recognised by Labour Members. But because they are a reality, inward investment into Britain is so much higher—from Japan, the United States, and even from Germany—than investment into other EC countries.

The investing countries know that they have in Britain a positive and beneficial climate for industry. That fact is unrecognisable from the gloomy picture that is always painted by Labour Members. Despite the problems of recent years, there has been in Britain a net increase of 420,000 new businesses since 1979. No wonder the benefits of investing here are recognised, as are the results of the measures that the Government have taken to control inflation.

The next step forward—we must be positive, because we can expect nothing positive from the Opposition—must involve creating confidence. As many independent commentators, from the Governor of the Bank of England downwards, agree, the basic work has been done and the right conditions set. We must now continue to build up confidence so that the savings that people are now accumulating will result in a demand-led recovery.

We constantly hear the siren voices of Opposition Members echoing the cheap way out—devaluation—but Governments of both complexions since the war have tried that policy, and each time it has failed. An article in The Economist of 4 January 1992 was headed "The whine about sterling." It concluded that the best hope of getting both prizes—lower interest rates and lower inflation—is for Britons to stop whining. If the markets were convinced that sterling would never be devalued, the pound would quickly rise. I am certain of that. But the one way to ensure that it would not happen would be for the whining voices among the Opposition to be heard and, heaven forbid, for Labour Members to be elected to power. That would be the way to destroy all hope of fulfilling the glowing prospects that, with the sound basis that we have created, beckon Britain in the 1990s.

I hope that responsible Opposition Members will in future have a care. They should not seek to alarm their constituents by making cheap political points in the election campaign. They should have a sense of responsibility over what has been achieved, for we need recognition of our successes and the prospects that lie ahead.

7.53 pm

Mr. Paul Flynn (Newport, West)

We have heard much in the debate and elsewhere about inward investment. We have heard not a word about, and there is no measure of, outward divestment. It is similar to trying to fill a bath with water and failing to notice that the drain plug is out.

In my constituency during the last year, and even today, we are witnessing the outward divestment of jobs overseas. A year ago, there were 850 jobs in Newport at Inmos Ltd. Today there are 450, and we have heard that, unless there is a massive investment programme, Inmos will close. What we are experiencing at Inmos is a kind of extended moonlight flit. Millions of pounds' worth of equipment has been moved abroad, along with key personnel, and while 400 jobs in the assembly department still exist, they are now in Malta and Malaysia.

Hon. Members will recall that Inmos was established as an investment of taxpayers' money to guarantee a British stake in high technology. Inmos had a remarkable record of survival and success in that highly competitive market. The transputer—the computer on a chip—was a quantum leap forward in semiconductor technology, and it is entirely British-designed and British-made.

As long ago as 1989, Inmos was selling 50,000 of the chips for about £50 million, a substantial sum but still only a small part of the £2 billion annual market for personal computers. In 1989, the first generation of transputer chips formed the smart nucleus of Japanese video telephones. They are used in the laser printers that are used in large numbers, in the House and elsewhere, and in the American space programme. The chip inside that equipment was not made in Osaka or California but designed in Bristol and manufactured in Newport.

The second generation of the transputer, the T-9000, was launched in April of last year and is manufactured in Newport. It is 10 times faster than its predecessor and is poised for mass sales, in collaboration with IBM, for a galaxy of exciting new uses, such as in colour fax machines, medical diagnostic equipment, high resolution personal computers and the amazing three-dimensional computers known as virtual reality.

Skin diseases, speech defects and diabetic blindness can easily be diagnosed and monitored with the help of computers fitted with transputers. They have other mundane uses for the mass markets, such as in controlling washing machines, in fuel injection systems of cars and in many military and defence uses. The transputer is now one of the most widely used processors. It was the first to offer the parallel computing equivalent of the power of supercomputers. A stunning fact about the British transputer is that it can carry out 200 million instructions per second.

The development has had some support from the Government and from the Esprit programme, but we are seeing jobs falling away because nobody is defending them. We shall find the French-Italian company, SGS Thomson—it has taken over the company, although it has no interest in it; it is a nationalised organisation under the control of the French and Italian Governments—taking action which will result in this miracle chip, which was created through the investment of British taxpayers' money and the innovative genius of British scientists, being manufactured overseas.

After a month of speculation, Inmos today announced that, unless there is a massive investment programme, the Newport factory will be closed and manufacture of the T-9000 will be transferred to Texas, France or Sicily. Two other fabrication centres have been established as part of the Thomson empire.

Electronics Weekly of 29 January last reported an industry analyst as having said that transferring the production technique, known as Elite, from Newport to three other sites seals Newport's fate … That pretty well puts the final nail in Newport's coffin. That is a dire warning for my constituents.

The Inmos story is ideological. Instead of a judicious mix of free companies operating in the market, with Government intervention where appropriate—it is absolutely appropriate in Europe, because the French, Italian and other Governments defend their industries to a degree that we do not—the Inmos story is descending into tragedy.

It was born as an innovative, far-sighted, bold venture by the last Labour Government. It was shunned by the Thatcher Government, with their arm's-length disdain. They were always blind to its marvellous potential, so they neglected it and starved it of investment. Finally, they abandoned it and sold it at a knockdown price to the multinational company, SGS Thomson. We are now experiencing a crisis, the seeds of which were sown by the blind folly of that Government. The French and Italian Governments have a different view of how to treat their industries and we now know that, especially the Italians, are offering a rich investment in Inmos. That is why the company will be swallowed up by that fat, multinational company.

Inmos—a British invention, created by British genius and British work—has been left defenceless in the cut-throat competition of international trade. Unless the Government act immediately, Britain will lose for ever a dearly bought, irreplaceable lead in the phenomenal world of tommorow's miraculous technology.

8.1 pm

Mr. James Cran (Beverley)

The many industrialists I know in all sectors and regions of the country will be disappointed with the manner in which the hon. Member for Dunfermline, East (Mr. Brown) introduced the debate. Many of them will regard it as a smidgen too flippant and funny, and a wee bit too long on rhetoric rather than on the facts that they want to hear in a considered judgment about industry's problems and opportunities.

Because the Opposition has made serious charges in the motion, I did the same as the hon. Member for Dunfermline, East—I went to the CBI. In the CBI news of October 1991 I found an article entitled "All sectors and regions expect upturn next year"—in other words, in 1992. The hon. Member for Dunfermline, East places confidence in the CBI and so do I. I believe what it says about what will happen in 1992.

To be clear about what the business community believes, I shall quote from the first paragraph of that article: A survey of firms' plans for the year ahead shows that all industries in all regions of Britain expect 1992 to see an upturn in business next year. That was not a small survey of industrial opinion but covered 685 firms in 18 major sectors of the United Kingdom.

I then checked my region of Humberside or, as we like to call it, east Yorkshire. The Humberside Economic News for January 1992 says: the County of Humberside looks to the future with optimism having just won one of the largest inward investments of 1991 with the announcement by Kimberly-Clark of their intention to build a 750 job paper products factory at Barton-upon-Humber. I could quote other paragraphs from that economic review but, essentially, it is extremely optimistic. It concludes: Recession in the UK and the US, and the political changes in Europe, have all contributed to lower investment horizons but Humberside continues to be resilient. I note that Opposition Front-Bench Members are not listening—perhaps they do not want to.

Humberside Economic News was not produced by Conservative central office, or by me. Had I produced it, Opposition Members would have questioned me. It is produced by Labour-controlled Humberside county council, and it is perfectly clear that it does not support the Opposition motion. Rather, it leads one to examine what is really happening in British industry. The hon. Member for Dunfermline, East did not deal with that. He told many funny anecdotes and made many funny allusions to advertising companies but he did not deal with what Opposition Members are fond of discussing—manufacturing industry.

I have a large manufacturing company in my constituency—British Aerospace. The aerospace and defence industry in this country has achieved annual sales of £13 billion and a positive trade balance in 1990 of £1.1 billion. That industry is the second largest of its kind on the globe, beaten only by the United States. I wonder how industrialists and members of the work force in aerospace and defence companies throughout the country will regard the speech of the hon. Member for Dunfermline, East. I know perfectly well that most of them will think that they cannot go to Opposition Members for support because they simply run industry down time and again, and it has happened again this evening.

I should have liked to ask the hon. Member for Dunfermline, East why Rolls-Royce, for instance—a superb company by any standards—has quadrupled its share of world markets for jet engines since 1987. It did not achieve that out of thin air but because it has a superb management and work force and because the Government are creating an economic environment in which the company can make such achievements. The Opposition may say that, rather than quadrupling its share of world markets it should have increased it by five or six times. Let us hear how they would achieve that. We are proud to be able to say that that company, under a Conservative Government, quadrupled its share of the market in jet engines.

I could mention other companies in that sector, such as Dowty, GEC, Lucas, Smiths Industries and Westland, all of which are world leaders. I do not call them world leaders. Rather, the latest document on manufacturing produced by the CBI does so. Indeed, their competitors in other countries also know that they are world leaders. It is a pity that the Opposition do not know that.

I had intended to mention motor vehicles, but I suspect that my hon. Friend the Member for Birmingham, Northfield (Mr. King) wishes to speak, and I would not dream of intruding on what he will say because he is more expert than I. Instead, I shall speak about the mechanical engineering sector, which is a £32 billion industry. In 1990, 40 per cent. of its output was exported. It has a trade surplus with the European Community and a positive worldwide balance of £2.5 billion. Should we not be proud of such a record? I know that my hon. Friends are proud of it and I want to hear what Opposition Members have to say about it. They have not mentioned the achievements of the mechanical engineering industry, because it does not suit their book to do so. It is a successful sector.

The mechanical engineering sector has seen the resurgence of the machine tool industry to the extent that it is now the seventh largest in the world. Specialist magazines on that subject show that British machine tool technology leads every company in the world in sensors, grinding techniques for jet engine blades and laser-cutting techniques. Again, it did not suit Opposition Members to mention those facts.

I could mention chemical and many other sectors, but I do not have the time. I simply wish to illustrate that British companies have, in the past 13 years, undertaken a major restructuring programme. They were fat, flabby and inefficient in terms of world markets, and that is no longer the case.

In the early 1980s, ICI's return on assets was below 10 per cent., which was an utter disgrace by any international standards. In the second half of the 1980s, that increased to 20 per cent. on average return on capital employed. That was achieved under a Conservative Government.

British Steel was suffering from an advanced case of rigor mortis. Now it is privatised and is one of the most capable and efficient deliverers of steel products. Its pre-tax profits for 1989–90 were about £773 million. Why do not we hear about that from Opposition spokesmen? The reason is that it does not suit them, because they want to run down British companies and British industries by devious means. They think that, if they say something often enough outside this place, someone may believe them and vote Labour. I am merely trying to show that British industry has a lot to shout about, and Conservatives are doing the shouting.

I have heard much tommy-rot today on the subject of regional policy. It is easy for Opposition spokesmen to say, "Let's have regional policy." What does that mean? It simply means that, in the 20 years between 1964 and 1984, successive Governments spent £20 billion on regional policy to create a net 500,000 jobs, for about £40,000 each. They were like snow on a spring day—here today and gone tomorrow. If Opposition Members want to pontificate on regional policy, I should like to hear something novel, not a regurgitation of policies that have failed in the past. I am ebullient about the future of British industry, but only if we have a Conservative Government. If a Labour Government get into power, we will be back to the days of 1970s and failure.

8.12 pm

Mr. Tom Clarke (Monklands, West)

The brilliance of the speech of my hon. Friend the Member for Dunfermline, East (Mr. Brown) has been underscored by the simple fact that not one Conservative Member could bring himself or herself to say a word of praise of the speech of the Secretary of State. That tells us all we want to know.

What has emerged from the debate is that there is a recession, and it has been made worse by Government policies, from which we in Scotland are clearly suffering. The Prime Minister and his colleagues are in an undignified rush to find the maximum number of countries that are in difficulties. Even when they try to identify them, they list countries such as Japan and end up with egg on their faces. Any time now, I expect the Prime Minister to start complaining about bad economic circumstances in the republic of Bolivia—even then, I am not sure that the comparison would stand the Government in good stead.

In the remarkable performance of the Secretary of State —[HON. MEMBERS: "Hear, hear."] The judgment of Conservative Members on such matters is well known to the House and to the country, so the intervention does not come as a surprise. The remarkable speech of the Secretary of State contained a reference to the film industry, an important sector of British industry. If ever there was a dismissive reference, that was it. That industry was promised so much—the present Home Secretary said that it would have a renaissance, but it is not producing as many films as it did after the war.

It is also clear that there is a recession in Scotland, where unemployment in December 1991 stood at 227,000 —26,500 more unemployed than a year ago. We are talking about people, families and communities such as mine in Strathkelvin and Monklands district.

I asked my two local district councils for up-to-date information on their problems. I should love to quote everything they said, but time would not allow me to do so, even if I were not limited to 10 minutes. Strathkelvin district council said: In October 1991 total unemployment in Strathkelvin stood at 2767 which represented an increase of 23.9 per cent. over the year. The figure for December rose to 2857, ie. approx. 8.4 per cent.

In the past year, a list of recent redundancies have been effecting the Monklands district. Conservative Members almost seem to ask us to believe that such a scene does not exist. However, there have been redundancies in William Purdie, Henry Bannerman, Shanks and McEwan, Terex, R. B. Tennant, MSA, Cobalt UK, Honeywell Bull, Geest, Tibbit and Britten Ltd., Lambertons, Lane Orthopaedics and Alexandria Workware. In addition, there has been the spin-off from the appalling announcement about Ravenscraig. If such statistics do not reflect a recession, I do not know what does. Earlier, we were asked to rely on the record of British Steel, but it was that company which said that it had brought forward the proposals for Ravenscraig by two years due to economic circumstances. Who created those economic circumstances?

The references to the Confederation of British Industry do not seem to have included what we know to be its views in Scotland. The "Scottish Quarterly Industrial Trends Survey" produced by the CBI in January showed that the recession in Scotland remained severe and that what signs there may have been of recovery had, if anything, disappeared, not become stronger.

The survey reported: General business confidence and export optimism have deteriorated markedly over the past four months … Profit margins continue to be squeezed". It continued: Investment intentions in plant and machinery have worsened since October". When my hon. Friend the Member for Dunfermline, East and others referred to those simple facts, they were giving an accurate account of what was happening in our constituencies. We would be failing in our duty if we did not draw such factors to the attention of the House and offer the Labour party's alternatives.

The steel industry has been decimated, but where are the proposals for manufacturing? Ravenscraig is being closed and Gartcosh in my constituency still stands idle. One reason for that is that the paper recycling plant on which so many hopes were based cannot get off the ground due to Government policies and high interest rates.

The House underestimates at its peril the problems that we in Scotland face. I am sorry that no SNP members seem to be present, but their policies, particularly during the recession and the economic nightmare that the Tories have provided for us, are most uninviting. Industry will not be helped by separatism and a separate Scottish currency. It will not be helped by export papers and documents having to be exchanged at the borders of our two countries. Above all, industry will not be helped by separated interest rates to which the SNP policy of independence will inevitably lead.

Dr. John Reid (Motherwell, North)

Where is the Scottish National party today?

Mr. Clarke

SNP Members are absent during a vital debate on unemployment and the recession in Scotland —a debate which is about more than mere slogans. The European Community is moving towards economic and monetary union. Therefore, for the SNP to argue for a separate currency seems to be an argument more suited to the 19th than the 20th century.

I believe that Scottish people will consider such matters sincerely. It cannot be good for Scottish industry to cut the home market from 55 million to 5 million, and to make England simply a foreign market. That is a high price to pay. I prefer the alternatives that the Labour party offers, which include a Scottish parliament able to deal with these matters in a more informed way than has been obvious from the remarks of Conservative Members this evening.

During these difficult times, we demand a strategy for investment, for manufacturing and for exporting. Our growth rates do not begin to compare with those of Germany, France, Italy and Spain. There must be a new commitment to investment and training; it is that commitment which Labour policies represent.

The right hon. Member for Finchley (Mrs. Thatcher) —[HON. MEMBERS: "Hear, hear."]—who still seems to have some support on the Conservative Benches, but very little elsewhere, promised a property-owning democracy, among other things. I must tell those who still applaud the right hon. Lady that people in my constituency who face high interest rates and whose businesses are going to the wall, not to mention high mortgage rates and the consequent repossessions, are looking for the same sort of apology from the right hon. Lady that the chief executive of TV-am received from her when she had the decency to write to him to say that she did not expect that her policies would lead to the outcome that emerged.

The alternatives offered in this debate are clear: stagnation with the Tories, with all the unemployment, poverty and deprivation that go with it, or progress with Labour. In the coming months, the people of Scotland and Britain will make the inevitable choice, and will go forward with Labour.

8.21 pm

Mr. Roger King (Birmingham, Northfield)

It is a funny thing, but detectives always say that the villain who has committed a crime will inevitably turn up sooner or later at the scene of his crime. I cannot say how true that is generally, but it is certainly true in politics.

The evidence of this is that, after 12 years of Conservative government, the shadow Chancellor and the hon. Member for Dunfermline, East (Mr. Brown) came to my constituency as part of Labour's "Buy British" programme, a programme designed to endorse investment in training and manufacturing. These two came to my constituency to visit the Rover plant, the former home of Red Robbo, of trade unionism run riot, of overproduction, dereliction, nationalisation and the virtual destruction of the motor industry. They came, they saw and they said that it was absolutely tremendous—the company had invested; it had new training programmes; it had an advanced form of productivity and of relations between management and workers. It represented the way forward, in fact.

Rover is not, however, an isolated example. The same thing is happening throughout the length and breadth of the country. If only the Opposition would get out and visit our businesses and factories and see the enormous changes that have taken place over the years, they would learn that Rover is not alone.

We know that the Opposition are no friends of the British motor industry—certainly no friends of Rover. Only a few days ago, when the European Court of Justice referred the £44 million-worth of sweeteners back to Commissioner Sir Leon Brittan, I was thrilled to death, because Rover and British Aerospace need the money and were certainly the innocent parties in that transaction. But the hon. Member for Dunfermline, East criticised the Commissioner, saying that he was negligent and incompetent—and he criticised the Government for being negligent. So he wants the money to be paid back. He wants to draw it out of Rover and British Aerospace even though it is being used for investment in new models and new jobs. The hon. Gentleman is clearly no friend of ours and nor is the Labour party.

Dr. Reid

Will the hon. Gentleman give way?

Mr. King

No, I am short of time, and the hon. Gentleman, not surprisingly, will not like what I have to say.

Rarely can a country have been blessed with a second chance like the one that the Government have given this country, in the form of the British motor industry. The Economist intelligence unit has said that the like of the improvement has not been seen for 40 years, as investment programmes increase and accelerate and provide the jobs and factories for people to work in over the next few years.

I offer in evidence the findings of Professor Garel Rhys, the Society of Motor Manufacturers and Traders professor of motor industry economics, who has calculated the scale of the advances being made in the British car industry. The total 1990 output from our manufacturers Rover, Ford, Vauxhall, Peugeot and Jaguar amounted to 1,290,000 units. The professor has forecast that, by the year 2000, that will have risen to 1,950,000 units. Meanwhile, the new producers, Nissan, Toyota and Honda, produced no more than 106,000 cars in 1990—they were all produced by Nissan—but by the year 2000 this group will be producing just under 1 million units. All that means that the car industry in Britain will be producing about 3 million cars a year by the turn of the century—up from a low of just under 900,000 units a few years ago. That is a tremendous improvement, sure proof that under the Conservative Government the right investment decisions have been made.

This improvement has come about because we have been able to embrace much of the technology that the Japanese have given us in the form of manufacturing techniques for lean production, which makes our manufacturing units more efficient and more effective. The process has permeated the suppliers to our great motor industry as well. World players such as Lucas Automotive, SKN, BBA, Turner and Newall and BTR are the equal of any European component manufacturers. With the opportunity to supply the expanding British car sector, they will certainly remain world players for a long time to come.

The recession should not deter the industry's plans for advancing, but we look forward to a helpful Budget to accelerate that advance. Our economy is much more car-fuelled than it was in the past. We need new sorts of cars for a greener world—they are essential for environmental improvement.

We have achieved all this by means of a number of devices. First, we reformed the trade unions. We reformed working practices, and we gave people a stake in their future through home ownership, higher take-home pay and tax reductions, which are essential to motivate working people.

We have reduced company taxation and we have accelerated our training programmes. The process will continue by establishing exchange rate stability so that we can expand our export market, which is up by 50 per cent. in the past 12 months alone. We need to embark on further cuts in taxation to stimulate the economy further and produce more customers for our products.

The Opposition claim that to get out of any recession we need an investment-led expansion programme and more training. What we really need is more customers to buy the products. If there are more customers, the training programmes and investment will automatically follow—British manufacturing will make sure of that.

We want lower interest rates and we are achieving them. We need low inflation, and we are certainly achieving that. The contrast between 1979, when we inherited inflation that had risen to 25 per cent., and today is stark. We have got inflation down to 4.5 per cent., and it will be even lower. What a contrast that is with what Labour offers the country. It offers us nothing at all. The Opposition want to adopt a minimum wage which will have a colossal impact on differentials in British industry as people try to readjust their incomes accordingly. Labour has no commitment to a road-building programme. The British car industry needs its products to arrive at the factory doors on time; we need good roads for that.

The Opposition would further increase taxation on the car. They would increase personal taxation, which would have a disastrous effect on those working on the shop floor who might put in some overtime and find themselves being taxed heavily for the privilege. The Opposition would create so-called regional development agencies, which would act as a wet blanket over investment decisions. They would endeavour to pick winners, which would mean that one company's handout was another company's tax bill.

The Opposition would end flexible working by embracing the social charter and restricting the number of hours that people can work in a week if they choose to. That would only play into the hands of our European competitiors, who are envious of our more efficient working practices.

If we try to embrace the ideals of the Labour party we will find ourselves unable to compete for inward investment. Labour talks about an investment-led recovery, but, as I have already said, the only recovery that really counts is the one that the customer will bring with him by buying the products that we make.

Finally, the Labour party would abolish the uniform business rate, which has done an enormous amount to stabilise costs. If it were not in position, small and large businesses would be held hostage. Many Labour councils, uncapped and free to spend what they liked, would, of course, turn to business and extract every last shekel which would otherwise have gone to investment and development.

The opportunities for this country have never been greater. We are at the beginning of a period of substantial expansion of our motor industry. The track record over the past few years shows that it has been producing the right quality of product for the customer in the home market as well as the export market. We hope that the Government will look very carefully at Budget proposals, so that a cut in the 10 per cent. special car tax will stimulate those very important car market sales.

It may interest the House to know that, unfortunately, the January car sales figures show a 6 per cent. decline in home market sales compared with the same period in 1991. Indeed, January's sales this year were the lowest since 1981. Much of that is offset by very much greater export sales, as a result of export-led production, but, if we want to capitalise on the tremendous opportunities offered by this inward investment, largely fuelled by Japan, but also by multinationals in this country, we have to ensure that there is a good, growing and strong home market. If we can achieve that, and I am confident that we can, we can usher in a new economic future of great significance for us all.

8.31 pm

Mr. Austin Mitchell (Great Grimsby)

I do not want to follow the hon. Member for Birmingham, Northfield (Mr. King) in that economic nonsense except to ask this: if there has been such an economic miracle and the Government have done such wonderful things, why are we in such a mess now? Why are we in a recession that is generally agreed to be becoming, if it has not already become, the worst recession since the war?

This has been a depressing depression debate. My hon. Friend the Member for Dunfermline, East (Mr. Brown) gave a brilliant analysis of the nature of the problem, but all the Minister could counter with, like a petrified parrot, was that the position would be worse under Labour. He went on to chant that mantra throughout his speech. He was a pathetic spectacle.

The Minister did not explain why we went into the recession earlier and got in deeper than any other country. He held out no hope to the unemployed, rapidly increasing in number, or to companies hanging on and struggling not to go bankrupt with the banks squeezing them in the most monstrous fashion. Small businesses have been betrayed by the banks. He held out no hope for anybody of any possibility of a recovery. All he could offer us was Micawbernomics—wait and see. If we go on squeezing inflation and get it down to graveyard levels, he said, there might, eventually, be some recovery.

To say recovery will come with low inflation is absolute nonsense. At this time we need some increase in prices, just as we did in the 1930s. There was an interesting article in the Financial Times on Monday, with Anthony Harris pointing out that Roosevelt proposed a toast and popped out the champagne when prices began to rise, because prices need to rise if manufacturing and industry in general are to make a profit. That is the trouble at the moment. Companies are exporting, but not at a profit. They are just struggling to keep going. They are throwing overboard research, design, development and investment—everything that we need, in order to survive. They have to generate a profit, and that means that we need an increase in prices.

That is the central issue that is not being faced in this debate. If we are to recover from this recession, there has to be a reduction in interest rates and in the exchange rate. the central problem now is the balance of payments. If the balance of payments is high in a recession, as it is, it will be disastrous in any expansion. We cannot have expansion unless we get the exchange rate down. A competitive exchange rate is the only way to channel resources into investment, into industry and into closing the balance-of-payments gap.

The only way out is to use the price mechanism to make exports more competitive and cheaper, to make imports dearer, and, most important, to allow industry to generate a profit on the basis of which it can expand and grow. That is the only solution to the problem. Without an expansion of demand and without channelling that demand to manufacturing in this country by making production in this country profitable, which at the present exchange rate it is not, there cannot be a recovery. We have to make it pay to produce in this country. We have to allow manufacturing to generate a profit.

Unfortunately, too, by entering the exchange rate mechanism at an overvalued rate, which was 20 per cent. overvalued in real terms against the deutschmark on the last quarter of 1986 and about 40 per cent. against the dollar, we made it impossible for industry to generate a profit, and nailed the lid down on the recession. We have tied ourselves to the German economic cycle. The Germans want to deflate, and we need to expand. We have forced industry to cut jobs, to cut investment, to struggle just to survive, to try to regain the competitiveness it has lost through the exchange rate. Companies have to run faster just to stand still, and it cannot be done.

There is an analogy in the relationship between America and Japan. America is in substantial deficit with Japan. Japan is gaining an increasing hold on the American market and taking over an increasing number of American industries and companies. In that situation, America would be regarded as a little bit daft if it went in for a full single market with the Japanese; it would be regarded as insane if it had a common exchange rate with the Japanese; and it would be regarded as totally lunatic if it entered that exchange rate with an overvalued dollar. Yet that is exactly what we have done with our major competitor, Germany, with which we are in the same situation as the Americans are with Japan. That is the analogy, and that is the trap in which we have landed ourselves.

The result must be disaster. It must mean that deflation and recession now become a way of life. This is part of a necessary downsizing—the need to squeeze us out of dollar markets and into focusing on the European market. It means a sustained balance of payments deficit. That cannot be brought down at this exchange rate. It means a sustained fiscal deficit, because unemployment will rise, Government spending will have to go up and tax receipts will go down as profits fall and people are put out of work.

We are already talking of a public sector borrowing requirement next year of over £20 billion—an underestimate, in my view. One can see the horrors to come in that situation. It means cuts in the standard of living, because industry is unable to support it. It means that we suffer in terms of trade, because the basic staple of trade is still manufactured goods. We need to produce them and to export more of them. It means that we are cutting back on our industry.

The drive motor of our economy is being deeply damaged by the prevailing economics in this country. Indeed, it is being ruined. We are losing jobs in manufacturing. Every plant we close, every job we lose, every bit of production that is lost in this country, means a worse balance of payments problem later because we shall be importing more.

We are not only in a hole; we are digging it deeper by the way that the economy is run. Nobody can make water flow uphill, no matter how hard he may try. The exchange rate is not a phallic symbol, so that we are proud when it is hard. It is not a test of our enthusiasm for Europe; it is not a means of disciplining the economy, like the dominatrix's whip. It is simply a market-clearing mechanism. It has to be brought down to competitive levels if we are to produce in this country, if we are to invest in this country, if we are to make a profit in this country, if we are to rebuild the industrial base on which everything rests, which provides the jobs and pays our way in the world, which generates the surplus for investment and for public spending and on which all depends. That base is now shrinking. It is already dangerously near the limits of viability. If this recession is allowed to go on, if no action is taken, disaster lies ahead.

We are in exactly the same situation as in the 1920s, when we went back to the gold standard at an overvalued rate. Every pundit, every party, every economist, told us, then as now, that the exchange rate was not important, that it was a means of maintaining discipline and of forcing industry to cut its costs. The consequences were ruinous and eventually we were forced, in 1931, to abandon that exchange rate.

We shall again be forced to abandon it. I want to avert the damage that would be done; the ruin that would be brought down on viable companies that might be forced out of business; the closing of pits, steel plants, and other industrial plants; and the ending of other forms of production—all of which would be viable with a competitive exchange rate—just to keep this country tied to an overvalued exchange rate mechanism. That way lies disaster.

8.39 pm

Mr. Michael Irvine (Ipswich)

In Victorian times, my great grandfather was a Free Church minister in a village not 25 miles from Dunfermline. As I listened to the hon. Member for Dunfermline, East (Mr. Brown) in full denunciation, it crossed my mind that the tradition of hellfire sermons in Fife is still alive and strong. However, while all good hellfire sermons were full of denunciation and wit—as was the speech of the hon. Member for Dunfermline, East—the best of them placed some emphasis on the positive, and that was lacking from the hon. Gentleman's speech.

It would have been a better speech had the hon. Member for Dunfermline, East recognised that, between 1981 and 1989, this country enjoyed eight years of sustained economic growth, during which manufacturing output rose by 25 per cent. overall. That was the longest period of sustained economic growth since the war.

It would have been better also if the hon. Member for Dunfermline, East had said more about productivity. Over that same period, productivity in British manufacturing industry rose by 50 per cent. Associated with the rise in productivity was a significant investment surge—particularly towards the end of that term.

That strong investment growth and substantial increase in productivity lie at the heart of the success that British exporters are enjoying today, at a time of considerable world recession, in maintaining and increasing this nation's share of world trade.

The other feature of the hon. Gentleman's speech was his consistent failure to say much about Labour policy. The hon. Member for Dunfermline, East was mighty good on the negative, but when it came to the positive, we heard hardly a whisper.

Mr. David Evans (Welwyn Hatfield)

The hon. Gentleman said nothing positive.

Mr. Irvine

He did, in that he made a few dangerous positive remarks to which I shall refer later.

I suspect that if, heaven forbid, the hon. Member for Dunfermline, East found himself Secretary of State for Trade and Industry, he would be tempted to meddle. Governments of any colour are always tempted to do that, but this Government have been better at resisting that temptation than many others. Labour Governments in particular are tempted to meddle, and their meddling is usually dangerous.

There would be pressure on a Labour Secretary of State for Trade and Industry and his colleagues to pick winners and to back projects for which commercial support could not be found. We all know how dangerous and expensive it can he for the taxpayer and the country when Governments are sucked into high-cost, commercially unviable ventures.

That apart, there would be even more dangerous party pressures on the hon. Member for Dunfermline, East, as Secretary of State, to assist declining industries, prop up uncompetitive companies, and frustrate necessary but difficult commercial decisions. Consequently, companies in the new industries that are looking to the future, and on which this country will depend in the next century, would have to pay to meet the costs imposed on an incoming Labour Government under pressure to implement the policies that I have described.

There would he a further danger. My hon. Friend the Member for Welwyn Hatfield (Mr. Evans) said that there was nothing positive in the speech of the hon. Member for Dunfermline, East, but he concluded by mentioning regional aid.

Mr. Dewar

Excellent.

Mr. Irvine

The word "excellent" echoes across the Chamber from the hon. Member for Glasgow, Garscadden (Mr. Dewar). That confirms that Labour is strong on regional aid. It always has been—but regional aid has its dangers. Labour all too often forgets the harmful effect that regional policies can have on companies in, for example, East Anglia and the south of England, which fall outside the scope of regional assistance.

My constituency of Ipswich is an East Anglian town which has the advantage of a well-balanced economy. It is strong in the financial services sector, but also boasts a significant manufacturing sector, whose companies could all too easily be put at risk by irresponsible, over-vigorous regional policies.

Ipswich industrialists already complain that, from time to time, insubstantial companies establish themselves in parts of the country that lure them with generous regional assistance, grants, and other inducements. They find themselves in competition with well-established, effective companies in other places—such as Ipswich, the rest of East Anglia, and the south of England—to which such grants and inducements are not available.

In other words, the established companies are subject to unfair competition, with the consequence that their profit margins are pared, they are forced to put back their investment plans, and they are compelled to postpone export drives, to beat off what is essentially unfair competition.

I am not against all regional policy, because there is a place for it—but if it is too vigorous and gives too much weight to political pressures from areas of the country where Labour is strong, it can inflict a lot of damage on companies and their employees in parts of the country that do not receive regional aid and other inducements.

What industry really needs is not intervention, or assistance of the kind that Labour would proffer. It needs an economic climate in which profitability is encouraged, industrial achievements are recognised and given full credit, Governments do not frustrate sensible commercial decisions and unnecessary, nitpicking, expensive bureaucratic restrictions and requirements are not imposed. With such a framework and economic environment, industry will prosper; and I believe that a Conservative Government would be far more likely to provide them than a Labour Government.

8.50 pm

Mr. Thomas Graham (Renfrew, West and Inverclyde)

It is clear to me that Ministers are conning their Back Benchers. We are facing a general election, and I have no doubt that many Conservative Members will never be back here after that. If they continue to be hoodwinked by Ministers, they are heading for an ignominious defeat. I am also amazed to note that the Opposition Benches are empty of Liberal Members—and, moreover, of members of the Scottish National party, who claim to want to fight for Scotland.

For years, I have pleaded with Ministers not to visit my constituency. Every time they do, a factory closes a week later, and 100 or 200 jobs are lost. I have asked the Secretary of State for Scotland on bended knee not to send Ministers to my constituency on propaganda visits, because I know that absolute disaster will result. Not long ago, after I had asked a Minister not to visit my constituency, lo and behold! he visited my constituency. What happened then? A factory went into liquidation, and hundreds of jobs were lost. The same thing happens every time Ministers visit my constituency.

It is all very well to talk about recession; but let us consider what the word really means. Let us put a face to recession. A young lad in my constituency was training to become a baker. I know his father and mother, and I know him very well. The lad was enjoying his training, but his employer then forced him to work seven days a week. He was supposed to be paid £8 for working on Saturday and Sunday, but he could not get that £8. The owner of the company told him that he had no rights. "Take it or leave it," he said. "You will work, you will do what you are told and you will not answer back—and I am not paying you for working on Saturday and Sunday."

The boy explained that he had to deal with some personal and private business on the coming Sunday, and that he would prefer not to work on that day. He was told that he must do so; when he persisted, he was fired.

Such people have no rights. Their rights have been taken away by the Government. The recession has made things so hard that young people have no voice: they are so desperate to find jobs that they will take anything, on any conditions. That is exactly what the Government want. That is why they have stopped young people having any rights and any say in their conditions of employment. It is disgusting and disgraceful.

Let me give another example. A security guard who spent 20 years in the armed forces and fought for his country is now unemployed. He used to work in the Talbot car factory, but it closed. What have the Government done to replace Talbot jobs in Scotland? Next to nothing.

When the factory closed, the man obtained a job as a security guard in a Ministry of Defence Establishment. He was paid £1.85 an hour, and he had to bring up a young family on that wage. No hon. Member could do that; we spend more than that on drink here in half an hour.

That man was fired because he tried to speak up for his rights. I have discovered that security guards in Ministry of Defence establishments at Coulport and Faslane are working not just 10 hours a day, but, in some cases, 30 or 40 hours consecutively. They are desperate for money— which is not surprising, given that they are being paid £1.85 an hour. They are virtually having to sleep on the job. It is appalling that the Government are not giving them proper protection and proper rights. They refused to sign the European social contract, which would have saved that security guard a good deal of heartbreak and poverty. Can it be right that we are forcing men and women to work for such an unbelievably low rate—a poverty rate? Is that not incredible?

Let me ask the Minister a question that I have asked other Ministers. Does he know the price of a pint of milk? Does he know the price of a loaf, a tin of beans, half a dozen eggs? Does he know what food costs? If he does not know that, he will never understand what he is imposing on men, women and young families.

Because of the recession, many companies in my area simply do not know where they are going. They are now issuing short-term contracts. A big shop that had not been open for long was hit hard by the recession. It had expected not to do bad business; all of a sudden, it tore up the contracts and re-employed all the work force on short-term contracts.

It gets worse. I have talked about a young man who was training to be a baker but who lost his job, and about a security guard paid only £1.85 an hour. Not long ago, my secretary was working in a catering job for £2.45 an hour. That was slave wages because she had to work around the clock. I wonder whether the Minister's wife would work for that sort of money. I am sure that no member of his family would work for such a wage. My secretary was forced to do so because of the prevailing economic circumstances caused by the Government's mismanagement of the economy.

When the Government set up local employment centres, we were told that they would provide training for all the young people in Scotland, help us to face the 1990s and compete with the rest of the world. What happened? They cut the training budget by 33 per cent. They cut 33 per cent. off the budget in Renfrewshire. It is mind-boggling that they should claim to have introduced that panacea while still denying people proper training.

I can supply the names of people for whom training was terminated and who were thrown on the scrap heap. I remember a Minister telling us from the Dispatch Box that the Government would guarantee training and a future job for every kid in Great Britain. It is absolutely—I am trying to use only parliamentary language, but it is difficult when I am talking about the problems in my area—it is disgraceful.

Since the Government took office, over half the manufacturing jobs—166,000—have been lost in Strathclyde alone. The Minister simply keeps telling us that we are coming out of recession. In my constituency, the Talbot car factory has closed, India Tyres has closed, Caterpillar has closed, shipyards have been closed, Prestcold has closed and Howden has closed. The job losses run into thousands and industries are being decimated, but the Government still blunder on.

The Prime Minister and the Chancellor say week after week that we are coming out of recession. They tell us that we are doing fine. They are like the two Ronnies. It is as if they are following a script from "Only Fools and Horses". The Cabinet is full of a bunch of comedians and ham actors. We would be better off with Del Boy and Rodney running the country.

In my area, the people are not a bunch of comedians or ham actors. The people of Renfrew, West and the rest of Scotland want the right to work. My area offers good people who are desperate for training. We offer good sites, good communications, a decent road system and good airports and sea ports. Yet the Government squander millions of lives by forcing them to stay on the dole.

The Armitage Shanks factory in Barrhead in my constituency is world-renowned. It is closing. The Government are doing nothing but weep crocodile tears while that company abdicates its responsibility to the people who made it great.

I may have made a few jocular comments, but this is no joke. It is no joke that young people in my area have no home for the future. It is disgraceful that the Government claim to want equality and a classless society while allowing young people from my area to sleep in miserable poverty on the streets of London.

I am delighted that this is probably the last time in this Parliament that I shall face the Minister across the Dispatch Box. I am sure that, when faced with the ballot box, the young people of Scotland will know where the future lies. I am sure that they and the young people of England, Wales and Northern Ireland will know that the future lies with a Government committed to providing an opportunity for people to survive. We will provide an opportunity for people to develop and bring out their best. We will offer a caring society and give everyone the right to live decently, harmoniously and peacefully. Only a Labour Government will offer that.

9.4 pm

Mr. Phillip Oppenheim (Amber Valley)

Anyone listening to the speech of the hon. Member for Dunfermline, East (Mr. Brown) today would think that everything was fine with British industry in the balmy days of the 1970s and that everything has gone wrong since. Let us inject a little fact.

In the past four years, exports of manufactured goods rose by a quarter. The aerospace industry throughout the world has experienced problems, but in the 1980s and early 1990s ours substantially increased its share of world markets and recently overtook France to become the second largest in the world. Our pharmaceutical companies—the high-tech industry that we want—are the leading exporters in the world. In the 1980s, our manufacturing output and productivity rose faster than any other major European economy.

Mr. Jimmy Hood (Clydesdale)

Absolutely untrue.

Mr. Oppenheim

That is true. I shall happily give way if the hon. Gentleman has figures.

Mr. Hood

Will the hon. Member tell the House how many manufacturing jobs we lost during the period to which he is referring?

Mr. Oppenheim

The hon. Gentleman questioned whether manufacturing output and productivity had risen faster in Britain than in any other European country. The answer is that they rose faster in the 1980s than in any other major country. Manufacturing jobs in Britain have been lost in every decade since the war; 500,000 manufacturing jobs were lost and unemployment doubled under the previous Labour Government. [Laughter.] Before Labour Members get too carried away with their own self-righteousness, they should remember the record of their party when it was in office.

Let me give Labour Members some facts. In the 1970s, British Steel made a loss of £15 billion. Every year, we had a £1 billion deficit in steel products, and British Steel was the largest loss maker in the world. In the past few years, we have had a £1 billion surplus a year in steel products, and British Steel is the most efficient steel industry.

In the 1970s, all the multinational car makers were falling over themselves to move capacity from Britain to Europe. Ford and General Motors were moving component and engine plants from Britain and were importing many cars. General Motors, Ford and all the multinationals are now investing billions of pounds in new component and engine capacity and, for the first time in 20 years, are exporting significant numbers of cars. In addition, Japanese companies are making huge investment in this country.

Mr. Jimmy Wray (Glasgow, Provan)

Has not the hon. Gentleman got his figures wrong? Does he agree that it took the Government until 1988 to reach the manufacturing levels of 1979? What should I tell the people of the United Kingdom and Scotland when 2.5 million people are on the dole; when 180,000 people are homeless, 34,000 of them in Scotland; and when 10 million people are living in poverty, one in four of whom are children? How will we get out of the mess that the Government have got us into?

Mr. Oppenheim

The hon. Gentleman's figures are wrong. Manufacturing output in Britain rose by 25 per cent. in the 1980s, but it fell under Labour. Those are not my figures or Government figures but are from the Organisation for Economic Co-operation and Development. If the hon. Gentleman denies them, he should have a word with the OECD.

People who have lived in Amber Valley for a long time tell me that, in the 1960s and 1970s, when unemployment was higher under Labour, the area was broadly dependent on coal and old industries. The area now has a diverse high-tech manufacturing economy. Of course there are problems in the area and it is suffering from the recession, but there are more better-quality high-tech manufacturing jobs on a more diverse industrial base than in the 1960s and 1970s.

The hon. Member for Dunfermline, East had the cheek to mention miners who had been made redundant. Let me tell Labour Members what happened to redundant miners in my area when Labour was in power. More miners were made redundant in the 1960s and the 1970s under Labour than were ever made redundant under this Government, and they were given only a pittance in redundancy pay. At least, when men are made redundant from the mines now, it is done with dignity and they get a good amount of money, which never happened when Labour was in power. Labour disgracefully neglected miners who were made redundant. No amount of sanctimony, cant or moral indignation will let people in my area forget that important fact.

During 45 minutes of bile which passed for a speech from the hon. Member for Dunfermline, East (Mr. Brown), there was not a single mention of the policies that any future Labour Government would pursue. The electorate is entitled to ask, where's the beef?

The hon. Gentleman mentioned the success of the Japanese economy. Let me tell Opposition Members that the Japanese economy has hardly succeeded through socialist policies. There has been little nationalisation. What little there was in the state sector has now been privatised. Japan has had low Government spending, low taxes and minimal taxes on savings. In Japan, unlike Britain, there have been few of the anti-business and anti-profit attitudes which have been fostered by Opposition Members. Above all, the Japanese have had a rigorous and vocationally oriented education system.

Some Labour Members think that Government subsidies, through the Ministry for International Trade and Industry, have helped Japanese industry to success. That type of interventionist myth is popular among Opposition Members. They might be interested to know that Japanese industry has been subsidised less over the last 30 years than any other major industrial economy. Most of Japan's successful industries, like cars, robotics, electronics, photocopiers and information technology, have received virtually no help from MITI and the Japanese Government. Indeed, they generally spurn such help. Conversely, the least successful Japanese industries tend to be those which have had the most interference from Government.

There are two reasons why the Japanese economy has done so well over the past 30 years. First and above all, the Japanese have had a sound, rigorous, vocationally oriented education system. [Interruption.]

Mr. Deputy Speaker (Sir Paul Dean)

Order. It is very distracting to have a second debate going on below the gangway.

Mr. Oppenheim

Many Opposition Members have wandered in from too good a dinner. It might do them good to listen to what is being said rather than to behave like drunken, post-dinner idiots.

The other main reason for Japan's success economically is that since the war, like Germany, it has consistently followed a sound monetary policy which has involved reasonable state spending, no budget deficits and the encouragement of savings. That is an important point at a time when the Opposition are proposing a policy of raising taxes on savers. It shows how little the Opposition have learnt over the past few years.

High levels of savings reduce consumption and bear down on inflation and interest rates. Above all, they provide a good pool of capital for industry to invest. If a country does not have high levels of savings, it will not have high levels of investment. It is wrong for the Opposition to think that they can boost investment at the same time as taxing savers to the hilt. Again, that shows how little they have learned since the dark days of 1970, when a Labour Government last imposed an investment income surcharge on savers.

Yes, we have problems. To a large extent those problems were caused by interest rates being kept too low in the 1980s which led to too much laxity in monetary policy. Opposition Members should remember that at that time they were urging even lower interest rates on the Government. Many other countries made the same mistake, with the result that they had similar problems of excess inflation and excess monetary growth which they now have to wring out of their economies. It is worth reminding Opposition Members, who deny that other countries have economic problems, that the United States, Switzerland, Scandinavia, Australia, New Zealand and Canada have all had deep recessions; many of those were formerly successful economies.

Entry into the ERM may have exacerbated the problem, but I believe that it has been a necessary discipline. It will lead to a fundamental shift away from over-consumption to a more productive savings and investment orientated economy.

In the 1980s, Britain underwent significant improvements in industrial productivity and efficiency due to policies which were opposed tooth and nail by the Opposition. Our biggest remaining disadvantage is the poor quality of much of our education system. Education is crucial to a successful advanced economy. There may have been a time when countries could get away with low calibre work forces and a highly educated elite, but nowadays manufacturing industry needs flexible, decentralised and sophisticated work forces, which is why the changes that we are introducing in the education system are crucial to our future as an industrial and manufacturing nation.

Our policies are dealing with the weaknesses in our education system. Labour's control of many of the worst local education authorities shows that it has contributed to the problem and learnt nothing, because it is opposing all of our much-needed education reforms. Labour's pledges to increase spending show once again how little it has learnt. Increased public spending means crowding out the private sector and reduced private sector investment. Taxing savings means a reduction in the investment which could create manufacturing jobs. Those policies show how little it has learnt. Labour is not part of the cure. In fact, it is and always has been part of our industrial problems.

9.15 pm

Mr. Peter Kilfoyle (Liverpool, Walton)

Like my city's position in the Government's priorities, I always seem to be at the fag end of debates. Nevertheless, I should be less than honest if I said that I was participating in this debate because of the Secretary of State's robust defence of his stewardship of his office.

The hon. Member for Windsor and Maidenhead (Sir A. Glyn) fell asleep and half the people in the Gallery walked out because they found the right hon. Gentleman's defence less than riveting. His speech was characterised by a series of obfuscations and evasions and by downright ignorance. He seemed to have a peculiar unwillingness to grasp the responsibilities of his office. We heard an absurd argument about additionality being somehow metaphysical. I can say only that his understanding of philosophical terminology is even less than his understanding of his office. In fact, his argument was tautological and he should go back to his philosophy textbook and find out what it means.

We have been painted as the party of doom and gloom. The Secretary of State struck me as a Tory Hamlet without the charm. To find doom and gloom I have to go no further than the TSB's United Kingdom economic outlook for January this year. Its first paragraph states: December's economic data paint a gloomy picture particularly for the Government which had heralded a recovery in the second half of the year. It goes on to state the bald fact that in the three months to November, output fell by 0.5 per cent., and was 1.5 per cent. lower than a year earlier. The Secretary of State made great play of innovation and research and development. I was tempted to intervene and ask him what he thought about, for example, GPT. That company invested a lot of money from its Plessey days in research and development. It developed the system X form of telecommunications, but it is now closing huge sectors of that operation and jobs are being lost. More importantly for the telecommunications industry in this country, huge reservoirs of expertise are being broken up and thrown away. Once again, we shall lose a world lead in a particular branch of R and D.

That company showed innovation, but where was the support from the Government? I know that the Government met union representatives at the company, but only last week more redundancies were announced. Where does it end? Where is the support for such firms?

My hon. Friend the Member for Dunfermline, East (Mr. Brown) and I visited the factory of Precision Hydraulics, a company in my constituency. We heard the old shibboleth about the trade union movement and the damage it has done to industry. My hon. Friend and I visited a factory in a city which is much derided by the Government. That factory had 100 per cent. union membership, and there were good relations between management and unions. It was a high-tech factory, exporting hydraulic pumps to Japan, West Germany and America. It was a leader, and its staff worked sensibly together. The overwhelming impression with which I came away was that those people would do a damn sight better if we had a Government who would give them some support.

The hon. Member for Amber Valley (Mr. Oppenheim) tells us that he wants to deal in facts. I shall tell him some facts. My hon. Friend the Member for Dunfermline, East described the Government's abdication from regional policies. I shall give examples drawn from the north-west, involving two major companies. In 1980, 62 per cent. of the work force of ICI was based in the United Kingdom. In 1991, that proportion was down to 38.5 per cent. That is a fact—jobs have been exported.

The proportion in Pilkington has gone down even more dramatically—from 65 per cent. in 1980 to 27.6 per cent. last year. That is a fact. Pilkington's jobs and expertise have been exported.

We have heard all the facts about unemployment. We know that 306,900 people are unemployed in the north-west, even according to the fiddled figures. We know that the north-west has lost 322,000 jobs. Even taking into account the increase in self-employment, we have lost 181,000 jobs. That is a fact.

The North-West Business Leaders Forum consists of 30 major companies which have come together. It is a fact that those companies are keen on a regional development agency. They certainly identify more closely with our plans for the future Labour Government than they do with those of the present Government.

I am conscious of the time limit, so I shall finish with one more important fact—the distribution of the unemployed in the north-west. At the general election we shall be watching the Bury seats, the Bolton seats, and Hyndburn, Pendle and Wallasey seats. The results that Labour achieves in those areas will show in electoral terms people's recognition of the damage that the Government have done to the infrastructure and the economy of the north-west. The electorate will be in no doubt. I shall make one safe prediction: when we have a Labour Government, the largest number of Labour Members of Parliament will represent not Scotland but the north-west.

9.22 pm

Mr. Donald Dewar (Glasgow, Garscadden)

I must tell my hon. Friend the Member for Liverpool, Walton (Mr. Kilfoyle) that no one will be happier about the fulfilment of his prediction than Scottish Labour Members.

There has been a certain predictability about the line of argument in the debate. There is no doubt that Conservative Members know what they are supposed to say. They take the line from those who are their seniors—if not their betters. We have heard a remarkable number of excuses and explanations.

The Secretary of State, whose remarks were echoed by many of his hon. Friends, told us that all the problems that we mentioned were the problems of other countries in the world and of the recessions that they had manufactured. One Conservative Member even told us that what was happening in Britain was all America's fault.

I was fascinated by the most prevalent line of argument —that my hon. Friend the Member for Dunfermline, East (Mr. Brown) was acting improperly in some way, because he spoke about the situation as he saw it. We were led to believe that there was a patriotic duty not to tell the truth about the Government. I am used to the theory that one should not be disloyal when abroad, but it is new to me that even in the House of Commons we must watch what we say, in case we frighten the workers. That is an extraordinary proposition. In the months ahead, when Conservative Members populate the Opposition Benches, I shall greatly look forward to watching them practise the restraint that they now preach. I shall be surprised if I am impressed by their performance in that respect.

The Secretary of State said that the Labour party was intellectually paralysed and near brain-dead. Some of my hon. Friends suggested to me that that was a state about which the right hon. Gentleman could talk with some authority. But, to be fair to him—[HON. MEMBERS: "Why?"] I shall be fair to him, because few other people manage to do so. There were moments when realism broke through. His remarks about the state of the Japanese economy were interesting. He clearly found the metaphysical distinction between slow growth and recession rather hard to pin down. For a minute, I thought that his words on that amounted to a disagreement with the Prime Minister.

The Secretary of State also told us that it was always very difficult to know when we were coming out of recession and that it sometimes takes months to be sure what is happening. That was some sort of explanation for why he and most of his Front-Bench colleagues have been consistently wrong in their economic projections over the past 18 months. If I am not mistaken, it amounted to as near an apology as we shall get from the right hon. Gentleman.

In a few minutes, we shall hear a closing speech by the Under-Secretary of State for Industry and Consumer Affairs. I find that a rather surprising appearance in the debate. I would have expected someone from the Scottish Office to speak. I might even have expected someone from the Scottish Office to put in an appearance at some time in the debate, even if only for two or three minutes. The Scottish Office has a big team, yet there has been not one sign or trace of the Scottish Office. The Under-Secretary's possession of a membership card for the No Turning Back group is not a substitute, although he may have been told by one of his hon. Friends that that is a welcome characteristic at the Scottish Office. However, it is not a substitute for a Scottish Office Minister. I realise that the hon. Member for Eastwood (Mr. Stewart) is ill, but surely one of his colleagues could have had the courage to turn up.

I can deduce, as many others can, only that the Scottish Office is running away from the problem. Are we really to accept that the Scottish Office no longer has any interest in industry? Are we really to believe that the recession does not hit Scotland hard? If Scottish Office Ministers think that, they should think again.

I will talk about Scotland, and I have no doubt that the Under-Secretary of State will represent the Scottish Office case as fairly as he can. I do not envy him the task. In his new year's message, the Secretary of State for Scotland —I do not expect that the Under-Secretary has read the document, and I do not recommend that he does—put a remarkable gloss on the situation. I thought that it was a message marked only by total unreality. I will give the House a brief quote. The Secretary of State said: The evidence is mounting that Scotland is on the road to economic recovery. Business confidence is rising across most of Scotland. Growth in the Scottish economy should become apparent soon"— a note of caution there— and our economy should grow steadily through 1992 and beyond. The Secretary of State talked generally not quite in terms of an economic miracle, but at least of the Scottish Office equivalent thereof.

The kindest explanation is that the Secretary of State for Scotland has reached the point at which he finds it impossible to face reality. He does not want to know—a feeling that often comes with the conviction that nothing can be done. Our essential case is that something can and should be done.

On 29 January 1992, the Secretary of State for Scotland answered a planted question from the hon. Member for Amber Valley (Mr. Oppenheim). I notice that the hon. Gentleman, having made a speech in which he overran his time, has now departed the House. He is the kind of gentleman who gives a public school education a bad name in Scotland. His planted question gave the Secretary of State a chance to set out his industrial policy—and a sad fist he made of it. However, he made one straightforward claim for which I am grateful. He referred to his policies —[HON. MEMBERS: "The hon. Gentleman is here."] I do not apologise to the hon. Member for Amber Valley. He has been in and out of the Chamber like a ghost and I think that he has no more substance than that legendary figure has.

The Secretary of State made a proud claim. He said: The success of my policies and the work of my Department can be shown through the progress Scotland has seen over the past 10 years."—[Official Report 30 January 1992; Vol. 202, c. 1191.] That is the test that he wants us to apply—the progress that Scotland has made over the past 10 years. I will spend a couple of minutes looking at the 10 years that have passed and at the progress that has been made.

Taking the Government's first 10 years, employment in manufacturing industry declined in Glasgow by 52 per cent., in Motherwell by 45 per cent. and in Dundee by 43 per cent. Scotland lost more than one third of its manufacturing base—the equivalent of more than 200,000 jobs. In the past two years the situation has deteriorated even further, so I do not believe that there is any evidence of the recovery of which the new year's message spoke.

Ministers show endless ingenuity when it comes to discussing unemployment—it is one of their favourite Rorke's Drift defensive positions. Unemployment has risen harshly from a similar comparison base of 140,000, when the Government came to power, to almost 230,000. However Ministers reply by saying, "Ah, there may be more people unemployed, but there are also more in work."

My hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) has done a great deal of work on this issue. If one compares the situation in September 1979 with that of September 1991, one sees that the number in work has come down sharply by 150,000 —or by more than 7 per cent. That is the number in employment. However, the total work force is down by 26,000. That does not take into account the sharp increase in the number of women part-time employees. It does not challenge the fact that the Government are now counting those in Government training schemes as being in employment—they were not included in 1979. Nor does it take account of the fact that the Government count those with a second part-time job as two employees. If one makes allowances for that, it is clear not only that unemployment has risen but that the numbers in work have dropped greatly.

During those 10 years, Scotland's share of the United Kingdom's gross domestic product has fallen from 8.8 per cent. to 8.3 per cent. Between 1979 and 1990, Scotland's share of GNP in manufacturing fell from 8.5 per cent. to 7.8 per cent. of the United Kingdom total. Scotland's GNP per head in 1991, expressed as a percentage of the United Kingdom figure, stood at 92.6 per cent. That is the lowest it has been since records were first kept on a comparable basis in 1971.

The Secretary of State has the darned cheek to put out new year messages and to tell us at the Dispatch Box that he is the possessor of a fine record and a success story. The index of production and construction currently shows that production is falling more quickly in Scotland than it is in the United Kingdom as a whole. The economic blizzard is blowing in a way that totally obliterates the claim, which was made with some plausibility at the beginning of the recession, that Scotland is suffering a little less drastically than other parts of the country.

The casualty list lengthens. Dun and Bradstreet records that there were 7,950 business failures in Scotland in 1991 —an increase of more than 76 per cent. and well above the United Kingdom figure. The list of job losses is endless. I am able to give only a small selection from the past couple of weeks' which includes companies such as Armitage Shanks, Clydesdale bank, Rosyth, Gates Rubber in Dumfries, Hughes Electronics in Glenrothes and Ravenscraig itself. However one looks at it, that is not a list that gives confidence for the immediate future. The range, variety, and scale of those losses is daunting.

The Secretary of State has been deserted even by his own traditional allies. There has been much talk today about the advantage of looking at the economic scene as a man of business. A number of people have put on a touching act of "where there's muck, there's brass" and to show that they know how many beans make five. I should say that it was rather unlikely character acting in some cases.

It is worth noting what those in business and industry are saying, because a different picture begins to emerge, as my hon. Friend the Member for Dunfermline, East pointed out. Let us take the Scottish CBI survey—[Interrupion.] I hear someone snorting in a way that the CBI would not find particularly attractive.

Mr. Whitney

I was snorting because the hon. Gentleman's hon. Friend—the denigrator from Dunfermline—has misquoted the CBI time and time again. As I said earlier, the CBI has pointed out that, since 1980, this country's industry has grown much more strongly than that of Germany or France. The hon. Member for Dunfermline, East (Mr. Brown) has totally disregarded any quotations from the CBI about that. The hon. Member for Glasgow, Garscadden (Mr. Dewar) said, 12 minutes ago, that something must be done, and, 12 minutes on, I would like to know what must be done.

Mr. Dewar

If the hon. Gentleman manages to produce a few more phrases such as "the denigrator from Dunfermline" he may get a job with Saatchi and Saatchi, but unfortunately that company will not be able to take him on, as it is not hiring because of the recession. In any event, at a time when German production has grown by more than 20 per cent., the British figure is only 6 per cent. If that is a sign of strength, the hon. Gentleman has a strange sense of proportion.

The CBI in Scotland said in its January report: General business confidence and export optimism have deteriorated markedly over the last four months. Profit margins have been squeezed, investment intentions in plant and machinery have worsened since October. The Scottish chambers of commerce business survey said that demand is stagnant or continues to contract across all major sectors. So even in the business sector—or perhaps particularly and understandably in business and industry—there is total disbelief about claims that are being made by a Government who are rapidly being stripped of all credibility. I find it very irritating indeed—wounding, indeed, to my constituents—when I look at the problems and prospects that they face, when I consider the deprivation that is growing in our communities and when I listen to the complacency that is peddled daily by Ministers.

The Conservatives are not the only people making a claim, so a comment about the nationalists—[HON. MEMBERS: "Where are they?"] I should perhaps apologise. I had hoped to he making these comments in the presence of the nationalists because, after all, the debate deals with a recession that is striking hard in Scotland. Unfortunately, they have not put in an appearance during the debate, so I must speak in their absence. I make it clear at the outset that I accept that Scotland is capable of sustaining independence. Some of the poorest areas in the world are independent states and some of the richest, such as California, choose to be part of a wider political and economic union. The question is not can we but whether it would be wise to take that road.

The dishonesty that must be challenged is the assertion that Scotland needs only a political operation to break the ties with the rest of Britain and every problem will be solved. The myth that a separate Scotland would, by some mysterious chemistry, become a land of milk and honey is a case that makes no sense, based on arithmetic that does not add up.

The nationalists would have us believe that oil revenues would meet every emergency and plug every fiscal gap. Oil is an asset in relative decline and is inevitably time-limited. This year, the Treasury estimates a yield to the Government of between £1.2 billion and £1.4 billion. It may increase for a short period, but the take will always be affected by international prices and the concessions necessary to encourage the development of marginal fields.

It cannot be right to advocate a major constitutional upheaval on the optimistic assumptions that the nationalists have made about the yield from the North sea. It is calculated that about £4 billion would have to be found per year to maintain present levels of public expenditure in a separate Scotland. On present projections, that would still leave a huge funding gap. What would be the answer—lower public expenditure or increased taxation?

The most important question I wish to address is whether separatism would encourage or even allow the growth of a modern, competitive manufacturing economy. The SNP advocates a fully-fledged Scottish currency, Perhaps that will raise a cheer at the SNP conference, but it would have serious consequences for Scotland's manufacturing industry.

The nationalists ignore the dramatic impact of reducing the home market from 50 million to 5 million at a stroke. If the nationalists really believe that there would be a differential interest rate between Scotland and England, what would there be to stop capital moving south? Investors based in what was Britain may well come to Scotland, but for cheap loans, while the differential, and nothing else, would survive.

Scottish industry must sell to live. It cannot survive on its domestic market. Do the nationalists seriously suggest that every time a Scottish company sold goods south of the border—and there would be an international border if the nationalists had their way—the deal would have to take account of a fluctuating exchange rate and a foreign currency transaction?

Professor David Bell of Stirling university argued that case forcefully in an article in The Scotsman earlier this week. In doing so, he underlined the futility of the whole exercise. Why pay such a heavy penalty in terms of dislocation and disruption? What price Scottish influence in major monetary decisions once Eurofed is in place? Only the first division players in the Community will have the leverage to influence central bank policy if EMU is introduced.

Professor Bell stresses the inescapable problems that would come with a separate currency. He argues that the disadvantages of introducing a Scots pound are obvious—dislocation of the financial Community, an obstruction of normal trade flows. He concedes that it will be a potential political advantage if the experience allowed the Government to determine effectively the best rate at which the Scottish pound could join the monetary union. His conclusion, however, is uncompromising. He says that the short-term introduction of a separate currency would be "an extraordinarily difficult exercise". Scottish industry, too, would regard it as an extraordinarily damaging process.

Labour's case for a Scottish Parliament is firmly based on democracy and good government. It is a scheme tailormade for Scotland—

Mr. Whitney

On a point of order, Mr. Speaker. The Opposition chose as the title for the debate Government policies and the recession in British industries". How is the debate between the Labour party and the Scottish National party about devolution relevant to that subject?

Mr. Speaker

The hon. Member for Glasgow, Garscadden (Mr. Dewar) is making his case. I have heard nothing out of order.

Mr. Dewar

The plans proposed in certain quarters of Scotland would have a damaging effect on industry. I should have thought that that was of interest to all hon. Members.

There is a strong industrial case for the powers of a Scottish Parliament, as outlined by the Labour party. As European integration proceeds and competition policy develops, the emphasis is bound to be on the supply side. Governments, whether in an independent Scotland or the United Kingdom, will concentrate, as a Labour Government will, on research and development, encouragement and investment, and training and skills. A great deal will depend, especially in Scotland, on the development of essential infrastructure. Scotland will want to invest in the energy and capacity of the people, which will be the task of the new Parliament, shaking off the dreary record of the last decade, which has left current investment in manufacturing below 1979 levels in real terms.

What is happening in Scotland—the depressing, hurtful statistics to which I referred earlier—is typical of what is happening in many parts of Britain. I listened to the speeches of my hon. Friends the Members for Eccles (Miss Lestor), for Preston (Mrs. Wise) and for Liverpool, Walton (Mr. Kilfoyle). They mentioned the problems of firms such as Pilkingtons which link their constituencies with mine. We all recognise that their problems are pressing. We must attack the problems of training and skills and get away from the insults referred to at the beginning of the debate. Employment action, so hyped by the Government, has created only 263 jobs in Scotland. We must raise that investment from below its 1979 level, where it has been disastrously stuck for so long, and do something about infrastructure links if we are not to end up at the wrong end of Britain and the outside edge of Europe.

There has been much talk about experience. Conservative Members said that it was the key to the Government's success, but they have translated experience into prejudice and into doing nothing. They deny all responsibility and blame everyone else. The experience of the electorate will make them decide that it is time for a change.

9.43 pm

The Parliamentary Under-Secretary of State for Trade and Consumer Affairs (Mr. Edward Leigh)

That was an interesting speech on devolution. The hon. Member for Glasgow, Garscadden (Mr. Dewar) seems to protest too much. Perhaps he is worried about being crushed between the anvil of Scottish nationalism and the hammer of Tory Scottish unionism—as he will be at the general election.

As for the hon. Gentleman's criticism that a Scottish Minister is not replying to the debate, he knows that that is a low blow, because the Scottish Minister responsible for industry is ill and the Secretary of State for Scotland is in Scotland. I could ask the hon. Gentleman the following question: as there are two English Ministers, why have the Opposition not managed to field an English spokesman, when there are two Scottish spokesmen? There are seven industrial virgins as spokesmen—not one Englishman.

Mr. Dewar

The hon. Gentleman well knows that the Secretary of State for Scotland is my opposite number, and he has had knowledge of this debate for well over a week. I think that he should have been here—and I think that Scotland will agree.

Mr. Leigh

The hon. Gentleman knows that my right hon. and learned Friend the Secretary of State has an appointment in Scotland that he cannot break.

We have heard another dreary list of statistics from the hon. Member for Dunfermline, East (Mr. Brown)—as my hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) said, as boringly predictable as Pavlova's dog—[Interruption.]

Mr. Speaker

Order. The debate has been orderly so far, and I ask the House to give the Minister a reasonable chance.

Mr. Leigh

As my hon. Friend the Member for Beverley (Mr. Cran) showed from his own experience—which the Opposition do not have—the CBI "Industrial Trends" in his district shows that confidence is increasing.

Claims have been made about inadequate investment —particularly by the hon. Member for Dunfermline, East. There are bound to be fluctuations in investment over the economic cycle. Investment responds primarily to expectations of future demand, not tax incentives. What has depressed investment of late is a cylical downturn in demand and activity. It would be totally counterproductive to attempt to offest that effect by creating artificial stimulae—[Interruption.]

Mr. Speaker

Order. I say to Opposition Members that I hope that the debate is not being televised in Scotland, as it will not provide a very good example.

Mr. Leigh

The Opposition do not like it; they do not listen to arguments. They did not listen to any Conservative arguments.

As my hon. Friend the Member for Hastings and Rye (Mr. Warren) made clear, one does not solve such problems by throwing taxpayers' money at them.

The hon. and learned Member for Montgomery (Mr. Carlile) made an interesting speech on the importance of investment in manufacturing infrastructure and infrastructure generally. He spoke of transport but did not mention the fact that, over the next three years, investment by British Rail and London Transport is expected to be 50 per cent. higher. He did not mention that investment in health is £250 million higher or that housing spending is set to rise by 17 per cent. He did not menton that capital spending on schools will rise by 7 per cent. or that spending on law and order was set to rise by £106 million.

The hon. Member for Preston (Mrs. Wise) was right to speak of unemployment in her constituency. However, in her attack on the defence industry in the north-west, she did not explain how her policies would result in anything less than a dramatic fall in employment. She attacked arms sales worth millions of pounds to the north-west and thousands of jobs, but failed to mention those losses.

Two of the most interesting speeches—

Mr. Terry Lewis (Worsley)

Will the Minister give way?

Mr. Leigh

No, I shall not, as I have so little time.

Two of the most interesting speeches from Opposition Members came from the right hon. Member for Swansea, West (Mr. Williams) and the hon. Member for Great Grimsby (Mr Mitchell). I had thought that Opposition Members supported our membership of the exchange rate mechanism, but it seemed that those two members were attacking our membership. They talked as though they were in favour of devaluing sterling.

Mr. Alan Williams

I was attacking not our membership but the level at which we entered the ERM, which is different. I made it clear that I was expressing a personal opinion, not a party one.

Mr. Leigh

The right hon. Gentleman is a former Minister and spoke with great authority. He seemed to be speaking the truth, which is staring Opposition Members in the face. Their policies would result in a devaluation of our position in the ERM.

My hon. Friend the Member for Hastings and Rye and other hon. Members stressed the importance of education and a training budget. The Government are committed to major investment in this area. The Department of Employment is investing more than £2.7 billion in training, enterprise and vocational training this year. That is no less than two and a half times as much in real terms as was spent in 1978–79. Industry and employers have an important role in deciding the type and level of skills needed by the work force. I am encouraged by the latest "Industrial Trends" survey, which shows that more firms are planning to increase their spending on training.

The Government believe that research and development expenditure decisions are for the market to take, but industry's funding of its own R and D rose by 43 per cent. in real terms between 1983 and 1989.

The Government are investing £170 million in export services, employing 200 private sector advisers to make sure that the money is well spent.

In the remaining few minutes of this debate, I want to ask the Opposition a question that I asked the hon. Member for Dunfermline, East a year ago. I am still waiting for an answer to it. I asked him then whether a Labour Government would be prepared to waste money coaxing investment over and above what the market provides and deems necessary. As I said, the hon. Gentleman refused to answer that a year ago. I should be happy to give way to him if he would like to estimate how much his proposed incentives will cost the taxpayer; secondly, how much net additional investment that would create; and thirdly, what effect any such extra investment will have on the growth of GDP. Fourthly, I should like to ask whether the hon. Gentleman agrees with Credit Lyonnais, which states that it hardly makes sense to impose a savings tax on the very capital that we would all like invested in industry.

Before the hon. Member for Dunfermline, East answers these questions—I am sure that he will try to—he might ponder the fact that total investment in the British economy runs at about £100 billion a year. So what is his answer? None is forthcoming, because Labour's policy is a sham. The amount of investment needed to make any real difference would mean that the extra taxation to pay for it would destroy the economy.

Then there was the farce of the announcement by the right hon. and learned Member for Monklands, East (Mr. Smith) in favour of an emergency package—a package quickly disowned by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) almost the next day. The right hon. Member for Sparkbrook said that we would have to wait for growth before implementing that package: help the patient once he has recovered.

What money will be provided for Labour's national investment trust, British technology trusts and regional development agencies? I am prepared to give way to the hon. Member for Dunfermline, East if he will estimate for the House how much money he will give those bodies. If a national investment bank ran on a commercial basis, why would we need it?

Labour Members talk of the need to support British technology. The old National Enterprise Board, designed to do just that, was able to borrow up to £750 million. Did it fail because it could borrow too much or because it could borrow too little? Opposition Members will not answer these questions, because they cannot answer them.

Finally, I repeat the question asked by the Secretary of State earlier today. If there were a run on the pound, as virtually every commentator expects in the unlikely event of a Labour victory, would Labour raise interest rates to maintain the pound's parity or would it devalue? That is a choice that every Labour Government has had to face, and every Labour Government has done both—they have put up interest rates and devalued. The silence of Opposition Front-Bench spokesmen in the face of history speaks eloquently. Four questions, four silences.

There is one question which the British people will ponder above all others in the coming weeks. How does it help small business men seeking to keep their businesses going and growing, how does it help the young married couple seeking to pay their mortgage, how does it help the large company seeking to remain competitive in world markets if they all end up paying more taxes? We will go on asking that question and. I suspect, receiving no answer to it, because there is none.

Mr. Graham

Will the Minister give way?

Mr. Leigh

I will not; I have asked several questions and received no answers.

The film "JFK" now showing in our cinemas reminds us of the implausible magic bullet which killed the President, and no one quite believed it. But they had to believe it, because the alternative of conspiracy was too awful to contemplate. In the same way, Labour's industrial policy is a kind of magic policy. It puts up taxes, it piles on red tape, it gives power back to the unions, it lets inflation rip, it does all the things guaranteed to damage industry, and yet, hey presto—

Several Hon. Members

rose—

Mr. Speaker

Order. If the Minister does not give way, hon. Members must resume their seats.

Mr. Leigh

Hon. Gentlemen do not really believe it themselves, but they cannot bear the horrible truth. It makes them shudder to think of it. They know that, after 13 years of Opposition supply days, a complete policy review never knowingly under-relaunched and a risible prawn cocktail offensive, they still cannot convince people that they can be trusted to run the economy. Their feeble new industrial policies—[Interruption.]

Mr. Speaker

Order.

Mr. Leigh

Their feeble new industrial policies have about as much impact as one man against a block vote at their annual conference. Their old knee-jerk prejudices —higher taxes, more red tape and power to the unions, with a cheque in the post to Walworth road, would wreck British industry's hard-won success. There is no big idea; it is simply a big lie.

That is what is on offer from the Opposition. Let us see what industry wants. As my hon. Friend the Member for Edgbaston made clear, industry wants low inflation. The Government have made the defeat of inflation their top economic priority. They have not shirked the tough measures necessary to bring inflation down.

As my hon. Friend the Member for Amber Valley (Mr. Oppenheim) made clear, industry wants good industrial relations. The Government have systematically improved the framework for industrial relations in Britain. A proper balance has been achieved, enabling managers to manage for success. As my hon. Friend the Member for Beverley (Mr. Cran) said, industry wants low taxation. The Government have cut corporation tax to the lowest level in the industrialised world.

As my hon. Friend the Member for Pendle (Mr. Lee) made clear, industry wants freedom to plan and invest for growth. The Government have swept away administrative and bureaucratic controls and regulations, allowing firms to get on with the business of making quality products at competitive prices. The Government have returned loss-making state corporations to the private sector, where their performance has improved dramatically.

As my hon. Friend the Member for Hastings and Rye (Mr. Warren) made clear, industry wants access to overseas markets. The Government have played a leading role in arguing the case for freer and fairer trade both within the European Community and within the general agreement on tariffs and trade.

There is therefore a contrast to draw. The Opposition claim to be a friend of business but offer crumbs compared with the scale of activity in the United Kingdom—crumbs which within the rule of Beckett's law they cannot even afford. Our party is committed to the framework for growth, to creating the conditions for growth and letting those who are able get on with the job. We assist, of course, and our watchword is focus and cost-effectiveness in the support that we give. The Opposition revel in great phrases, but their promises amount to waste. Their only measure of success is the sheer quantity of other people's money that they seek to squander.

The contrast is all too stark. We created the framework that delivered industrial resurgence in the 1980s, a performance unrecognisable after the lost years following 1974. The framework through which this transformation was achieved is still in place, under fire with recipes for dependency on the state. The Opposition would only tinker with and corrupt initiative, re-create dependency and divert attention from a fiercely competitive world. Once the present downturn has passed, the future is there for all to embrace. Of course there is hardship. Of course the present mist will clear, and industry will emerge stronger, leaner, and better placed to face the competitive challenges of the 1990s.

Our amendment tells it how it is. The preconditions for recovery are there. The framework is there. Our policies are there, and the will of the people—

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

The House divided: Ayes 187, Noes 292.

Division No. 73]	[10 pm
AYES
Adams, Mrs Irene (Paisley, N.)	Davis, Terry (B'ham Hodge H'l)
Allen, Graham	Dewar, Donald
Anderson, Donald	Dixon, Don
Archer, Rt Hon Peter	Doran, Frank
Ashley, Rt Hon Jack	Duffy, Sir A. E. P.
Ashton, Joe	Dunnachie, Jimmy
Banks, Tony (Newham NW)	Dunwoody, Hon Mrs Gwyneth
Barnes, Harry (Derbyshire NE)	Eadie, Alexander
Barnes, Mrs Rosie (Greenwich)	Edwards, Huw
Barron, Kevin	Enright, Derek
Beckett, Margaret	Evans, John (St Helens N)
Bell, Stuart	Ewing, Mrs Margaret (Moray)
Bellotti, David	Fatchett, Derek
Bennett, A. F. (D'nt'n & R'dish)	Fearn, Ronald
Benton, Joseph	Fisher, Mark
Bidwell, Sydney	Flannery, Martin
Blair, Tony	Flynn, Paul
Blunkett, David	Foot, Rt Hon Michael
Boateng, Paul	Foster, Derek
Boyes, Roland	Fraser, John
Bradley, Keith	Fyfe, Maria
Brown, Gordon (D'mline E)	Galbraith, Sam
Brown, Ron (Edinburgh Leith)	Galloway, George
Bruce, Malcolm (Gordon)	Garrett, Ted (Wallsend)
Caborn, Richard	George, Bruce
Callaghan, Jim	Gilbert, Rt Hon Dr John
Campbell, Menzies (Fife NE)	Golding, Mrs Llin
Campbell, Ron (Blyth Valley)	Gordon, Mildred
Campbell-Savours, D. N.	Gould, Bryan
Canavan, Dennis	Graham, Thomas
Carlile, Alex (Mont'g)	Grant, Bernie (Tottenham)
Carr, Michael	Griffiths, Win (Bridgend)
Cartwright, John	Grocott, Bruce
Clark, Dr David (S Shields)	Hain, Peter
Clarke, Tom (Monklands W)	Harman, Ms Harriet
Clwyd, Mrs Ann	Hattersley, Rt Hon Roy
Cohen, Harry	Heal, Mrs Sylvia
Cook, Frank (Stockton N)	Healey, Rt Hon Denis
Cook, Robin (Livingston)	Henderson, Doug
Corbett, Robin	Hinchliffe, David
Corbyn, Jeremy	Hoey, Kate (Vauxhall)
Cousins, Jim	Home Robertson, John
Cox, Tom	Hood, Jimmy
Crowther, Stan	Howarth, George (Knowsley N)
Cryer, Bob	Howells, Geraint
Cummings, John	Howells, Dr. Kim (Pontypridd)
Cunliffe, Lawrence	Hoyle, Doug
Davies, Rt Hon Denzil (Llanelli)	Hughes, Robert (Aberdeen N)
Davies, Ron (Caerphilly)	Hughes, Simon (Southwark)

Illsley, Eric	Pendry, Tom
Ingram, Adam	Powell, Ray (Ogmore)
Jones, Martyn (Clwyd S W)	Primarolo, Dawn
Kilfoyle, Peter	Quin, Ms Joyce
Kinnock, Rt Hon Neil	Radice, Giles
Lamond, James	Randall, Stuart
Leadbitter, Ted	Reid, Dr John
Leighton, Ron	Robertson, George
Lestor, Joan (Eccles)	Robinson, Geoffrey
Lewis, Terry	Rooker, Jeff
Litherland, Robert	Ross, Ernie (Dundee W)
Livingstone, Ken	Rowlands, Ted
Livsey, Richard	Ruddock, Joan
Lloyd, Tony (Stretford)	Sedgemore, Brian
Lofthouse, Geoffrey	Sheerman, Barry
McAllion, John	Sheldon, Rt Hon Robert
McAvoy, Thomas	Shore, Rt Hon Peter
McKay, Allen (Barnsley West)	Short, Clare
McLeish, Henry	Skinner, Dennis
Maclennan, Robert	Smith, Andrew (Oxford E)
McMaster, Gordon	Smith, C. (Isl'ton & F'bury)
McNamara, Kevin	Smith, J. P. (Vale of Glam)
McWilliam, John	Snape, Peter
Madden, Max	Soley, Clive
Mahon, Mrs Alice	Spearing, Nigel
Marek, Dr John	Stott, Roger
Marshall, Jim (Leicester S)	Strang, Gavin
Martin, Michael J. (Springburn)	Taylor, Rt Hon J. D. (S'ford)
Martlew, Eric	Turner, Dennis
Maxton, John	Vaz, Keith
Meacher, Michael	Wallace, James
Meale, Alan	Walley, Joan
Michael, Alun	Wardell, Gareth (Gower)
Michie, Bill (Sheffield Heeley)	Wareing, Robert N.
Mitchell, Austin (G't Grimsby)	Watson, Mike (Glasgow, C)
Molyneaux, Rt Hon James	Welsh, Michael (Doncaster N)
Moonie, Dr Lewis	Williams, Rt Hon Alan
Morgan, Rhodri	Williams, Alan W. (Carm'then)
Morley, Elliot	Wilson, Brian
Morris, Rt Hon A. (W'shawe)	Wise, Mrs Audrey
Morris, Rt Hon J. (Aberavon)	Worthington, Tony
Mullin, Chris	Wray, Jimmy
Oakes, Rt Hon Gordon
O'Hara, Edward	Tellers for the Ayes:
O'Neill, Martin	Mr. Frank Haynes and
Orme, Rt Hon Stanley	Mr. Ken Eastham.
Patchett, Terry
NOES
Adley, Robert	Bowden, Gerald (Dulwich)
Aitken, Jonathan	Bowis, John
Alexander, Richard	Boyson, Rt Hon Dr Sir Rhodes
Alison, Rt Hon Michael	Braine, Rt Hon Sir Bernard
Allason, Rupert	Brandon-Bravo, Martin
Amery, Rt Hon Julian	Brazier, Julian
Amess, David	Bright, Graham
Amos, Alan	Brooke, Rt Hon Peter
Arbuthnot, James	Bruce, Ian (Dorset South)
Arnold, Jacques (Gravesham)	Buck, Sir Antony
Arnold, Sir Thomas	Burns, Simon
Ashby, David	Burt, Alistair
Aspinwall, Jack	Butler, Chris
Atkins, Robert	Butterfill, John
Baker, Rt Hon K. (Mole Valley)	Carlisle, John, (Luton N)
Baker, Nicholas (Dorset N)	Carlisle, Kenneth (Lincoln)
Baldry, Tony	Carrington, Matthew
Banks, Robert (Harrogate)	Carttiss, Michael
Batiste, Spencer	Cash, William
Bellingham, Henry	Channon, Rt Hon Paul
Bendall, Vivian	Chapman, Sydney
Bennett, Nicholas (Pembroke)	Chope, Christopher
Benyon, W.	Churchill, Mr
Blackburn, Dr John G.	Clark, Rt Hon Alan (Plymouth)
Blaker, Rt Hon Sir Peter	Clark, Dr Michael (Rochford)
Body, Sir Richard	Clark, Rt Hon Sir William
Bonsor, Sir Nicholas	Clarke, Rt Hon K. (Rushcliffe)
Boscawen, Hon Robert	Colvin, Michael
Boswell, Tim	Conway, Derek
Bottomley, Peter	Coombs, Anthony (Wyre F'rest)
Bottomley, Mrs Virginia	Coombs, Simon (Swindon)

Cope, Rt Hon Sir John	King, Roger (B'ham N'thfield)
Couchman, James	King, Rt Hon Tom (Bridgwater)
Cran, James	Kirkhope, Timothy
Currie, Mrs Edwina	Knapman, Roger
Davies, Q. (Stamf'd & Spald'g)	Knight, Dame Jill (Edgbaston)
Davis, David (Boothferry)	Knox, David
Day, Stephen	Lamont, Rt Hon Norman
Devlin, Tim	Latham, Michael
Dicks, Terry	Lawrence, Ivan
Dorrell, Stephen	Lee, John (Pendle)
Dover, Den	Leigh, Edward (Gainsbor'gh)
Dunn, Bob	Lennox-Boyd, Hon Mark
Dykes, Hugh	Lester, Jim (Broxtowe)
Eggar, Tim	Lilley, Rt Hon Peter
Emery, Sir Peter	Lloyd, Sir Ian (Havant)
Evans, David (Welwyn Hatf'd)	Lloyd, Peter (Fareham)
Evennett, David	Lord, Michael
Farr, Sir John	Luce, Rt Hon Sir Richard
Field, Barry (Isle of Wight)	Lyell, Rt Hon Sir Nicholas
Fishburn, John Dudley	Macfarlane, Sir Neil
Forman, Nigel	MacKay, Andrew (E Berkshire)
Forth, Eric	Maclean, David
Fowler, Rt Hon Sir Norman	McNair-Wilson, Sir Michael
Fox, Sir Marcus	McNair-Wilson, Sir Patrick
French, Douglas	Madel, David
Gale, Roger	Major, Rt Hon John
Gardiner, Sir George	Malins, Humfrey
Garel-Jones, Rt Hon Tristan	Mans, Keith
Gill, Christopher	Maples, John
Gilmour, Rt Hon Sir Ian	Marland, Paul
Glyn, Dr Sir Alan	Marlow, Tony
Goodhart, Sir Philip	Marshall, John (Hendon S)
Goodlad, Rt Hon Alastair	Martin, David (Portsmouth S)
Goodson-Wickes, Dr Charles	Mates, Michael
Gorman, Mrs Teresa	Maude, Hon Francis
Gorst, John	Mayhew, Rt Hon Sir Patrick
Grant, Sir Anthony (CambsSW)	Mellor, Rt Hon David
Greenway, Harry (Ealing N)	Meyer, Sir Anthony
Greenway, John (Ryedale)	Miller, Sir Hal
Gregory, Conal	Mills, Iain
Griffiths, Peter (Portsmouth N)	Miscampbell, Norman
Grist, Ian	Mitchell, Andrew (Gedling)
Ground, Patrick	Mitchell, Sir David
Hague, William	Moate, Roger
Hamilton, Neil (Tatton)	Monro, Sir Hector
Hampson, Dr Keith	Montgomery, Sir Fergus
Hanley, Jeremy	Moore, Rt Hon John
Hannam, Sir John	Morris, M (N'hampton S)
Hargreaves, A. (B'ham H'll Gr')	Morris, Sir Charles
Hargreaves, Ken (Hyndburn)	Morrison, Rt Hon Sir Peter
Haselhurst, Alan	Moss, Malcolm
Hawkins, Christopher	Neale, Sir Gerrard
Hayes, Jerry	Needham, Richard
Hayhoe, Rt Hon Sir Barney	Nelson, Anthony
Heathcoat-Amory, David	Neubert, Sir Michael
Hicks, Mrs Maureen (Wolv' NE)	Newton, Rt Hon Tony
Higgins, Rt Hon Terence L.	Nicholls, Patrick
Hill, James	Nicholson, David (Taunton)
Hind, Kenneth	Nicholson, Emma (Devon West)
Hogg, Hon Douglas (Gr'th'm)	Norris, Steve
Hordern, Sir Peter	Onslow, Rt Hon Cranley
Howard, Rt Hon Michael	Oppenheim, Phillip
Howarth, Alan (Strat'd-on-A)	Page, Richard
Howarth, G. (Cannock & B'wd)	Paice, James
Howell, Rt Hon David (G'dford)	Parkinson, Rt Hon Cecil
Hughes, Robert G. (Harrow W)	Patnick, Irvine
Hunt, Rt Hon David	Patten, Rt Hon Chris (Bath)
Hunt, Sir John (Ravensbourne)	Patten, Rt Hon John
Hunter, Andrew	Pawsey, James
Hurd, Rt Hon Douglas	Porter, Barry (Wirral S)
Irvine, Michael	Porter, David (Waveney)
Jack, Michael	Portillo, Michael
Jackson, Robert	Powell, William (Corby)
Janman, Tim	Price, Sir David
Jessel, Toby	Raffan, Keith
Johnson Smith, Sir Geoffrey	Raison, Rt Hon Sir Timothy
Jones, Gwilym (Cardiff N)	Rathbone, Tim
Jones, Robert B (Harts W)	Redwood, John
Key, Robert	Rhodes James, Sir Robert
Kilfedder, James	Riddick, Graham

Ridsdale, Sir Julian	Temple-Morris, Peter
Roberts, Rt Hon Sir Wyn	Thatcher, Rt Hon Margaret
Roe, Mrs Marion	Thompson, Sir D. (Calder Vly)
Rossi, Sir Hugh	Thompson, Patrick (Norwich N)
Rost, Peter	Thorne, Neil
Rowe, Andrew	Townend, John (Bridlington)
Rumbold, Rt Hon Mrs Angela	Townsend, Cyril D. (B'heath)
Sackville, Hon Tom	Tracey, Richard
Sainsbury, Rt Hon Tim	Twinn, Dr Ian
Sayeed, Jonathan	Vaughan, Sir Gerard
Scott, Rt Hon Nicholas	Viggers, Peter
Shaw, David (Dover)	Wakeham, Rt Hon John
Shaw, Sir Giles (Pudsey)	Waldegrave, Rt Hon William
Shaw, Sir Michael (Scarb')	Walden, George
Shelton, Sir William	Walker, Bill (T'side North)
Shepherd, Richard (Aldridge)	Walker, Rt Hon P. (W'cester)
Sims, Roger	Walters, Sir Dennis
Skeet, Sir Trevor	Wardle, Charles (Bexhill)
Smith, Sir Dudley (Warwick)	Warren, Kenneth
Smith, Tim (Beaconsfield)	Watts, John
Soames, Hon Nicholas	Wells, Bowen
Spicer, Michael (S Worcs)	Wheeler, Sir John
Squire, Robin	Whitney, Ray
Stanbrook, Ivor	Widdecombe, Ann
Stanley, Rt Hon Sir John	Wiggin, Jerry
Steen, Anthony	Wilkinson, John
Stern, Michael	Wilshire, David
Stevens, Lewis	Winterton, Mrs Ann
Stewart, Allan (Eastwood)	Winterton, Nicholas
Stewart, Andy (Sherwood)	Wolfson, Mark
Stewart, Rt Hon Sir Ian	Wood, Timothy
Stokes, Sir John	Yeo, Tim
Sumberg, David	Young, Sir George (Acton)
Summerson, Hugo
Tapsell, Sir Peter	Tellers for the Noes:
Taylor, Ian (Esher)	Mr. David Lightbown and
Taylor, Sir Teddy	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; recognises the importance of maintaining the fight against inflation to maintain competitiveness; acknowledges the success of British manufacturing industry in reaching record figures for exports despite depressed world markets; rejects the high tax; high spending policies of the Opposition which City forecasters predict would cause an increase in interest rates and inflation and would be an impediment to recovery; condemns their anti-industry policies of nationalisation, state control, a national minimum wage, renewed union power and unqualified support for the social charter which would have damaging consequences for jobs and industry; and notes that all these policies have been rejected by business.