HC Deb 02 March 1994 vol 238 cc948-1046
Madam Speaker

I have selected the amendment in the name of the Prime Minister. I have also had to limit speeches between 6 pm and 8 pm to 10 minutes.

3.48 pm
Mr. Robin Cook (Livingston)

I beg to move, That this House is of the opinion that there are industries, such as the steel industry, the car industry and the airframe industry, which cannot be allowed to fail if Britain is to remain an advanced economy; believes that the future of the sole remaining British owned and British controlled motor manufacturer, Rover, must continue to be a matter for Her Majesty's Government; observes that all these views which were expressed by the President of the Board of Trade prior to his appointment are at odds with the continuing redundancies in steel and aerospace and the acquisition of Rover by BMW since his appointment; notes that, under this Government, employment in manufacturing has fallen faster and that output of manufacturing has risen more slowly than in other major industrial countries; regrets that Britain has run a deficit in trade in manufactured goods in every one of the past twelve years and has run an unprecedented balance of payments deficit even in the years of recession; rejects the Government's policies of promoting a low wage, low skills workforce; and calls for an industrial strategy both in Whitehall and in the regions to achieve competitiveness through a high-tech, high investment manufacturing base. The motion stands in the names of my right hon. and hon. Friends and myself, but I had hoped to be able to move that wording on behalf of the President of the Board of Trade, too, because, in an attempt to achieve cross-party unity on the question, the first quarter of the motion consists of direct quotations from the right hon. Gentleman's writings before he was appointed to his present job.

Sadly, however, it is not possible for me to include the name of the President of the Board of Trade in the motion, because he has put his name to the amendment to delete even those passages culled from his own writing. In case it has slipped his mind, I refer him to the passage, which he will find on page 113 of his book "Where There's a Will",where he said: The future of the sole remaining British owned and British controlled motor manufacturer of Rover will continue to be a matter for the Government…Otherwise, the British motor industry will find itself further down the cul-de-sac to extinction. There is no doubt that, when he comes to speak, the President will explain precisely at what point between 1987 and 1994 he changed his mind, because Rover, the sole remaining British-owned and British-controlled motor car company, has ceased to be British owned and British controlled and it happened while he was President. No wonder that at the Tory party fringe meeting in 1989 the President warned the meeting that they should watch for the Conservative's claim on industrial performance in case: Your empty words will come back to haunt you. Perhaps the President will follow the words of the Minister who said, when we discussed the matter in the House, that the purchase of Rover by BMW was somehow a triumph of the industrial strategy of the Government. If that is the case, it is an industrial strategy which the rest of Europe does not seem anxious to emulate. Italy still has two volume car manufacturers, France has two, Germany has three and Japan has five. Britain is alone in having, as some hon. Members have already prompted me, only Rolls-Royce and the Reliant Robin under British ownership.

Mr. Iain Mills (Meriden)

Will the hon. Gentleman give way?

Mr. Cook

I shall happily give way. I was about to refer to a Conservative central office research department brief, but I am happy that the hon. Gentleman's remarks will anticipate that.

Mr. Mills

Are those car manufacturers in Italy and France productive and making money?

Mr. Cook

They are making cars, they are providing jobs—[Laughter.] Hang on. They are making cars, they are providing jobs. they are providing exports, they are also providing contracts for the suppliers to those industries and they are fulfilling a vital role in their economies. Part of that role, which is endangered by the loss of British control, is that they provide high technology, high design and the opportunity to take strategic decisions in the car industry. That is now at risk.

I was about to refer to the Conservative research department brief on Rover and BMW because it attempts to put in perspective the purchase of the last volume car manufacturer by a foreign firm, by contrasting it with UK firms that control and own apparently foreign companies and brands. It lists Häagen Dazs, Fabergé, Courvoisiér and, to bring it to a climax, Jacuzzi. I will not take anything away from those market industry success stories, but they are not in the same league as the last major British car volume producer.

Häagen Dazs has its virtues, but it does not play the same role in Britain's engineering base. Courvoisiér does not make the same contribution to developing our engineering skills. I suspect that not even Fabergé provides the same orders for supply industries in Britain. If I must choose between the British ownership of Rover and Fabergé, I can express myself best with another quote from the President. In the past week, I reread the President's speech in the debate on Matrix Churchill and was much taken by a sentence of his which I rediscovered. He said: If I must rely on the Attorney-General or the hon. Member for Livingston it is the simplest decision that I have ever had to make in my life. At the time, in my naivete, I assumed that the decision was simple because he was going to rely on his colleague the Attorney-General. I now understand that that was a coded message that he preferred the advice of even his opposite number to the advice of the Attorney-General. To echo the President of the Board of Trade, if I had to choose between British control of Faberge and Rover, it would be the simplest decision that any of us could make.

Clearly, it does matter whether Rover is controlled in the midlands or in Bavaria, for the reasons that the President gave in 1987: Foreign investment is of course to be welcomed, but control has its dangers. For the major parts of the British motor industry to fall entirely into foreign hands would leave it a hostage to decisions in foreign capitals. The threat to Rover is that those decisions will now be taken in Munich rather than the midlands. The risk is of a "headquarters effect" in which there will be a concentration of advanced technical skills and strategic management decisions in Bavaria. Youngsters who want to get to the top of motor engineering design will have to go to Munich to get there. There will be a gradual increase in import controls on the content of Rover models and, ultimately, BMW will take the up-market, high value-added models, leaving Rover the low-cost, mass-volume cars that are most vulnerable to competition from low-wage economies.

Mr. Graham Riddick (Colne Valley)

The Leader of the Opposition has now said that the ownership of companies is no longer important. Will the Labour party therefore drop clause 4 from its constitution? If not, why not?

Mr. Cook

I am not entirely clear how that intervention arises naturally from the matter that I am rehearsing before the House. However, the issue is adequately and clearly distinguished in the writings of the President of the Board of Trade. What is at stake here is not just the question of ownership; it is the question of control. Just as Germany and BMW would not dream of letting the control of BMW pass outside Bavaria, we are also right to be concerned about the control of our last major volume car manufacturer. That point is understood in France, Germany and, most certainly, Japan.

Mr. Riddick

What about clause 4?

Mr. Cook

May I tell the hon. Gentleman that British Leyland was taken into the public sector because it collapsed in the private sector. While in the public sector, it was turned round and the Government passed it on to British Aerospace for a song. Given the profit that British Aerospace has now made on that ownership, Conservative Members would do well to keep quiet about public ownership.

The real disgrace of the Rover purchase is not that it has been bought by a foreign firm but that there was no British bid to purchase it. The real indictment of the Government's stewardship of this nation's industrial financial affairs for the past 15 years is that no company, organisation or consortium had the capability or will to put up the £800 million necessary to keep Rover under British control. The most telling criticism of the Government is their lack of commitment to manufacturing industry and the fact that they made no attempt to put together a British solution.

I presume that the President knew that British Aerospace was trying to sell the whole outfit and about the financial pressures on British Aerospace. I presume that he read the report presented to him last year by his aviation committee, pointing out that levies from the Treasury on aerospace sales now exceed current Government contributions to grant aid for research and technology in aerospace.

Mr. Phillip Oppenheim (Amber Valley)

Will the hon. Gentleman give way?

Mr. Cook

No, I should like to continue this passage. I assure the hon. Gentleman that I shall give way to him. I have never failed to do so because it is always highly worth while. If he will be patient, his turn will come.

I presume that the President noticed his aviation committee's conclusion that our level of support has declined relative to other countries, that we are the only country that now deducts EC research funding from Government funding for research and technology in aerospace, and that unless we match other country's budgets we shall be forced out of key areas of aeronautics". British Aerospace has advertised that very danger in the past two months by declaring 1,900 redundancies since the beginning of this year. Is there any doubt that there were troubles at Rover's parent company? They were banished when British Aerospace decided to sack its chairman with a payment of £3.2 million for his year and a half in office. That is enough to meet the redundancy payments of 1,000 ordinary workers. When the Prime Minister was asked about it, he told the House that it was not a matter for him.

The Government cannot insist that work forces should be flexible and on low wages and casual terms and conditions, and then stay silent when top executives take small fortunes when they are sacked by the same companies. That is a double standard which will destroy any attempt to build a common purpose which is necessary to regenerate our industrial base.

Mr. Oppenheim

Does the hon. Gentleman have any recollection of the state of the British car industry when Labour was in power? Does he have any shame for Labour's record when they were in power? Is not it true that under the last Labour Government we lost the chance of having a genuine British global player in international car markets? It is both a miracle and a tribute to what this Government have achieved that we have brought the British car industry back to this state when companies such as BMW are willing to take it over.

Mr. Cook

I remember what the situation was like at the end of the last Labour Government. I remember that we had a trade surplus—and we had run a trade surplus in every year of that Government, in a way that this Government have never managed in any year. I remember that we achieved an investment rate of over 3 per cent. of gross domestic product in manufacturing industry in a way that this Government have never managed to achieve. I remember that we had an unemployment level that this Government would regard as a major triumph if they ever once achieved it.

Mr. John Sykes (Scarborough)

Will the hon. Gentleman give way?

Mr. Cook

No. I remember one other thing, since this Government are so adept at claiming that they have no responsibility for what is happening in industry: I also remember that we had a mining equipment industry. I know what has happened to that industry over the past two years. Butterly Engineering has laid off one third of its work force since the President took office; the Dale Group has more than halved its work force since the President took office; and the Anderson Group is down one quarter in its work force.

There is no point in the Government congratulating themselves in their amendment on achieving low inflation and creating the conditions for business success and then telling those companies that the conditions for business success have been put in place. Those companies are going down because the President has destroyed their market by presiding over the closure of the most profitable pits in Europe with the richest coal reserves in Europe. Let us not hear the Government say that that is not their responsibility.

Mr. Jacques Arnold (Gravesham)

Will the hon. Gentleman give way?

Mr. Cook

I shall give way in a moment—I want to conclude this passage.

There is an evasion of responsibility in the Government's amendment. The opening line of the amendment invites the House to regret the Opposition's denigration of the achievements of United Kingdom companies. For the record, the achievements of United Kingdom companies over the past 15 years have been heroic, given the background against which they had to operate. But I must disabuse the Government. The subject of the debate is not how well companies have done against that background, and it is not the achievements of United Kingdom companies over the past 15 years—it is the Government's record as the stewards of Britain's industrial prosperity over those 15 years.

Dr. Liam Fox (Woodspring)

Will the hon. Gentleman include in that list of heroism of British industry British Steel, which cost the taxpayer £300 million a year when it was in the state sector and which is now a major contributor to this economy? That is the real success of privatisation under this Government.

Mr. Cook

If the hon. Gentleman wishes to debate steel —I know that a number of my hon. Friends intend to speak on steel—and if he speaks to senior executives in British Steel, he will not find a warm echo for the Government. Those executives remember how only last December a Minister of State, having given an assurance that he would agree to no deal rather than a bad deal, went to a meeting in Europe and agreed to the continuation of subsidies for companies that are undercutting British Steel. The problem for British Steel now is that it has in Britain some of the most successful and most efficient plants in Europe, which are now at risk.

Several hon. Members


Mr. Cook

I appreciate the enthusiasm of hon. Members to take part in this debate. I wish to ensure that there is some time for them to take part when I conclude, so if they will forgive me I shall continue my speech. [Interruption.] My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) presents me with some advice with regard to the hon. Member for Scarborough (Mr. Sykes). It may be advice that tempts me to allow the hon. Gentleman to intervene at a later stage, which I would not object to.

Why have we seen that decline in investment in British industry over those 15 years? In case we are accused of running down the British people as well as United Kingdom companies, I must say that there has been no reduction in the inventiveness or creativity of British people. British designers are working all round the world. They are designing Yamaha motor cycles, Pentax cameras and Tefal kettles and they are providing two thirds of the software for Nintendo and Sega. Any other nation would be harnessing that wealth of talent to build its own manufacturing base.

The Government must explain why, after 15 years in charge of Britain's industry, those creative designers, at the top of the global profession, are not working in Britain on goods to be made in Britain. One reason is that we have been through 15 years, during which at least one of the predecessors of the President of the Board of Trade told the nation that we need not worry about the decline in manufacturing, because we can all get jobs in the service industry, showing tourists round museums of industrial archaelogy after the factories have shut down.

There is another reason. Those 15 years include two of the worst post-war recessions into which the Government tumbled Britain, by a combination of record high interest rates and an overvalued exchange rate on both occasions. Both recessions closed more industrial capacity than was destroyed by enemy action in a world war. It is permanent loss of capacity. If any Conservative Members doubt that, let them look at the trade figures. In every year until the recession in the early 1980s, Britain ran a surplus in manufacturing trade. In no year since that recession has Britain had a big enough industrial base to avoid running a deficit in manufactured trade.

Last June, the Prime Minister addressed the National Conservative Women's conference. He urged that audience to look around Europe. Look at France, at Germany, at Italy. Wherever you look things are worse than they are in Britain. Let us look at France, Germany and Italy—those industrial sick men of Europe. The last six months of trade figures that we have for those countries cover the period conveniently up to June 1993, which was the month of that speech. In the six months before that speech, every one of those countries ran a surplus with Britain—a surplus of £17 million in manufactured goods in every working day. Since 1985, they have all increased their exports faster than Britain; they have all had a smaller loss of manufacturing jobs than Britain and they have all increased manufacturing output faster than Britain. Those are the countries with which the Government invite us to compare their record.

Mr. Jacques Arnold

Can the hon. Gentleman tell us how British manufacturing exports to Malaysia are assisted by the antics of the right hon. Member for Copeland (Dr. Cunningham)?

Mr. Cook

There is one reason why British exporters to Malaysia now face the possibility of disruption of their trade and that is the corrupt way in which the Government put together the Malaysian dam deal. [Interruption.] The hon. Member for Gravesham (Mr. Arnold) received an answer to his question. It would be nice if, just once in 15 years, Conservative Members were prepared to accept responsibility for an error they made and which is now hitting manufacturing industry.

We know on whom the Government will try to dump the blame for the poor figures of the past 15 years. We know who stands in for the Attorney-General as a scapegoat for the decline in manufacturing—it is the workers. They are not flexible enough or cheap enough or they are too wedded to what I suppose is now seen as another damaging excess of socialism—an ambition to hold a secure, full-time, well-paid job.

I give the Government this: if their strategy was to destroy secure, full-time, well-paid jobs as the obstacle to growth, their policies have been a runaway success. There have never been so many people working in this nation without a permanent contract of employment, without protection against unfair dismissal or without security at work.

Mr. Sykes


Mr. Cook

The hon. Member for Scarborough is not secure in his place of work, but I will give way to him.

Mr. Sykes

Will the hon. Gentleman tell the House how many manufacturers he has met during his career who agree with the Opposition's policy on the social chapter?

Mr. Cook

I must say that I addressed 120 industrialists before I came to the House, and not one raised the issue of the social chapter. The concerns that we constantly hear from the Government—that the social chapter in Britain would deter inward investment—sits oddly with the recorded fact that employees of companies working for foreign firms in Britain receive an income 25 per cent. higher than those working for British firms.

The Government have chosen to create a casual, part-time and low-wage labour market. They not only chose to create it—they boast about their success in creating it. They advertise for foreign companies to come here because British workers are worse paid. The central office brief on the sale of Rover congratulates Conservative policies in creating a work force which is paid one quarter less than the work force in Germany.

We must be the only democracy in which the elected Government hope to run for re-election on the slogan that one is worse off under them. There is a problem. A casual, short-term and low-paid work force will also be a poorly motivated, badly trained and low-skilled work force. One does not get a competitive and keen work force if the workers know that they are treated as disposable assets. One does not get a commitment to invest in the training of a work force from a company that has no commitment to that work force.

Last autumn, the Chancellor of the Exchequer attended the World Economic Forum, which published its 1993 report. I know that the right hon. and learned Gentleman is not a great reader, but he might take the report along with him the next time he slips into the back row of Ronnie Scott's. He might then consult the table that ranks the 22 member states by the availability of skilled labour. He will find that that table puts Britain plumb bottom. That is a measure of the damage that the Government have done by building a deregulated and casual work force.

We will not compete with the low-wage work forces in the far east economies on the basis of wage costs. Not even this Government could advertise for investment on the basis that we can pay workers one quarter less than China. The only way to survive and to preserve a quality of life in Britain is not to trade down in wage levels but to trade up in the value that is added to the things we make, and that takes investment.

Mr. Jacques Arnold

What a revelation.

Mr. Cook

The hon. Member for Gravesham finds that to be a revelation. That brings me to the central crashing failure of his Government's industrial record. They have presided over the collapse in manufacturing investment, which is now at its lowest level as a percentage of GDP since the Central Statistical Office started taking records.

In 1979, investment in manufacturing as a percentage of GDP was 3.5 per cent. I invite the hon. Gentleman to pay attention to the next line, because he will find it to be a revelation. It is currently at just over 2 per cent. For the hon. Gentleman's edification, that is a drop of one third in real terms. Never once in any of those 15 years have the Government matched the level of investment in manufacturing as a percentage of GDP of any year under Labour. Even the Government's best year is worse than the worst year under Labour.

I will be even more insulting to the hon. Gentleman, who may find this more difficult to swallow. Even in the Government's best year, the figure was lower than in any year under the Government of the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) which it was once fashionable to denounce even more virulently than the Opposition.

The Government cannot come up with another alibi —they were present at the scene of the crime. They have been in power throughout the period in which investment in manufacturing industry has declined. They share some of the responsibility for that historic low rate of investment because, during the same period in which they weakened trade union power at the workplace, they strengthened the financial power over industry.

The results are there for all to see. Under the Government, the proportion of profits paid out as dividends has gone up from about 50 per cent. to almost 70 per cent. We are now distributing in dividends almost double the proportion of profits of Germany or Japan, which is why our investment performance is weaker. They retain two thirds of the profits to be reinvested in the company; British companies retain only one third of their profits for reinvestment. That is why every German worker and every Japanese worker is backed by more capital, more plant, more machinery and more investment than every British worker. I concede to the hon. Member for Gravesham that industrialists know that.

Industrialists are aware of the need to invest more and to pay out less in dividends. They keep their dividend up because if they do not the price of their shares will fall and they will become vulnerable to a takeover. They know that if they become vulnerable to a takeover, they will receive no help from the Government, who have presided over a record number of takeovers with a minimum number of interventions. They have not once referred a hostile takeover to the Monopolies and Mergers Commission on the grounds of its threat to a technological base, its threat to employment or its threat to the regional balance of our economy. Even in the recession, dividends went up one sixth while investment went down one fifth. How can it be right to increase dividends when we cannot afford to invest?

The real problem in British industry that the Government should attempt to resolve is not the high cost of wages, but the high cost of capital. The question that the Government should ask is why the rate of return expected on a research and development project in Britain is 50 per cent. higher than in Germany and 200 per cent. higher than in Japan. They should ask why Britain is the only one of those three countries that invests less in research and development than it pays in dividends.

Mr. Roy Thomason (Bromsgrove)

Does the hon. Gentleman agree that the reason might be that we have had high inflation, which is why returns have had to be higher?

Mr. Cook

I am confused. I do not know how often the hon. Gentleman has dropped into Treasury questions, but I understood that we were now in a permanent non-inflationary economy. I understood that the Government's prime claim to achievement was to have knocked inflation on the head. But last year investment in manufacturing industry did not rise in response to that decline in inflation; last year, investment in manufacturing industry fell by 2 per cent. Therefore, while I welcome the hon. Gentleman's doubts about the Government's inflation record, he cannot use that as an explanation for the figures that I have given.

We live in an age of rapid technological change. The future belongs to those nations that develop new technology and manufacture the products that other nations want to buy. The method of entry for joining those nations is to be found not through low wages and skills, but by putting Britain on the road to high investment and advanced research.

Central office briefs for such debates always contain another traditional feature. Somewhere in the brief—no doubt it will appear again today—is the accusation that Labour has no policies. If Conservative Members cannot put their finger on the passage in today's brief, I can tell them that it is usually found at the end of a three-page attack on Labour for making too many commitments. In case a Conservative Member, such as the President of the Board of Trade, is tempted to try that one on, I shall spell out how Labour will put Britain back on the road to higher investment of the sort that was achieved under the last Labour Government.

The proposals are contained in the document published last year. It proposes reforming the tax system to encourage investment and reviewing the changes to corporation tax that were introduced by a previous Conservative Government who placed bigger taxes on profits invested and lower taxes on profits paid in dividends. The document contains a proposal to provide industry with the security to retain profits for investment by protecting them against hostile takeovers that threaten our technological base. It proposes examining what new institutions are needed to step into the investment gap, such as a development bank on the lines of the German KFW, which specialises in providing support to help small businesses grow into medium-sized enterprises.

We will set up a network of regional development agencies to decentralise to local people the initiative to promote their own local economic development and to encourage them to match local savings to local investment. We will set up a defence conversion unit so that we can make the best use of the skills that are now being taken out of the defence economy. That would end the waste of those skilled resources that have been going through the door of redundancy into the waste of the dole queue.

Two months ago, I produced a document showing how we would encourage the development of small businesses by providing them with a statutory right to interest on late payments from big businesses and by providing a moratorium on insolvency proceedings to give them the possibility of being rescued as going concerns instead of simply joining the swelling ranks of bankruptcies.

Only last week, I and my hon. Friends the Members for Dunfermline, East (Mr. Brown) and for Kingston upon Hull, East (Mr. Prescott) published a document showing how we would take the Treasury straitjacket off public sector enterprise to give it the freedom to mobilise financial investment.

If anyone outside the House wants to see one sharp difference between our commitment to manufacturing industry and the Government's absence of commitment, they can find it best in the months that the Government have spent dithering over the proposal by London Underground to lease new stock for the Northern line from the Derby works. That proposal is urgent because the present rolling stock is near the end of its life and the Derby works is near the end of its contracts. It would save the Treasury cash by keeping 1,200 people off the dole queue.

If the President wants to persuade us that the Government are serious about boosting British manufacturing, let us hear from him that he will throw his weight behind a project that will both improve the quality of public service and hold together a skilled production team for the future of the British manufacturing base.

When we published the documents that I have placed on the Table, setting out an industrial strategy that realises a vision of Britain in which we are once again a manufacturing nation, leading and not lagging behind our competitors, we were accused by Conservative Members of socialism, interventionism and other things that they pronounce with distaste. Conservative Members are the only people I know who can make a four-syllable word such as interventionism sound like a four-letter word. The irony is that it is they who are out of step; all the rest are practising interventionists. Every other country in Europe provides a higher level of support to its manufacturing industry. Even Ireland and Portugal provide a higher level of support per capita for manufacturing industry.

In the far east, the state plays a leading role in industrial strategy. In Taiwan, the state identified 10 new sectors for high-technology production and where the companies did not exist, the state brought: in the private sector to set them up.

In north America, home of capitalism, the Clinton Administration have brought the automobile industry together in a national project to design the car of the future: a car low on gas and pollution and high on safety and export orders. What a contrast that is with the British Government, who look the other way while Rover is taken over. They are the real oddballs; they are the odd ones out, the only ones who believe the future of a sophisticated industry can be left to the market. They are the only ones who believe their own rhetoric about the market always producing the best result. The real result is the worst performance among our competitors. In 15 years, it has produced the slowest growth in output and biggest drop in manufacturing investment as a percentage of GDP.

It is a measure of the extent to which the Government have spiralled out of touch with ground control that Ministers still make speeches in which they claim that the worst industrial performance is actually the best. They have had 15 years to try out their ideology and the result is that, of all the British Governments of the post-war period, they have clocked up the lowest growth in GDP.

Fifteen years is long enough for a social experiment; it is time that they accepted one of the principles they keep pushing on everybody else—that the great advantage of a flexible work force is that we can dismiss it when the enterprise fails. The Government have failed Britain. The time is coming when Britain will dismiss them.

4.24 pm
The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: 'regrets that the Opposition persistently denigrates the achievements of United Kingdom companies; recognises the importance of manufacturing to this country's economy; congratulates Her Majesty's Government on its success in achieving the conditions for sustained non-inflationary growth-low interest rates, low inflation and good industrial relations; and welcomes the fact that both the OECD and European Commission are forecasting that the United Kingdom will be the fastest growing major economy in the EC in 1994 and 1995.'. The hon. Member for Livingston (Mr. Cook) spent the morning with the CBI. It has been helpful to the CBI that he spelled out this afternoon the policies of the Government of which he would like to be a member. My colleagues and I listened with interest as he went through the strategy—the proposals—with, if I may say to him frankly, refreshing detail.

I had not known until today that we would have dividend control under a putative Labour Government. I had not known, although I confess that I had suspected, that the one condition that would not matter in the conduct of the future business of a company was that it should make profits. It could make cars, toothbrushes, refrigerators or notepaper, but the one thing that would not matter is profit, because that was the one thing that the hon. Gentleman did not know about all the companies that he lauded so much on the continent of Europe.

The difficulty with making no profits is that one cannot get investors—with one exception. The state will invest in non-profit-making businesses. But there is a difficulty, because the right hon. and learned Member for Monklands, East (Mr. Smith), the Leader of the Opposition, who has wisely left the Chamber, has promised us that there will be no ownership of companies by the state.

Indeed, my hon. Friend the Member for Colne Valley (Mr. Riddick) kindly asked—he seems to have gone as well, which is a shame but his question was nevertheless a good one—whether, within the purpose of the Labour party, there would be any further ownership as laid out by clause 4. That is a good question. I, too, have asked that question. I took the trouble to write to the Leader of the Opposition and ask for an answer. He wisely did not give one.

What has been revealed in the House this afternoon beyond peradventure is that, if companies do not make profits, only the state can intervene; but the state is apparently not going to intervene. The logic of that is that we shall not have any companies. That seems to me to be a fundamental lacuna in the argument of the hon. Member for Livingston.

I have to say to my hon. Friend with due apology, if he will bear with me—he will see this if he reads Hansard tomorrow—that I have tried to address the pertinent question which he put to the House, and which in his absence I have answered.

The hon. Gentleman went on to deal with competitiveness. It is a remarkable achievement to address the House on one of the single greatest challenges that faces this country—the competitiveness of our industrial base, on which the hon. Gentleman is about to produce a report —without going through any of the significant factors that add up to competitiveness. I will take a little time of the House to address the real issues.

The next step forward of the hon. Gentleman's brave new policy initiative was regional development agencies. They are mini national enterprise boards. There will not be one granddaddy National Enterprise Board, with great and worthy figures chosen from national life. Instead, they will be chosen from local and regional areas, will do the work locally and will therefore be much less exposed to national scrutiny than was the original National Enterprise Board.

I single out one issue on which apparently there are real difficulties. We are to have a defence conversion unit. For most of the past decade, when it fell to me to comment on these subjects, the Labour party tried to close down the defence industries. Now that, mercifully, we do not face quite such an international threat as previously, the Labour party wants to spend time converting the defence industries, which, if it had had the power, would have already been closed down.

I ask my right hon. and hon. Friends to ponder the spectre of those defence conversion units. Where will the civil servants who will give advice to the leading British industrialists come from? We would have some trade unionists, presumably to give them a representative view from the shop floor. We shall need some academics to bring that searching analysis that we have heard from the Labour party, which is based on one conviction; its Members have never spent a day in their lives making anything in any company. Then we shall need some bishops to draw up a code of morality to ensure that no British product goes to any company in the world whose practices can be found in any way to be undermining those of the party in power. All those people will then sit down in a great huddle to design the car of the future.

Mr. George Stevenson (Stoke-on-Trent, South)

The right hon. Gentleman said that Opposition Members had not worked in industry. Would he care to tell us how many coal mines he had worked in before he closed them, and how many industries of any kind he has worked in, as part of a Government who have presided over the destruction of manufacturing in this country?

Mr. Heseltine

I have never worked in any industry as part of a Government. I have spent my life trying to take industries out of the hands of Government—and, as a result, we have returned the commanding heights of the economy to the private sector, where they are winning for Britain in the markets of the world.

Perhaps I may digress by taking the House back to the essence of the motion, which concerns the competitiveness of the British economy. The hon. Member for Livingston may not wish to deal with that in general and wide terms; it seems to me, however, that anyone making a serious analysis of the state of the British economy would want to consider the exchange rate, which is competitive. I think that such a person would want to ask questions about the state of British exports, which are now at an all-time high —63 per cent. higher in volume terms than when Labour was last in government.

We have low interest rates: the United Kingdom base rate now stands at 5.25 per cent., the lowest rate since 1977 and among the lowest in the European Union. Interest rate cuts since 1990 are worth more than £13 billion per year off companies' interest charges. Inflation has fallen dramatically: the retail prices index, excluding mortgage interest payments, is 2.8 per cent. Over the past four months, underlying inflation has been the lowest since 1968. UK inflation is below the European Community average on all measures.

Manufacturing productivity is at an all-time high: it is more than 3 per cent. higher than a year ago. Between 1979 and 1992, total plant and machinery investment increased by nearly 50 per cent. The only way in which the hon. Member for Livingston can make any kind of case is to select one sector of the economy. I shall deal with his reasons for doing that in a moment.

Mr. Geoffrey Robinson (Coventry, North-West)

The right hon. Gentleman said that we should be posing questions about the exchange rate. He will recall that, at our last Trade and Industry Question Time, I asked him a direct question on the subject, and was given the usual brush-off of an answer that we expect on such occasions.

The right hon. Gentleman knows as well as I do that the exchange rate is crucial to our competitiveness. Will he now state categorically that we want no further appreciation of the rate against the dollar or the deutschmark, in the interests of maintaining that competitiveness?

Mr. Heseltine

How can the hon. Gentleman sit on the Benches of a party whose Front Benchers hardly ever make a speech without demanding larger and larger items of public expenditure, which would stoke inflation and cause the depreciation of the exchange rate? That is why the Government's counter-inflationary policies are fundamental to competitiveness.

We now have the best industrial relations for over 100 years. Moreover, nearly 1 million new small businesses have been formed since 1979. If the hon. Member for Livingston had analysed our competitiveness against that broad horizon, and explained how his party would address and improve the position, I would have respected him.

Mr. Peter Hain (Neath)

Will the right hon. Gentleman give way?

Mr. Heseltine


Our industrial production has increased by 3.5 per cent. in a recent quarter; it fell in France, Germany and Japan. Both the Organisation for Economic Co-operation and Development and the European Commission are forecasting that the United Kingdom will be the fastest-growing major EC economy in 1994 and 1995. To make a speech in the House against that background is simply to indulge in the traditional practices of the Labour party—mischief-making and running the country down.

So, because he dare not face up to the realities of addressing competitiveness, the hon. Member for Livingston has to single out three specific issues, three industries—and I want to deal with them.

Let me start with cars. I doubt whether a sector of the British economy has been so transformed over the 1980s as our car industry. The motion calls for high investment. Let the hon. Member tell us how much higher the investment by Ford, at £3.4 billion, he thinks should have been. Let him send a message to Vauxhall, complaining about the £650 million that it has invested here. Let him tell Nissan to take its £930 million back to Japan. Let him explain to Toyota that its £840 million was not welcome or Honda that its £370 million was insufficient.

If he were prepared to tell all those companies that, I would at least understand what he was saying, but to pretend that it has not happened and that it does not matter is a travesty of the truth.

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


Mr. Heseltine

The hon. Member for Livingston did one thing for which I am grateful, one thing that I praise and admire: he quoted from my book. I was going to tell all right hon. and hon. Members that it is available from the Library but, much better than that, it is available at all good booksellers. I did write the words that the hon. Member quoted and that many other commentators have quoted, and I do not in any way draw back from them.

As Ministers responsible, when faced with the issues surrounding the recent sale of Rover, we did not stand back from them. It so happens that I was in the far east on a trade mission, but my right hon. Friend the Minister for Industry (Mr. Sainsbury) saw the leading figures in BMW., as a result of which assurances were given. Are Opposition Members going to sneer and laugh at those assurances? No, they go very silent.

The fact is that Rover now has a major interest in working with BMW, and Labour Members are longing to find a way to undermine the credibility of that position. They are at it again, as they always are; when faced with straight questions, they go quiet—and they should go quiet.

Several hon. Members


Mr. Heseltine

My right. hon. Friend the Minister for Industry received assurances from the BMW chairman that Rover would be maintained as a separate enterprise, based in Britain, with independent manufacturing, design and development facilities and with purchasing and distribution functions. I am proud that it was one of my Ministers who asked for and received those assurances.

It means that Rover now has the opportunity to take advantage of the international dealer base and the expertise of BMW in increasing the scale and strength of the British motor industry, so that it will be a part of what we now perceive to be the opportunity to close the deficit in our balance of trade.

Several hon. Members


Mr. Heseltine

So I have no apologies to make. Indeed, I would go further. As many right hon. and hon. Members will recall, we had a debate in the House not that long ago about Leyland DAF, when the hon. Member for Livingston was at it again. He wanted us to do what the Europeans do, but we refused. We gave every possible help to the receiver to find people who would take over those businesses.

Today, the three businesses are back in the private sector in their own names and are increasing production, and the Government have contributed, at the very most, £5 million-worth of regional aid. What the Europeans did was to become deeply involved. It cost their taxpayers over £100 million, and the European Commission is investigating the aid programme that they put forward.

I can imagine that that would have squared the hon. Member's circle. What a joy. He would have pushed us further into Europe, he would have put social costs on the backs of those companies, the whole thing would have been referred to the European Commission, and the Labour party could have paraded it as a triumph for the internationalisation of the European process.

Let me now move on to the second of the hit targets that the hon. Member for Livingston singled out—our steel industry. The motion is very interesting, because it refers to industries that should not be allowed to fail. I do not think that anyone thinks that those industries should be allowed to fail, but what did the hon. Gentleman have in mind when drafting the motion and referring to the industries that must not be allowed to fail, including steel?

The hon. Member for Livingston said that the British steel companies were among the best in Europe. Why? Because we privatised them. Because they have improved their output and their cost structure and their profitability, we no longer have to subsidise them as taxpayers, and the hon. Gentleman said that they are among the best in Europe.

In that case, why are they in this Labour party motion? Why should anyone think that they are in danger of failing if they are the best in Europe? The answer is that it is only the Labour party that wants to create the impression that they will fail in order that Labour Members can pander to the worst anxieties of their constituents in order that they can do what has to be done in their party interest, regardless of the interests of Britain's companies, which are undermined in the process. [HON. MEMBERS: "Hear, hear."]

The third issue singled out by the hon. Member for Livingston was, interestingly enough, airframes. I have been Secretary of State for Defence and Minister for Aerospace and Shipping. I have been deeply involved in the aerospace industry. [Interruption.] There is not much point in talking to Opposition Members. They do not listen —and, much worse, if they did listen they would not understand.

I have spent many political years involved with that industry and I have never yet heard anyone in that industry say, "We want a policy for the airframe industry." We do not build gliders in this country. We have an aero-engine industry; we have an avionics industry. Why, therefore, did the hon. Member for Livingston single out airframes? I will tell you why, Mr. Deputy Speaker—because if he had mentioned aero-engines he would have had to face the fact that the triumph of Rolls-Royce plc is a triumph for privatisation, and he cannot bear success.

Mr. Robin Cook

I am sorry to disabuse the President of his hypothesis. The reason why those three words are there in the second line of our motion is that they are a direct quotation from page 111 of his book.

Mr. Heseltine

Absolutely— [Interruption.] I will do a deal with the hon. Gentleman. If, from now on, he will follow my policies and my quotations, I will cease to attack him across the Dispatch Box.

The aero-engine business is a critical one. Rolls-Royce is an example of just how successful British manufacturing industry can be, with an order book of £6.4 billion and 25 per cent. of the world market.

The hon. Member for Livingston asks again for a strategy. Perhaps I can tell him the strategy. For example, in the case of the airbus, we have provided £700 million of financial support to British Aerospace. The EH101 helicopter, a joint Ministry of Defence/Department of Trade and Industry project, costing £57 million; the Tornado, with £7.5 billion of Government money; the European fighter aircraft, with £1.4 billion of support; and the Hawk, one of the most successful aircraft of its type that has been launched in this country, were all built with the help of British taxpayers. Those are the facts; those are the results.

The hon. Member for Livingston wants to substitute, for that real support for real projects and real success, a vague range of platitudes, which will add not one whit to national wealth.

Mr. Campbell-Savours

The President, as he chooses to call himself, tells us that he spent all that taxpayers' money. Can he explain to us why he spent that taxpayers' money in that way? Why?

Mr. Heseltine

I did it to help Britain's defence industries and to help Britain's defence capability. I have always been prepared to acknowledge that, if we do not understand that, we shall not be able to face the fact that other countries—America, France and a range of other countries—support their defence industries, and it is a world competitive process. I have always argued that case, and I have never heard it seriously questioned by Conservative Members.

Let me discuss one other aspect.

Mr. Richard Caborn (Sheffield, Central)


Mr. Heseltine

Forgive me: I want to make some progress.

Let me mention one other major fallacy of the motion. It points out that employment has been decreasing in some of those industries—the major manufacturing industries —and the solution, apparently, is more investment and the use of more highly skilled people.

What the Labour party cannot understand—has not begun to embrace in its analysis of the world that confronts us—is that more investment and the use of more skilled people might lead to fewer people being employed. That is the dilemma that confronts the advanced technological world in which we move. Any suggestion—that is what the Labour party did with the steel industry—that one can stop or slow that process leads to the loss of markets, to increased subsidisation and, in the end, the rationalisation which too often takes one out of that business altogether.

The very things that the Labour party is speaking about, therefore—increased investment to secure the increased productivity and competitiveness—are likely, in many cases, to result in a reduction in employment. There is no point in the House and the country not understanding that, and explaining it to a work force who will have to have better and more widely based training precisely to enable people to move from job to job more frequently, several times during their working life.

That brings me to the question that I asked at the beginning—why did the hon. Member for Livingston choose manufacturing? There is an answer to that. Why did he choose those three industries? He did so because it so happens that, in this regard, they produce a case which does not extend across the range of the British economy. The answer to that is very important.

Manufacturing accounts for only 27 per cent. of the wealth-producing sector and 20 per cent. of the whole economy. Of course it matters, but every sector matters, and the only reason why the hon. Member keeps using those statistics is that he cannot find any way of applying the general case to the general state of the economy.

The only intellectually honest way to deal with comparisons of that type is to compare peak with peak and trough with trough; the high point of one economic cycle, compared with the high point of another. However, the hon. Member for Livingston cannot do that because, if we compare the high point of 1979 with the high point of 1989, his case falls apart. Manufacturing investment was greater under the Tories, up from £13.5 billion to nearly £15 billion between 1979 and 1989.

Let us therefore take the hon. Gentleman's own phoney way of dealing with those issues, which is to consider the whole economy. Investment for the whole economy in 1979 was £75.8 billion. The comparable figure for 1992, comparing a peak with a trough, was £94.7 billion. [HON. MEMBERS: "Oh."] Comparing a Labour peak with a Tory trough, what do we find? A growth of 25 per cent. in investment.

The news gets rapidly worse for the hon. Member for Livingston. The ground is already being cut from under his feet. The figures in the latest Confederation of British Industry surveys show—I would be the first to recognise that not many hon. Members have seen the latest CBI surveys; they were so good that they hardly received a mention anywhere in the national press—that the gross domestic product in the last quarter of 1993 was 2.5 per cent. up on the previous year. The Organisation for Economic Co-operation and Development forecast is that manufacturing output in the United Kingdom will grow by 3 per cent. next year—one of the fastest rates in the European Union. Certainly manufacturing matters, but it is myopic to pretend that the energy, tourism, construction, communications, entertainment and invisibles industries do not matter at all. They all contribute to the national economy, and they include some of the most successful and largest companies in this country.

As the hon. Member for Livingston is prone to publicise good news, I am sure that he will want to congratulate the Stakis Hotel Group, which recently announced a £6 million project to build a hotel in his constituency. I hope that there will not be a row of placarded pickets outside demanding that it be closed because it is not manufacturing, because such an action would not come across very well.

I refer now to the hon. Member for Leeds, Central (Mr. Fatchett), who will be winding up the debate for the Labour party. I hope that he too will celebrate the good news of the £1 billion order from the Ministry of Defence for Challenger tanks and a £140 million order from Oman for tanks and vehicles—unless Labour can find a way of upsetting our relationship with that country which would lead to the cancellation of the order.

Why did we not hear anything from the hon. Member for Livingston about the small and medium-sized economy of this country? Why did he not tell us about the 1 million extra companies that have been formed despite the world recession? The fact is that, every time the hon. Gentleman talks about competitiveness, he has to resort to generalisations and vagueness. He is not capable of producing solid policies relating to the wealth-creating process.

Mr. William Cash (Stafford)

My right hon. Friend mentioned intellectual honesty and the macro-economic situation. He may recall that our 1992 manifesto committed us to the exchange rate mechanism as the centrepiece of our counter-inflationary policy. Does he accept that it was a failure, and that we should under no circumstances re-enter it? In view of the good news to which he has referred, and in the light of his views on the role of the Treasury in these matters, does he agree that we must ensure that we do not go back into the ERM, and that we will not take a single step further towards economic and monetary union?

Mr. Heseltine

I can say only that I helped to write that manifesto, and there is not much point in my hon. Friend trying to re-write it now.

It is very important that we deal with competitiveness. Nobody can seriously doubt the nature of the challenge we face in the world of wealth creation. The Opposition parties —the Liberals play the game as ruthlessly as the Labour party—talk of the national preoccupation that great care must be taken before we take risks with the national reputation and self-interest of our companies overseas. The fact is that Opposition politicians have become expert at undermining by innuendo and smear the interests of our exporting companies.

Let me explain to the Opposition parties that Britain does not rule the world. We do not dispense justice to the world; we do not police the world; and we do not establish the customs and practices of other countries. But we do have to sell to the world, and everything that is said here is used to harm our interests and is exploited by our competitors.

On the shop floor and in the boardrooms of this country, every sanctimonious posture is seen for what it is—the desperate parading of Opposition parties trying to get cheap publicity, regardless of the damage they do to British firms and investment. For that reason, I believe that the House will want to support the Government tonight.

4.53 pm
Mr. Doug Hoyle (Warrington, North)

Listening to the President, as he likes to be called, giving his prospectus for the future of manufacturing, one would believe that we were living in a paradise. He could also perhaps have explained why the Government are so electorally unpopular, for unpopular they are. Many people would not begin to recognise what the President of the Board of Trade tried to explain to us.

Conservative Members, especially those sitting on the Government Front Bench, are like false rain doctors who keep saying that the rain will come tomorrow and the famine will soon be over. The truth is that the rain is not likely to come—we are as far from prosperity as ever.

Mr. John Evans (St. Helens, North)

My hon. Friend shares a constituency boundary with me. Is he aware that SmithKline Beecham today announced the closure of the Beecham's factory in St. Helens with the loss of 480 jobs, thus ending a 150-year association with the town? Is he aware that, seven days ago, the company reported an increase in profits to £1.2 billion but did not have the courtesy to inform the work force or the trade unions of its intention to close the factory? Is that not typical of the way in which British employers treat their work forces?

Mr. Hoyle

I could not agree more with my hon. Friend. I see that the hon. Member for City of Chester (Mr. Brandreth) is smiling. If redundancies in the north-west amuse him, it is perhaps something about which he should search his conscience.

Mr. Gyles Brandreth (City of Chester)


Mr. Hoyle

No, I shall not give way.

Mr. Brandreth

Will the hon. Gentleman please give way, as he mentioned me?

Mr. Hoyle

Oh, very well.

Mr. Brandreth

One is, of course, always concerned about any new unemployment. I am grateful that unemployment in my constituency is about 27 per cent. lower than five years ago because of all the inward investment. Will the hon. Gentleman tell us something about the social chapter, which the hon. Member for Livingston (Mr. Cook) failed to explain? The Department of Employment reckons that the cost of the social chapter would be about £5 billion. What do manufacturers in the hon. Gentleman's constituency believe that the cost would be?

Mr. Hoyle

I can tell the hon. Gentleman that there will be no manufacturers in my or any other constituency if the Government continue as they are. It was significant that when my hon. Friend the Member for St. Helens, North (Mr. Evans) gave the House the grave news of the factory closure, the President chose to ignore it and left the Chamber. He left and the hon. Member for City of Chester smiled—I do not believe that that is the way to treat such news.

It is all very well for the President of the Board of Trade to tell us about his wide experience in industry, but he has never worked in industry in his life. The same is true of all Government Front Benchers and, indeed, of many Conservative Back Benchers. I should have preferred the President to consider the underlying problems which could occur and which have occurred in the north-west.

In Lancashire alone, 40,000 people work in the defence industry. All their jobs could be affected by the imminent defence cuts, but we heard the right hon. Gentleman try to decry my hon. Friend the Member for Livingston (Mr. Cook) and our attempt to think of other industries and products to create new jobs. We would establish a defence diversification agency to examine what we could be doing. That idea was received with laughter, despite the fact that jobs are disappearing. The hon. Member for Chorley (Mr. Dover) is as worried as I am. He nods his head and shows sympathy and concern because 823 jobs might go at the royal ordnance factory in Chorley. In fact, notice has already been served. The 800-acre site in Chorley should be developed, yet the President of the Board of Trade said nothing about it.

The matter is of grave concern in the north-west. In Cheshire, Cammell Laird recently closed down. My hon. Friend the Member for St. Helens, North expressed concern about the rundown of the work force base. There has been a rundown of industry at Pilkington. In the past two weeks, 109 jobs have been lost at BICC in my constituency because of the state of economy. My hon. Friend said that the Parkside pit, the last in the north-west and one of the most modern, has also shut.

Mr. Den Dover (Chorley)

Does not the hon. Member welcome the Government's new policy for the north-east, the east midlands and Yorkshire to designate enterprise zones in old coal-mining regions which have experienced an enormous loss of coal-mining jobs? That policy proposes 100 per cent. capital allowances, 10 years without business rating and free planning criteria. Will he therefore welcome the changes in the defence industry in the north-west and the introduction of an enterprise zone at the royal ordnance factory in Chorley, which, as he correctly said, has 800 acres of land available? We should be flexible and quick on our feet and should come up with new industries and job opportunities.

Mr. Hoyle

I should welcome an enterprise zone in Parkside, where the colliery has closed. The other day, I heard the hon. Gentleman question the Prime Minister without obtaining a positive answer on enterprise zones. I should welcome any measures that would create new jobs in not only Chorley but Newton-le-Willows, St. Helens and Warrington. We need those jobs.

Redundancies have been announced at AEA, which is one of the more successful companies in Warrington. The hon. Member for Chorley did heed a few words of sombre warning. He joined me in condemning the sale of the highly successful truck division of Leyland to DAF. We were right, because Leyland was sold off to a village company that was not large enough to provide the opportunities that the then Secretary for Trade and Industry said would develop. We were told that the sale provided a great opportunity, but we know what happened. The bus company was acquired by a management buy-out, and in turn it was sold to Volvo. We have witnessed the destruction of the bus and coach industry in this country. The modern bus manufacturing plant in the constituency of my hon. Friend the Member for Workington (Mr. Campbell-Savours) has closed.

Leyland, what is left of it, has experienced difficulties; but thanks to its management, it is holding its head above water. It is no longer the powerful firm that was recognised worldwide for its trucks, coaches and buses. We should take that lesson on board.

Rover, the last British car company, has been sold to a foreign company. We do not need to look into the crystal ball to learn any lessons: we recall what happened to the British truck industry. Rover has been sold to BMW, one of its competitors, with all the possible dangers of that. I am sure that the four-wheel drive vehicle, which was the jewel in Rover's crown, has a future, but the future of the other models is less certain, especially since Honda's announced withdrawal. Honda helped to create Rover's success. It invested money in new models and in research and development.

Will such investment continue? What will replace the co-operation and collaboration between Rover and Honda? Will BMW fill that vacuum? What will happen when there is competition between BMW and Rover models? The Opposition know and have tried to make the point that such decisions will be taken not in this country but in Germany. There is a danger that Rover's future models, especially its larger ones, will merely be badge-engineered products.

I should have thought that that would be of some concern to the President of the Board of Trade, who again outlined the prospectus and told us how successful we are. The hon. Member for Stafford (Mr. Cash) said that that success was due to our leaving the fixed exchange rate system. That enabled us to compete. We were taken into that system by the previous Prime Minister, who became one of its foremost opponents, but hon. Members should not forget that the Chancellor of the Exchequer at that time was the present Prime Minister. Entry might have been desirable, but the Government took us in at the wrong rate and at the wrong time. It is only because we left the system that we have had success with exports.

We must get rid of the structural difficulties that still exist in many of our industries. I noticed that the President of the Board of Trade again steered away from addressing the economic indicators. All hon. Members welcomed the falls in unemployment, but there was a rise in January. The retail sector and the previous Chancellor expressed fear about what might happen as a result of this year's Budget. They warned that tax rises would cut consumer spending and reduce the chances of a boom. The underlying rate of inflation, which has been the jewel in the crown of the Conservative party, is beginning to increase again. I should have thought that the President would spend some time examining those indicators.

As my hon. Friend the Member for St. Helens, North knows, the aluminium industry is important to Warrington. People in the industry told me recently of the consequences of free-market conditions. We are always told that everything must be left to the market. Free-market conditions in the world mean that the aluminium industry in this country and in Europe is being undercut by supplies from previously uneconomic plants in Russia, which use outdated smelters and pollute the environment. That puts the aluminium industry in this country, Europe and worldwide under great strain.

One understands that, given their position, the Russians are seeking to find what markets they can, but environmentally advanced smelters in this country are closing because of imports from countries whose plants pollute the atmosphere. Again, the President of the Board of Trade made no comment on that. What help and advice has he given to that important world industry?

The Minister might note and pass on to the Department of the Environment the importance of recycling in the aluminium industry. There is an aluminium plant in the Warrington, South constituency, the neighbouring constituency to mine. When considering how we can achieve greater success in recycling, I hope the Minister will tell the Department of Environment that the aluminium industry should be involved in its survey. There should be co-operation. Such matters cannot and should not be left to the market.

My hon. Friend the Member for Wentworth (Mr. Hardy) will speak later on the steel industry, but I may say in passing that, once again, we appear to have got the rough end from the Commission. We have already heard that we have the most modern steel industry in Europe, which was created under public enterprise and then sold. We have seen many redundancies and many closures of what were economic and viable plants, yet, despite all that, fines are being imposed on British industry while subsidies are given to the industries of other countries. We heard nothing about that from the President of the Board of Trade at the Dispatch Box, except that it was a matter for the Commission.

Mr. Peter Hardy (Wentworth)

My hon. Friend will be aware that the achievement of the British steel industry today is to be able to produce steel at a cost of £413 a tonne, compared with Germany's £558 a tonne and Japan's £572 a tonne. Does he think that the Japanese or German Government would be as daft as the British Government?

Mr. Hoyle

No Government anywhere could be as daft as our Government. One despairs of them and of what they are doing to British industry.

Rover has been sold. Yet Gareth Rhys, a motor industry expert who offered his expertise to the Select Committee on Trade and Industry when I was there, reported that there could have been a management buy-out of Rover instead of its being sold to a competitor such as BMW—[Interruption.] I cannot hear what the hon. Member for Coventry, South-West (Mr. Butcher) is saying, but Gareth Rhys said that that could have happened. But to prop up the British aerospace industry, Rover was sold for £800 million.

Mr. John Butcher (Coventry, South-West)


Mr. Hoyle

Let me finish what I am saying, and then of course I shall give way.

What did Mr. Cahill, the tax exile who was appointed, get for the master stroke that put the British motor industry in jeopardy? He got a £10 million pay-off. And what did the Prime Minister say? Like the President of the Board of Trade, he said that that was not a matter for him. I expect that the workers at British Aerospace, the royal ordnance factory and Beecham would have liked redundancy terms such as those, yet the pay-off was for delivering a blow at the economy of this country.

Mr. Butcher

I am grateful to the hon. Gentleman for giving way, especially as I am hoping to catch your eye later, Mr. Deputy Speaker.

I am afraid that the dream of a management buy-out, which many of us would have found attractive, must remain just that. It is common knowledge that even if £700 million or £800 million could have been found to buy out the equity, another £600 million or £700 million would have been needed to develop the model range, and that sort of money would not have been available to such an operation.

Mr. Hoyle

It was the undue haste with which British Aerospace sold out Rover, with the full backing of the Government, that alarmed many of us. The hon. Gentleman says that the management buy-out must remain a dream. Yes, it must now, for ever more, because control of the last British motor manufacturer has passed from this country and in future decisions will be taken in Germany.

Mr. Robin Corbett (Birmingham, Erdington)

My hon. Friend is right about the impact of the sale of Rover, but I remind him that we have one other British-owned car manufacturer left—Beans Engineering of Tamworth, which produces about 1,300 Robin Reliants and Rialtos a year, and about 150 Scimitars. That makes it slightly larger than Rolls-Royce.

Mr. Hoyle

I praise Beans Engineering for what it turns out, and I hope that it will continue to turn out those products and will expand its production. That firm makes an important contribution because, as my hon. Friend says, it is slightly larger than Rolls-Royce. But now we are down to talking about the odd one or two companies. Let us hope that what remains of the indigenous motor manufacturing industry has a future.

I despair, however, because we have heard nothing positive at all from the Government. The President of the Board of Trade gave his usual knockabout performance, the kind of performance that we have grown to expect from him. He may talk about honesty, but it might have been more honest of him to have come to the House a while ago when we had a debate on Matrix Churchill and told hon. Members what had happened, instead of waiting until he was called before the Scott inquiry and then saying that he was almost forced to send innocent people to prison.

We need no lessons from the Conservative party about credibility or honesty. I was disappointed that the Secretary of State did not take his office seriously and say what he intended to do about the vital parts of the economy, instead of engaging in a knockabout performance. My hon. Friend the Member for Livingston was right when he spoke of the civil and the defence sides of the aerospace industry, and about the continuing demise of companies such as Beecham and BICC. Even successful companies such as AEA Technology are continuing to slim their work forces.

If Ministers would get out of their black cars into the real world, they would find despair, disillusion and disgruntlement among many people wherever they went. Despite the figures that the Government publish every month, they would see factories closing—

Mr. Dennis Turner (Wolverhampton, South-East)

My hon. Friend has made an important point about companies continuing to close, especially in view of what the President of the Board of Trade said about the steel industry. Steel companies throughout the country are continuing to close, and one of the reasons why—apart from the fact that companies in Europe are operating in a manner that is totally devastating to our competitiveness —is the 70 per cent. increase in scrap prices over the past 12 months. A company in my constituency is struggling with electricity prices. It is paying 54 per cent. more per kilowatt of electricity than its parent company is paying in France. That is supposed to be the competitive—

Mr. Deputy Speaker (Mr. Michael Morris)

Order. The interventions have been very long.

Mr. Hoyle

That may have been a long intervention, Mr. Deputy Speaker, but my hon. Friend was expressing the concern of his constituents and mine, and that of the constituents of my other hon. Friends and of many Conservative Members, too.

As I was saying, if Ministers would get out of their cars when they made their rare visits to plants and would talk not only to the directors in the boardroom but to the office staff and the people who produced the goods, the people on the shop floor, they would get a different message.

I have no faith in the future of our industry if it rests with the Government—with jaded John, careless Kenneth, miserable Michael and the rest of the motley crew. It is time that they got out and we had a general election to elect a Government who believe in industry and in bringing about investment and employment and who will restore our manufacturing industry to what it once was—profitable and expanding. That will never happen so long as the present Government remain in power.

5.18 pm
Mr. John Butcher (Coventry, South-West)

The hon. Member for Warrington, North (Mr. Hoyle) said that he doubted whether many hon. Members had industrial experience in their own right. I preface my remarks by saying, as co-chairman of the all-party manufacturing group, that that weakness of the House does indeed sometimes manifest itself. I recall debates in the past on the engineering industry where we could muster only about 18 or 20 colleagues who had direct experience of the engineering industry at that time. I hope that the hon. Member for Warrington, North will accept in a non-partisan manner that the way in which Members of Parliament are recruited, selected and elected is something that the major political parties should consider if, with integrity, we are to defend the interests of a key sector of our economy which produces tradeable goods to the tune of about 80 per cent. of its output. Sometimes we must recognise our weaknesses and recognise that, although we may be brilliantly equipped to comment on the fortunes of manufacturing industry, due to the way in which Members of Parliament are recruited we have not brought sufficient numbers into the House who have truly understood an industry in which they have worked and earned their livelihoods. I add immediately that I include myself in that minority of people.

I shall make two suggestions. One is about an issue which both parties deem important—training and education and how those factors affect the performance of manufacturing industry. The other is about the cost and availability of capital to a sector which distinguishes itself from the service sector by virtue of the fact that it is more capital intensive than a service sector activity. I shall return to those points in a few moments and I hope that I can lay before the House a couple of proposals which may at least be worthy of further debate, even if they may not find complete consensus.

Before that, I shall refer to our current position as a trading nation. In our debates we tend to work in time frames in which industry and commerce do not work. When I listen to speeches, I sometimes think that we forget about leads and lags and trade cycles. I was refreshed and encouraged by the speech of my right hon. Friend the Member for Henley (Mr. Heseltine) when he brought that point to the centre of his argument. In considering trends about which we ought to worry, I shall lay one set of statistics before the House. In 1964, Britain enjoyed around 14 per cent. of the world's traded exports. By 1979, that figure had fallen to 8 per cent. If my memory serves me correctly, we did stop the rot in the 1980s and have kicked up just above that 8 per cent. in recent years.

There are a number of reasons why that remorseless decline occurred during a period in which both Labour and Conservative parties had time running our economy. First, an intensification of competition occurred. There was not too much competition in certain key sectors in the Pacific Basin in 1964. Now there is intensive competition in the sectors in which we are currently fighting in our domestic and international markets. We threw away a large number of the advantages that we held in the 1960s, but we now have an opportunity, in the first investment cycle out of the past five since the war, to be real winners in the international markets.

Something is going on out there which is exciting and tangible. If one considers the growth in productivity in this country over the past half a decade, one sees a rate of growth which cannot be explained away merely by the occurrence of surplus capacity as we emerge from a recession. It is a normal and natural phenomenon to see an increase in productivity when we come out of recession, but the current rates of increase in productivity are virtually unprecedented in our post-war history. That means that for the first time we are out-performing our competitors in Europe in the application of certain investment programmes and especially in some of the high-tech investment programmes as they apply to manufacturing systems engineering, to design work, to computer-integrated manufacture and to computer-aided design. Those special technologies have been applied faster and in a more sophisticated manner in Britain than by most of our competitors. To a certain extent, that explains the sea change in our performance over recent years. Let us bank that as an asset that we can continue to use.

We have had a bonus in the exchange rate position, which may be short or medium term. There is no doubt that the Germans especially are deeply worried about the rate at which we can capture some of their markets in north America, for example, and at which we can begin to penetrate their domestic market. The exchange rate competitiveness has been of great help, but one cannot run a country, an economy or a manufacturing sector for ever counting on an advantage given through exchange rate competitiveness. As hon. Members on both sides of the Chamber have said, we must get into higher added value, higher productivity, and apply new technologies to our basic industries.

However, we must beware of taking German economic history and applying it to Britain. No one in the House will deny that Germany has had 40 brilliant years as a manufacturing economy. It has built its Wirtschaftswunder and has been immensely successful. Germany developed a social market economy which in its terms worked and which gave it an economic dominance in Europe which many of us envied. However, it developed a social market economy which has become more social than market. German industrialists are now worried that their wonderful years are coming to an end. They can see only an erosion of market share, higher on-costs and their competitors giving them a hard time.

One can take two views of the German problem—one can either assume that it will bulldoze its way through that problem in three or four years, or one can take the slightly more apocalyptic view that some of its current structural defects may continue for some time and be the devil's own job to put right. I veer towards the latter view. We must not adopt the Germans' policies, which are beginning to fail them, with social chapterism and loading on-costs on to employers. If we do that, our German competitors will start to smile again.

Mrs. Jacqui Lait (Hastings and Rye)

I agree with everything that my hon. Friend has said. Will he comment on whether he has experience, as I have, of recently visiting a German manufacturing factory and realising that they not only do not have the technology that we have but they do not have our industrial relations either? [Interruption.] It is similar to visiting a British engineering plant in the 1970s in terms of management fear of the unions.

Mr. Butcher

I notice the response of Opposition Members and I repeat what I said earlier. We must be aware of leads and lags and investment cycles. Opposition Members may smile, but it is indisputable that in the five investment cycles since the war Germany has outperformed us in three and one was a shaded bet. However, in the recent investment cycle, we have done better in the application of new ideas—

Mr. Corbett

What about Germany's industrial base?

Mr. Butcher

I am not disputing that Germany's base has been built up faster than ours, but when one puts things right in 1985 one sometimes does not see the benefits until 1995. The Germans know that and we know that. Why can the hon. Gentleman not accept that and celebrate the fact that we have a chance to be winners again?

In some areas there is a consensus in the House on objectives, but unfortunately there is dissent about how to achieve them. I refer to training and to the shortage of capital in key sectors such as small and medium-sized business and manufacturing. When I was an education Minister, I enjoyed a trip to Germany. I did not take an entourage—just one inspector—and we did not see any Ministers, but spent our time intensively in German schools talking to German children, German students and German parents.

The German tripartite education system has Hauptschulen, Realschulen and Gymnasiums—high schools, technical schools and grammar schools. We abandoned such a system, but the Germans retained their free-place, state technical schools for 11 to 18-year-olds. Interestingly, the middle-class parents of children in Germany were fighting to get their youngsters not into the equivalent of grammar schools but into the technical schools because they saw the vocational opportunities to be gained from such an education.

In the past two and a half decades we have abandoned that system. May I tell my hon. Friend the Minister for Energy, who used to be responsible for education, that we may be giving technical schools a push now, but why cannot we give children of statutory school age of all backgrounds, in every city, an opportunity of a technical education, paid for by the state? More than anything else, that would help us to overcome what many hon. Members are worried about—an anti-industrial culture in education and the media.

Mr. Ken Purchase (Wolverhampton, North-East)

The hon. Gentleman is absolutely right to speak of the culture in which we live, particularly for manufacturing, although I suspect that it has more of a class nature than an educational one. Does he agree that the tripartite system that he mentioned operated in this country post-Hadow from 1935 until the 1970s, yet failed to deliver as the German system has delivered? If he thinks it through carefully, he may accept that this country has a class bias towards engineers and their status which is different from Germany's. The truth lies more in that than in the tripartite system.

Mr. Butcher

I am being tempted into making a longer speech than I had intended. I have thought carefully about this matter and it is a chicken-and-egg situation. The Germans have kept their strong industrial culture because they have kept a strand of their schooling through which they put a third of their children. They continue to value that culture whereas I am afraid that we tend not to give children the opportunity to be exposed to simple questions like "What is a balance sheet?" and "What is a production control system?" No one under the age of 18 knows what those are.

Given the two hats that my hon. Friend the Minister for Energy has worn in the Government, my plea to him is that we should stop mucking about with the introduction of technical schools for statutory-aged school children. Let the state fund them, let us have at least one in every city of any size, and let us restore the opportunities that have been denied to many of our young people in the past quarter of a century. Let us start putting ladders up against the wall again. When I hear the manager of a big manufacturing company say that he failed his 11-plus and went to a technical school, I wonder whether future generations who could have had the opportunity to say the same will be thinned out because they will not have had that alternative opportunity.

There is still a shortage of risk capital in the small and medium-sized manufacturing sector. We can produce schemes to give incentives to people to invest by exempting them from certain taxes. At first sight my proposal may be dismissed as indulging in the worst aspects of class warfare, but I propose that we abolish capital gains tax for investments where there is a real risk of loss and where a long-term gain is sought. We already have some history on that. We know that we need not necessarily abolish capital gains tax where the gains are short term and virtually guaranteed, but the manufacturing sector and the small and medium-sized firms sector would benefit most from the abolition of capital gains tax under the criteria that I have placed before the House.

If there is agreement that we have a problem with capital, let us try that route—and if we do so, for Pete's sake let us not argue about whether capitalists or workers will benefit because everyone will benefit.

5.34 pm
Mr. Nigel Jones (Cheltenham)

From time to time in the House someone makes a gem of a speech and we have just heard such a speech from the hon. Member for Coventry, South-West (Mr. Butcher). It is a great delight to follow him.

First, may I declare an interest in ICL Computers? It seems particularly appropriate, when Britain appears to be experiencing a gradual economic recovery, to examine the current state of UK manufacturing. How has it fared during the recession and as a consequence of 1980s economic policies, and what does the future hold? Many hon. Members—we have already heard one or two in this debate —are bound to condemn the Government over their policy void towards manufacturing in Britain, but this debate is a chance to put forward positive ideas for creating jobs and wealth, both now and in the future.

Britain has traditionally earned its way in the world by inventing and making quality products. In recent years, as technology has forced change, the number of people employed in manufacturing has diminished. Other countries have adapted to that change better than Britain. No one in the House will sit back and say that all is well today with British manufacturing industry. Since 1979, large-scale industrial manufacturing has declined almost to the point of extinction in some areas. Our position in product manufacturing is certainly insecure. The perception outside is that everything seems to be made in Japan, Germany or Taiwan and that Britain has, essentially, a service-based economy.

I spent more than 20 years in the computer industry before being elected to Parliament and I share the worry of the hon. Member for Coventry, South-West about the make-up of Parliament today. In my 20 years in industry, I learnt that British people are not the problem. We have the best inventors and designers in the world, although we may not have enough of them. Britain has long been associated with inventions, but rarely with their practical application in recent years.

Television advertisements are widely acknowledged to be best made in Britain, but the televisions themselves are made abroad. The best cars in the world are widely acknowledged to be designed in Britain, but they are made either abroad or in Britain by foreign companies.

Britain lacks a vision for the future. The Government have a key role to play in defining that vision. We must acknowledge that the best of British manufacturing is first class. We cannot and should not criticise it. But that is not enough. Given our £12 billion trade deficit in a recession, we must be worried for our manufacturing industry as a whole. I am concerned about the state of small and medium-sized British manufacturing companies as they are the base of our wealth. Where are they? Why are there so few of them? How well are they doing? And what can the Government do to help manufacturing companies so that they thrive and Britain can pay its way in the world?

To put it bluntly, we must be able to apply enough national wealth to keep us in the manner to which we have become accustomed. How are we to ensure a manufacturing base that is strong enough to earn the money to keep up our standards of living? How are we to ensure that that is not done to our country's environmental detriment?

The future of British wealth is in high technology. Hon. Members may think, "He would say that, coming from a computer background". In the mid to late-1980s, the increase in manufacturing output, much of which later proved to be unsustainable, was strongest not in high-technology, high-growth product manufacturing sectors but in more dated, low-growth areas such as spirits, tobacco, asbestos goods, munitions and small arms. Each of those markets is now facing a decline.

We cannot return to manufacturing of the past, but we can have a strategy for the future and a proper integrated plan. It should include support for research into new technologies, targets for sustainable developments, and ensuring high educational standards for future generations and for those currently trying to get back into the work force. That must be led by the Government. It is not the Government's job to run industry but they must support it. As the hon. Member for Coventry, South-West said, the Government must provide the opportunity for industry to take long-term decisions, and they must encourage industry to take an environmental view and an investment-led view.

In 1987, before I entered the House, my right hon. Friend the Member for Yeovil (Mr. Ashdown) introduced the House to the concept of a fibre-optic communications highway reaching into every home in the land. That was his vision and we should aspire to it because fibre-optics are with us. I have a piece of fibre-optic cable with me which was made by BICC.

Mr. Gordon Prentice (Pendle)

Is it not the case that fibre-optics were being developed by British Telecom years before the right hon. Member for Yeovil (Mr. Ashdown) made his speech?

Mr. Jones

Fibre-optic communications are a miracle which was invented in Britain. [Interruption.]

Mr. Deputy Speaker

Order. The hon. Gentleman may not be aware of this, but it is not acceptable to bring what could be considered a missile into the Chamber.

Mr. Jones

I can assure you, Mr. Deputy Speaker, that there is nothing subversive in a one-foot length of fibre-optic cable.

My right hon. Friend's vision in 1987 was a fibre-optic communications network—a broad band highway reaching into every home in the land. Every time the utilities —gas, electricity, telecommunications or water—dig up the road, it pains me that they do not put fibre-optic cables everywhere. There is a map in the office of my Chief Whip showing the areas of the country that are currently being set up for cable television. Eighty per cent. of the country is completely untouched.

For the future well-being of our people and our businesses, we should ensure that Britain plays its full part in that exciting new information revolution and gains a decent slice of the market. What are the benefits of a communications highway? It would create jobs—jobs in manufacturing the fibre-optics, installing the network and making the terminals that people would need in their homes and offices to make use of the highway. I am not simply talking about cable television. I want to see a two-way multimedia information flow, for example, to allow distance learning.

In yesterday's debate, hon. Members discussed the need for investment in education to equip our people with skills so that our work force can compete in an ever more competitive world. Distance learning is one way in which we can open the opportunity to study and learn from home cheaply, for example, for young mothers wishing to keep up to date with their skills and for those who have lost their jobs to retrain for a new career. There will also be a chance for companies to make use of teleworking so that their experienced staff, who, for one reason or another, wish to change their pattern of work, can still contribute their experience from home.

If traditional markets are lost or declining, we must look to new and growing markets. There is a substantial market for environmental products and processes, to which the hon. Member for Warrington, North (Mr. Hoyle) referred. The market is currently estimated to be worth £200 billion a year and is expected to treble in size in the next six years.

Mr. Jacques Arnold

Will the hon. Gentleman give way?

Mr. Jones

I shall give way once I have developed this point. The United Kingdom is not matching its competitors in seizing these opportunities. Germany's share of the world market for environmental technology is 21 per cent; the United States, 16 per cent; and Japan, 13 per cent. Britain's share of this huge market is estimated at only 1 per cent.

Mr. Arnold

Can the hon. Gentleman tell the House how we will maintain our traditional markets for our manufactured exports if the right hon. Member for Tweeddale, Ettrick and Lauderdale (Sir D. Steel) continues to attack Malaysia, which is one of those principal markets?

Mr. Jones

We had that debate yesterday—I am not entirely sure that I saw the hon. Gentleman in the House then.

Many people think that to be environmentally friendly means closing things down, but it is not like that. The future demands that we pollute our rivers and air less. If we give scientists a problem to solve, more often than not they will produce a solution. Environmental technology is big business and Britain should be in it. It pains me when I hear that Johnson Matthey, which is developing fuel cell technology—making energy from water—is doing its research in Reading, but will manufacture its products in Belgium because it is getting help from the Belgian Government.

Another area in which we are about to lose our world lead is clean coal technology which is carried out at the Coal Research Establishment in Stoke Orchard just outside my constituency. We are investing peanuts in that industry, compared with Japan. There are huge opportunities for British business to reap rewards from measures to promote environmental sustainability, but the Government have yet to show the necessary commitment. Indeed, included in an overall strategy to build a new manufacturing base for Britain should be three distinct areas that have already been mentioned: research and development, in which we must invest more; education, which we talked about yesterday; and infrastructure, which my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) is always banging on about in the House.

A recent report, "The 1993 UK Research and Development Scoreboard", revealed that only 11 of the top 200 world companies are British. The companies were ranked according to research and development expenditure as a percentage of sales, profits and dividends. That is a sorry score. There is a strong case for providing incentives to encourage research and development in small to medium-sized firms.

In my part of the country, there is a serious structural problem caused by the rundown in orders for defence equipment. Good local firms such as Smiths Industries and the Dowty Group have been hard hit with thousands of job losses and, in the case of Dowty, takeover by TI.

There has been much talk in the House and outside about defence diversification and the so-called peace dividend. This country must not spend less on research and development because defence spending has gone down. The money should be transferred to civil research and development. Engineers and design teams are there. There are not enough of them, but there are many good people out there. They are as skilled as anyone in the world and they are ready to make world-beating products for civil markets, just as they produced world-beating military products in the past. The aerospace industry is vital to Britain as an export earner.

I was confused by the word "airframe" in the motion. I thought that the hon. Member for Livingston (Mr. Cook) scored a direct hit on the President of the Board of Trade when he said that the word "airframe" was included in the President of the Board of Trade's book. I am sure that if the President of the Board of Trade had drafted his own motion, he would have used the word "aerospace" because aerospace is the net contributor to the balance of trade of some £2.5 billion. It is one of those high value-added industries where Britain has enjoyed, and still enjoys in certain areas, a world lead.

In a debate on aerospace in the House last December, I said that the programme on launch aid should be extended to aerospace equipment manufacturers, rather than being limited to airframe manufacturers. The Leader of the Opposition is right to say in the motion that we cannot allow our great industries such as aerospace to fail. However, there is a danger that they might fail because the Japanese Government have—

Mr. Purchase

Does the hon. Gentleman agree that in my constituency of Wolverhampton, Dowty, which he mentioned, has lost more than 400 jobs recently, demonstrating the clear way in which the aerospace component industry has shrunk almost irrevocably? Is not that indicative of the way in which our aerospace industry has shrunk recently?

Mr. Jones

It is indicative. As I said, we have a world lead in certain parts of the aerospace industry including, for example, landing gear, which Dowty makes, and propellers. That sounds like old-fashioned technology, but the propellers produced in Staverton just outside my constituency involve sophisticated modern technology.

There is a danger that the older industries in which we have enjoyed a world lead could fall. For instance, Japan has announced its aim of producing a complete aircraft by the year 2015. Only a fool would bet against their achieving that.

High research and development priorities are of limited use in isolation unless we have properly trained people. The Government's record on training and education is woefully short of what is needed in an industrialised nation such as Britain if we are to succeed in the world.

I should have liked Rover to remain independent under British ownership. It is not a happy situation that the only British car manufacturers remaining under British ownership are Rolls-Royce and Reliant and specialist car makers such as Marcos, TVR and Morgan. They are excellent companies, developing new products. I went to the launch of the Marcos Le Mans GT, which, sad to say, few people will drive, as the company makes only one a week.

Mr. Purchase

How much are they?

Mr. Jones

They cost about £30,000.

Rover needed access to investment funding which British Aerospace could not provide and which did not appear to be available in Britain. Honda was offered a 100 per cent. buy-out, but turned it down. Rover's success in recent years has been because of positive practices within the company by management and workers. It had a positive attitude to partnership and its success was nothing to do with Government legislation. The management made a deal with the work force that they would guarantee employment in return for flexible working conditions. BMW has a lot to learn from Rover on management techniques. It would be illogical if BMW were to do anything but build on Rover's success, but there seems to be no guarantee of that.

At the Conservative party conference last year, the Prime Minister made some encouraging comments about manufacturing industry. He said that he wanted British industry to be the best and to compete on a level basis with the rest of the world … make pounds for the UK; don't make dollars for other people. He said that industry should sell abroad and buy at home". I was encouraged by those statements. I thought that the Government had at last learned of the importance of manufacturing industry.

To survive in world industry, we must invest. As the hon. Member for Coventry, South-West said, that investment must be long term and large. Our competitors understand that. Japan, Germany and the United States all have strategic plans to help their industries. I was disappointed when not much happened in the Budget. There was no vision for the future, no statement of direction and no tangible support for industry.

I urge the Government and the Opposition to fire people's imagination with a vision for the future. The United States document, "The National Information Infrastructure—Agenda for Action" is as good a start as any. Investment in infrastructure is vital. Deregulation is also critical to explosive growth, particularly in communications highways, not just in Britain but throughout Europe.

I look forward to the report of the Bangemann high-level group, which is looking at issues surrounding the creation of a European information infrastructure. The group consists of some exceptional people, including Peter Bonfield, chairman and chief executive of ICL, and Pehr Gyllenhammar, former executive chairman of Volvo. They are people with vision. Their report to the European summit at Corfu should be studied and acted upon.

There is nothing wrong with British people. Given a vision of a better future, they will work for it and make it happen. I hope that today's debate will start to create that vision.

5.53 pm
Mr. John Horam (Orpington)

My hon. Friends the Members for Coventry, South-West (Mr. Butcher) and for Hastings and Rye (Mrs. Lait) made some interesting points about the comparison between Britain and Germany. They will have heard—the Opposition do not seem to have heard this—of the recent remarks by Gunther Rexrodt, the German Economics Minister. He said, almost in despair, "If only we had done what Britain did in the 1980s. If only we had privatised, deregulated and reduced the tax burdens on industry in the way that the Brits did in the 1980s, we would be in a wholly better position than we are in today."

Such a comment would not come easily to the Germans. After all, Germany is a great and proud industrial nation. It is the home of Vorsprung durch Technik and has a great commitment to technical industrial innovation. Despite that, Germany is prepared to say that what was done in Britain in the 1980s was a real revolution in our approach to industry and manufacturing.

I am pleased to say that that revolution has continued, despite the problems of recession in the 1990s. I welcome what has been done by my right hon. Friend the President of the Board of Trade and his Ministers in connection with competitiveness, which, as he said, is the heart of the matter. It is what manufacturing and commerce are all about. I am glad that he has set up the competitiveness unit because it has provided a focus for comparison with the best practice in other countries, which we badly need and from which we can learn.

I am glad that the Government have introduced the deregulation Bill. That continues the wide and virtuous approach to industrial practice which we started in the 1980s and which we are now carrying on so successfully. One consequence of that approach is that, apart from anything else, it has provided a raft of new companies in the private sector—British Gas, the electricity companies, British Steel, British Airways and British Telecommunications. They are in the mainstream of big international industries and are major players in a way that they never were in the nationalised sector. Those companies can be added to the existing private sector companies. It is not surprising that we have 22 of the 50 largest companies in Europe. That is the strength that we now have in major industries and we can claim legitimately that it is a product of the supply-side policies of the past 10 or 15 years.

The hon. Member for Cheltenham (Mr. Jones) spoke with great interest about information super-highways. I am sorry to say that that industry was not fathered by the Liberal Democrats or that party's leader. The hon. Gentleman will know that what is happening in that business worldwide is extremely interesting. It is a major new industry which is divided into four or five different sectors, each of which is worth billions of pounds. He will know that Japan has just cancelled £4 billion worth of investment which it got wholly wrong, while British Telecommunications is beautifully placed to take advantage of the wise decisions that have been taken in the past 10 or 15 years.

The hon. Member for Cheltenham said that there is no cable under the streets in his part of the world. In Orpington, the cables are being put in, in the right place —not here—so that my constituents can have free local telephone calls and obtain every television service that they want. That sort of development is happening throughout the country. It shows that Britain is at the forefront of advanced technology, as well as having sizeable companies that can make a major contribution.

We are not talking just about large companies. We are developing medium-sized and smaller companies which we need in order to develop a proper industrial base for the future. Orpington may be seen by most people as a constituency in which the majority earn their living by travelling to the City of London. Indeed, about 15,000 of my constituents travel to the City each day from the various stations in Orpington. Therefore, it is important to us that the City is restored to something like its former health. However, I have found that a new set of high-tech companies is arising before my eyes. For example, A.C.Egerton is in the cable-activated television industry to which the hon. Member for Cheltenham referred. It exports 85 per cent. of its product, employs 400 people and is expanding all the time. That is the sort of modern company which is springing up in Britain.

In Orpington, we also have major companies involved in the earth resources industry. For the cognoscenti, that involves the technology used in drilling for oil in the North sea, in which we are a world leader. That is happening at the forefront of technology and is a result of the policies that we have developed over the past 10 or 15 years. Whether we are talking about small or large industries, the whingeing and snivelling Opposition motion is backward-looking and wholly irrelevant. We need not talk in terms of constant redundancies, high unemployment or low technology. We are involved in high technology in a major way. I agree with my hon. Friend the Member for Coventry, South-West that we are winners once again, and that we have major opportunities if we will only grab them successfully.

The hon. Member for Livingston (Mr. Cook) mentioned that he had spent the morning at the CBI, and that is a valuable thing for a shadow spokesman to do. The hon. Gentleman should have picked up the fact that the CBI is not altogether happy with the industrial policies of the Opposition. What clearly worries the CBI above all—apart from the interventionism and the raft of old-fashioned ideas, reminiscent of the 1960s and 1970s, which the Opposition will bring back if they come to power—is the Opposition's tax policy.

Opposition Members have made a lot of the Government's taxation policy in the past few weeks, but their tax policy for companies and for industry would be extremely damaging. The shadow Chancellor, the hon. Member for Dunfermline, East (Mr. Brown), produced a pamphlet before the Budget about tackling tax abuse. He proposed that a number of tax loopholes be closed, and he alleged that those loopholes were exploited mainly by companies in this country. If he were to close those loopholes, he would, by his own calculations, increase taxation on industry. It is estimated that that would put an extra £3.6 billion on the tax and costs of industry during two years, which is roughly equivalent to an increase of about 25 per cent. in the rate of corporation tax.

The hon. Gentleman also proposed, almost in the same breath, a windfall tax on the profits of utilities. My hon. Friend the Minister for Energy will be aware of exactly what that would do to investment and jobs in those industries, and to costs in the rest of industry. That is typical of the Opposition's attempt to square the circle, which they still have not done, between their spending plans and their tax plans. To try to pretend that individuals can be somehow let off and that all the burden can be put on industry is totally misconceived, and will not work.

While I would say that the Government are going in the right direction, there are two threats which I should like to point out. One is the threat that I perceive from the European Union, and the other is the threat that I perceive from the Treasury. I do not put those in any particular order of importance or incompetence, but I will deal with the European Union first.

Many of us have been struck by the fact that the European Union has spent so much time contemplating its own navel. It has built a carapace of new institutions—some of them have merit, while others have not. In the meantime, however, the world outside has moved at an almost frightening pace.

For example, the countries of the Pacific rim, such as Indonesia, with 185 million people, have grown. We always think of China with more than 1 billion people, but there are other countries with huge populations and of huge economic significance which are now growing extraordinarily fast. Those include Taiwan, the Philippines and Malaysia. The far east is a huge market, and will soon account for 40 per cent. of the world's GNP.

In addition, there is India—a giant which is awakening at last. India has ditched its socialist policies, after 40 years of attempting to make them work, in favour of a more capitalist approach, and is now growing at 6 per cent. a year. Countries in Latin America have ditched even crazier ideas, and are growing steadily. All those countries are advancing and, looking from a purely European perspective, that is extremely dangerous.

In its latest policies, the European Union has begun to show that it is aware of the dangers of some of its practices, but the Brussels bureaucrats are still too embroiled in their ideas of good regulation, good subsidy and protection. That is looking the wrong way, and the world is moving towards a lower taxation, deregulated and privatised regime which the Union still does not understand fully.

My hon. Friends should be aware that, while we must take advantage of the single market, we must play our cards extremely carefully when it comes to subsidies for the steel industry, the GATT round and the common agricultural policy, which is the biggest single piece of damaging protectionism in the world.

I will say something about the link between industrial policy and economic policy. I have long believed that the Treasury, while it has many virtues—I cannot think of them at the moment—has never really understood industry as well as it might. I was glad that the Permanent Secretary, Sir Terence Burns, tried recently, in effect, to acknowledge that, with a fairly major reorganisation of the Department and the introduction of greater industrial expertise.

There has been a conflict over the years, and under both parties—I am not making a political point—between the macro-economic policies pursued by the Treasury and what makes the best sense for industry. We have suffered since the war from that conflict. Now that we have a better understanding of industry in the Treasury, I hope that we can proceed more sensibly.

The Treasury has not held down public spending in the way it ought to if industry is to prosper in this country. One of the great lessons from looking at world industry is that it is clear that countries with a low proportion of GNP in the public sector expand fastest, while countries with a high proportion of spending and high taxation expand slowest. The correlation is almost exact. The Conservative party, as we have always wanted to do, must get public spending and taxation down to a level which industry can afford and which would allow it to prosper. We have a lot further to go, and we have not done very well so far. I hope that my hon. Friends will continue to make that point to the Treasury.

The Chancellor faces difficult decisions about how to sustain the present recovery. There is the critical question whether we will go too slowly, which may make the recovery slightly shaky, and also how far my right hon. and learned Friend must help it by further interest rate cuts. We know the important role that international confidence plays in deciding whether a particular interest rate cut works, and whether it has a favourable effect. I hope that the Chancellor will remember all that when he makes his decisions.

Traditionally, the Treasury—and, even worse, the Bank of England—has always done too little, too late. A besetting sin of the Treasury is that its approach is too cautious, and it has often talked up a recovery to a level far beyond what is justified by the facts. I do not say that my right hon. and learned Friend must lower interest rates now, but he must keep the prospect firmly in mind over the next two or three months. The short-term prospects of British industry depend most of all on my right hon. and learned Friend getting those decisions right.

6.8 pm

Mr. Ken Livingstone (Brent, East)

I must say that the President of the Board of Trade's speech was absolutely disgraceful. Listening to it, I was reminded of how worried most Labour Members were when the succession stakes were running. There was not the slightest doubt that an overwhelming number of Labour hon. Members dreaded the prospect of the right hon. Gentleman succeeding Baroness Thatcher. We saw him as our most dangerous opponent, and that was not because we thought he had nice hair.

There was much in his critique of the lack of an industrial policy of Baroness Thatcher's Government with which the Opposition would have agreed. He offered a real alternative, and a break with the dreadful waste of the 1980s. Many felt that a Government led by the right hon. Gentleman and talking about rebuilding Britain's industrial base would strike a chord, and would be seen as a break with the past.

I suspect that many of us thought that, once the right hon. Gentleman finally got the job as President of the Board of Trade that he was after for so long, we would start to see some real changes and an attempt to rebuild our industrial base.

Mr. Austin Mitchell (Great Grimsby)

Does my hon. Friend realise that the closer the President of the Board of Trade gets to the leadership, the less sense there is in his speeches? Does not the fact that there was no sense at all in his speech today suggest that he is back as a contender?

Mr. Livingstone


Mr. Deputy Speaker

Order. I must remind hon. Members that there is a 10-minute restriction on speeches now.

Mr. Livingstone

I will not take too many more interventions.

I was struck by the fact that, in analysing the disaster of the past 15 years, one law which emerges from the way in which capitalism has operated during the past 200 or 300 years is that, year by year, the advantage shifts from those nations which export raw materials to those which export finished products. The Government came to power in 1979, and seemed to ignore that entire sweep of economic history. They threw all their weight and effort behind the oil industry, to the neglect of our manufacturing base.

Now, as the price of oil has collapsed, we find ourselves in a weak position. The Government fail to understand the evidence of the way in which capitalism operates. They have left us in a structurally weak position, which the President of the Board of Trade has done nothing to rectify since he has been in that post. All the talk of how he would intervene before breakfast and after dinner has come to nothing but empty rhetoric. At the same time, he has been winding down what remains of vital industries such as our coal industry.

The Government ignore the fact that no one objects to a strong service sector. No one would sneer at the profits that the financial sector could produce. But such factors must rest on a solid manufacturing base in an advanced modern industrial society. The Government cannot continue to sustain the rest of the British economy if the manufacturing base withers away. How long can London remain the financial centre if its industrial base continues to wither as it has over the past 15 years?

Financial power will inevitably follow industrial power. We will see the shift of power from the City of London to Frankfurt. I do not mind when Conservative Members do not understand our policies or socialism—that is true even of those Conservative Back Benchers who used to be Labour Members—but I object when they do not even understand their own capitalism, which they are so happy to defend.

The position is getting worse. I was struck by some of the arguments of my hon. Friend the Member for Livingston (Mr.Cook) about taking dividends out of profits. We have heard the talk about British workers and their wicked trade unions who screw too much from the profits for wages. We have heard talk about how the last Labour Government forced tax rates so high that industry and commerce were unable to be dynamic. But let us consider the past 15 years and where the burdens on companies have been increased. Wages and central Government taxes constitute less than 25 per cent. of the extra sum being drawn out of companies through dividends.

There is a striking illustration of that on the border of Brent, East and Brent, South—which I share with my hon. Friend the Member for Brent, South (Mr. Boateng)—where the last factory in Britain to make electric wall sockets is located. All other electric wall sockets are imported. I opened an extension to the factory a year or two ago. I was shown around the factory—an example of all that is best of what remains of British manufacturing.

The equipment that the workers were using was as good as anything in Germany or Japan—it was state-of-the-art equipment. Workers were given the necessary time to develop their skills. I then considered how the company was run. It was a family firm of two brothers. The first call on each year's profits was investment. The company did not have shareholders looking over its shoulder. It did not have to wonder whether Hanson might bear down on it if it did not make enough profits. The firm had the same aim as German industrialists—to stay ahead of the game. The first call on profits is investment.

We must break the psychology of the Conservative mob, who sit in the Chamber like the City of London at prayer. There are no industrialists among them—they are all fringe bankers, property speculators, lawyers, advertising executives and other sundry parasites. Like many other parasites, they have a valuable role, but they need a substantial and healthy animal on which to live. They are not a substitute for the healthy animal itself. There is no industrial lobby to take up the ideas advocated by El Presidente when he was Mrs. Thatcher's main critic in the Tory party. Until we have an industrial lobby in Britain, we shall continue to decline.

El Presidente harangued us about Labour's threat to the defence sector. That sector faces a threat because the balance of the world economy is shifting against it. The fact that we do not have a proper diversification agency and policy means that jobs will be lost because the Government will not intervene to save them.

We should sit down with those who own and work in manufacturing plants and, with a proper academic back-up, plan which of our present defence industries we should convert to produce many of the products that we now import because we do not produce them. We should do that plant by plant. Many of those defence industries will remain defence industries, but many will disappear whichever Government are in power in Britain.

Whoever is in power should plan to ensure that those jobs, skills and sites are not lost. Often, those industries have the most skilled work force, working with the most modern plant. They are exactly the workers and plants that should be retooled and retrained to produce in Britain the high-quality finished products that we now have to import from Germany, Japan and America because we do not produce their equivalents. If we were to adopt that approach, it would have the tremendous benefit of reducing the balance of trade deficit.

We heard the President of the Board of Trade talk about the tremendous opportunities in the British economy That was not the message of the Oxford economic analysis that was reported in the newspapers at the weekend. It showed a continuing and horrendous balance of trade deficit that will soon choke off any incipient recovery in the British economy that is not already choked off by Government tax increases. The analyses and estimates of the British economy that are beginning to pile up are gloomier than I first feared, yet we are living in the boom time between the two recessions.

The position will not improve in three or four years' time; we will be tipping into the next recession by then. We are now at the high point, on an upswing in the economic cycle—we are now at the same point as we were in January and February of 1983, when we were enjoying a boom. That shows how shallow and weak the present recovery is. Back in 1983, the Tories were poised for a triumphal re-election victory on the strength of the recovery, but no one seriously thinks that that can happen now.

It is no good the Conservative party dismissing what we say and do. If it does, it will be defeated. The tragedy is that we could have three more lost years, with factories closing and the continuing erosion and decline of our manufacturing base. I wonder how much longer we can continue before the position becomes irrevocable.

We in the Labour party must consider why investment in nationalised industries did not work in the post-war period. It was largely because of Treasury rules. The Treasury strangled our nationalised industries by not allowing them to set a price policy to allow them to pay for investment through the prices that they charged. It forced them to remain dependent on the Treasury. That is why I welcome the Labour party's statement on that subject.

6.16 pm
Mr. Iain Mills (Meriden)

I spent 20 years in the car and car component industry, much of it with Dunlop, and I continue my association with the industry through Committees in the House. I am a member of the Select Committee on Employment. I pay tribute to the late Ron Leighton, who was Chairman of the Committee for eight years and, sadly, left us last year. As the lead Conservative member on the Committee, I had a mixed relationship with Ron in terms of politics, but he was an extremely nice man. I regret his leaving us, and I know that members of the Committee will share my sentiments. I know that his absence from the House will be regretted on both sides.

In the 10 minutes that I have to speak, I hope to advance a number of arguments, some of which will be reasonable, and some very good. My comments on the lack of an interest rate cut will constitute the less good part of my speech. I urge my hon. Friend the Minister to communicate to my right hon. Friend the President of the Board of Trade the fact that many successful industries, such as the car industry—and others that have been less successful, such as the machine tool industry, where sales have declined, but recently recovered—would be greatly aided by a change in interest rates.

I know that there are hon. Members on both sides of the House who believe that interest rates should stay high, but the undoubted recovery in some sectors of the economy would be stimulated by further interest rate cuts. I am not sure quite how the City manages to become so nervous —but only those within it know the reason.

As a member of the Select Committee on Employment, I should like to refer to a most important report that we have produced on the future of manufacturing. I do not say that in a self-congratulatory fashion; I know there are a number of members of the Committee in the House. However, it made a number of significant points.

We took the trouble to find out why Britain is the most successful base of inward investment from Japan and Taiwan. It is quite simple: we speak English, we have a similar culture and we have the best unit labour costs in Europe. They want a base in Europe.

As someone who left the motor industry in 1979 after the winter of discontent, when the Labour party had been in charge for an awfully long time and our labour practices were undoubtedly the worst in Europe, I find it extraordinary that the Japanese and Taiwanese come here because they judge us to be the best. The final reason in our report is that they come here because they consider our work practices to be the best in Europe; they actually admire the way our people work.

Mention has been made of the increase in productivity having nothing to do with Government legislation, but of course it is due to the legislative changes brought about by my right hon. Friend, now Lord Tebbit—to whom I was PPS—in the early 1980s, among others.

I enjoyed being on the Employment Bill Committees. I have probably been on just about every Employment Bill Committee since 1979. Against the wishes of the Labour party and the trade unions, we introduced democratic practices which to some extent are now accepted by some sectors of the trade unions. They led to productivity improvements which could not have been conceived in 1979.

The Japanese and Taiwanese say that our productivity and working practices are the best in Europe. That enormous achievement could have occurred only under a Conservative Government. It is interesting that Japan and Taiwan invest in Britain because their own unit labour costs are higher than ours. They do not invest in Germany because unit labour costs in the German car industry are about £16.9 per man hour. The costs in our industries are about half that.

Amongst those who are highly competitive in that regard is our own domestic company, Rover. That is one of the reasons why Rover became attractive to BMW. The all-party motor industry group—my co-chairman, the hon. Member for Newport, East (Mr. Hughes), is in his place —has had a number of meetings on the matter. In reply to a question, a representative of BMW said that of course unit labour costs were a factor in the choice of Rover as a partner. BMW may have bought Rover, but it was looking for partnership and sees real advantages in Rover's high productivity and low unit labour costs.

It is my view that, although obviously no company would give solid and guaranteed commitments, Britain would be considered an extremely attractive country to manufacture a new small BMW. However, I deprecate some aspects of the sale of Rover to BMW and it is clear from a number of meetings of the all-party group that that feeling is shared on both sides of the House.

The unhappiness expressed by Honda has been caused largely because of the frankly insensitive behaviour of British Aerospace. The Japanese view companies and their involvement in companies almost as a family. It is as if a son were to marry without telling the family. So in selling Rover to BMW, British Aerospace took the huge risk of offending the Japanese company Honda. I deprecate that; I have said it before and I have now said it for Hansard. However, there is some hope.

Today, in a meeting with Honda, I expressed strong concern and my strong hope that the company would reconsider its apparent decision—according to the media —to leave Rover.

As an engineer and somebody who has worked closely with all three companies, I admire the engineering skills of them all. If one could coin a dream package to compete in Europe in future, the combination of BMW, Rover and Honda would be that dream package. It would have size, access to resources and complementary technology and engineering that would make Fiat shudder—and it is already shuddering—and Ford, the biggest car company, look again at what it is doing.

I urge Honda to reconsider. I am glad to say that the chairman of the British company told me that discussions with BMW have not been concluded. I urge Honda to reconsider as it would be a very powerful partnership.

In the short time that remains, let me move on to other aspects of employment in manufacturing industry. In its report, the Select Committee on Employment urged a number of important factors. We could not reach total agreement in detail on the lack of commitment to the social protocol and the social compact.

The evidence we were given by a number of people both here and in Japan was conflicting to some extent, so I shall put my own personal view with no reference to the Committee. It is my personal view that many of the people we spoke to felt that the cost of committing Britain to the social protocol and the social compact would be crippling. It would definitely disadvantage our manufacturing companies because of the high costs involved.

I understand from my right hon. Friend the Secretary of State for Employment that the direct costs to manufacturing companies in the United Kingdom for introducing those measures could be as high as £25 million.

I found no real conviction in discussions with people such as Padraig O'Flynn, the Commissioner for Social Affairs in Europe. I was given no real reassurance that the olive pressing in Greece and the Spanish wine industry and the collection of grapes would fulfil their obligations under the social compact.

The Committee agreed unanimously that deregulation, particularly that of European regulations, would be an extremely important encouragement to manufacturing industry. We have far too many regulations; perhaps some of them are carried out far too zealously by our own people in Britain, but many of them are imposed on us by Europe.

I finish by saying it is quite good news from the car world that we had new car registrations in 1993 of 1.778 million—12 per cent. above the figure for the previous year and we are looking forward to a slow and steady growth next year. Those figures include manufactures by domestic companies, but in the teeth of the recession Nissan, Toyota, Honda and Peugeot have had a very healthy export sale.

Mr. Deputy Speaker


6.27 pm
Mr. David Clelland (Tyne Bridge)

The northern region has a proud history of manufacturing excellence. We remain the top region in the country for manufacturing as a percentage of regional GDP. We are top for exporting —45 per cent. of GDP—top for implementation of BS 5750 certificates, top for Queen's awards for exports and technology and top for having the common sense to realise that our manufacturing base has helped us just tread water during the recession.

Despite all that, the region is nevertheless a pale shadow of its former self. We have a manufacturing culture in the north which has not been helped by the change in culture nationally.

The past 15 years have seen a declining interest in the fortunes of United Kingdom manufacturing by central Government and our world share of manufacturing trade has fallen still further.

It is now clear that, far from being characterised by a productivity miracle, the 1980s was a period of intensified industrial decline. While, according to current forecasts, it might just be that the bottom of the latest recession has been reached and there may be a slight upturn ahead, the forecasts for employment in engineering are still downwards.

Reductions in demand and improvements in technology might explain some reduction in employment, but they do not explain entirely our failure as a nation to maintain our position and our reputation as a world leader in manufactured goods.

The world still needs ships and power stations, buses and cars and trains and planes, and they are still being manufactured and sold, but less and less by British firms. As our share of world manufacturing trade plummeted, Germany, France, Italy and Japan were increasing theirs, the latter by a massive 400 per cent..

The northern region has seen many changes over the period. We were often told that changes were inevitable as old outdated smokestack industries declined. But the decline hit companies such as Plessey and Marconi, which are at the forefront of technology. Some of the most advanced shipbuilding facilities in the world could be found on Wearside, and Tyneside where Swan Hunter is still struggling to survive despite its skills and technological excellence.

It is not a question of outdated industry, but a combination of a lack of foresight, the absence of an industrial strategy, and a Government who do not understand, appreciate or support the manufacturing sector. Before I am accused of running down the northern region, let me say that there have been positive developments there. The northern region has been way ahead of the Government and, I must say, of my right hon. and hon. Friends on the Opposition Front Bench, in realising the importance of partnership in the quest for improvement. The creation of the Northern development company by the region's trade unions and business and local government sectors is an example of how we are able to pull together.

The public sector, through local authorities, provided the light rail rapid transit system on Tyneside, which has proved such a success socially and economically. Again, a consortium of local authorities built and developed Newcastle airport to reach the international status which it now enjoys, and which benefits the regional industry and the regional economy.

As I have already mentioned, there have been some successes in manufacturing, too. Some local firms are enjoying huge success and are producing high-quality, high-tech goods. Again, it was the close co-operation between local authorities and businesses, particularly the work of Tyne and Wear county council—abolished for its pains—that brought Nissan to the north, followed closely by Komatsu and others. But we do not have to kid ourselves that the arrival of overseas branch plants represents a fundamental transformation of the regional economy. The most damaging aspect of the 1980s has been the neglect and decline of the region's indigenous manufacturing base. The branch plant character of the regional economy has become more and more prevalent. Increasingly, the region's future is determined by decisions taken in remote boardrooms, by unelected quangos or in Whitehall.

There is general agreement in the region that something must be done and that we will probably have to do it ourselves. Many in the north are impatient for regional devolution—allowing the region more freedom to set its own agenda and pursue its own priorities. High on the list is the regeneration of our manufacturing sector and improvement of the regional infrastructure.

In the private sector, the manufacturing challenge is the initiative of former north-east business man of the year Karl Watkin of Crabtree Vickers in my constituency. It sets the goal of doubling regional output and trebling exports over a decade. It has the widespread and active support of the region's manufacturers. But there is a common understanding that market forces alone cannot create self-sustaining economic growth any more than will an over-reliance on overseas firms and the service sector.

The ability of the region's manufacturing base to consolidate and grow, and attract and retain firms that have the capacity to prosper, will be critical to its prospects. Again, from within the region, that realisation has given birth to new ideas. I have mentioned the manufacturing challenge and the contribution of the public sector, but the region's academic and research groups are also lending their support. If the finance is forthcoming—I sincerely hope that it is, and that manufacturers, trade unions and local authorities will take note—the local trade union studies information unit and the centre for urban and regional development studies at Newcastle university plan to embark on a research project to contribute to the formation of a policy for the development of the north's engineering and manufacturing base as a means of overcoming the present industrial crisis and rebuilding the region's indigenous strengths.

Despite all of that regional activity, we will not make sufficient progress at the required rate without the backing of central Government and sympathetic Government policies. As my right hon. and learned Friend the Leader of the Opposition said last week: It is important that the Government takes the lead responsibility. It cannot shuffle off these responsibilities to the private sector. But are the Government up to the job? To date there have been few signs that they are. We will have to wait for a Labour Government to give us the kind of regional devolution that will have any meaning in that context.

The recently published paper about which my right hon. and learned Friend was speaking outlines the Labour party's policies on regional development agencies and commercial investment banks. It is dedicated to mobilising investment in firms within the regions—the risk capital perhaps to which the hon. Member for Coventry, South-West (Mr. Butcher) referred earlier.

Other aspects of devolution policy will also help the regions. A northern regional assembly, for instance, with power to decide regional transport policy, would give a high priority to improving the communications networks in the region, not least of which would be the upgrading of the A69 and A66 to provide much improved coast-to-coast links, to the benefit of the regional economy. But if such policies are anathema to the present Government, they should at least be doing more to encourage investment in our manufacturing industry.

The current rules for tax relief on new plant and machinery should be changed to allow full relief in the first year on new equipment. That would provide a real incentive to invest, which is badly needed. I am no economist, but why cannot we have different interest rates, with borrowing to invest in new plant and machinery at a low rate and borrowing to buy imported consumer goods at a higher rate?

The Government could also provide industry with long-term planning. Manufacturing industry cannot operate on short-term decision making. That is what northern engineering employers told northern Labour Members at our meeting yesterday. They need a national view about what technology sectors we want to be in. They spoke of the need for a balanced energy strategy and a proper plan for the refurbishment and replacement of power stations, and the future of the nuclear industry. They seemed a little unsure, however, about how that can be achieved now that the industry has been privatised.

Another area of Government influence that is of major importance in manufacturing is training. A number of good apprenticeships are still running, particularly in the engineering industry. Firms are still keen to support and provide high-quality training. But the old concept of apprenticeships only at 16 must surely be out of date. I was the beneficiary of an excellent engineering apprenticeship —starting at 16 and finishing at 21. While that might have been appropriate at a time of high unemployment, the problem now is that thousands of young people—having left school at 16 or 18—are still out of work when they reach 19, 20 or older. That means that if apprenticeships are restricted to 16 and 17-year-olds—as intended by the Government's modern apprenticeship scheme—many will not qualify because of age. Surely that must be looked at again.

Training in a skill—particularly in engineering—is a rewarding and beneficial experience. Even if there is no immediate job at the end of it, it is worth while. The experience of work, of feeling that one is part of something, of making a contribution, cannot be replaced by Mickey Mouse training schemes that provide no real skills and do not develop personalities. The huge increase in juvenile crime is directly proportional to the level of youth unemployment, and the perception of large numbers of young people that there is no meaningful place in society for them.

The importance of proper employment is evident every time we meet someone new and invariably ask, "What do you do?" Too many young people have no answer to that question. Many more of them could have. One of the engineering manufacturers with whom we spoke yesterday —he runs a quality apprenticeship scheme—said that he would be quite prepared to take on more apprentices than he needed, and provide them with good training, if financial support was available to compensate. We should consider that seriously. We should be using some of the millions now wasted on schemes that young people have no confidence in—

Madam Deputy Speaker (Dame Janet Fookes)


6.37 pm
Sir Michael Grylls (Surrey, North-West)

It seems strange to me that the Opposition motion should be on the manufacturing industry, as there are many other parts of national life that they could have picked and made a critical attack on the Government. It is astonishing that the Labour party should stick their necks out on that subject. Labour Members should not be surprised that they got two black eyes. They were given half a dozen black eyes by my right hon. Friend the President of the Board of Trade in an effective and hard-hitting speech.

I notice that the hon. Member for Brent, East (Mr. Livingstone), who spoke earlier, is about to leave the Chamber. Perhaps he will come back. His only positive suggestion was to create all sorts of extraordinary units to advise defence manufacturers on how they should get into civil business. That is the most weird and peculiar suggestion that I have ever heard—we have heard some pretty strange suggestions over the years from the Labour party. It is a strange idea that politicians, civil servants and bureaucrats should visit Lord Weinstock in his office and say, "Lord Weinstock, this is how you should get your business into civil business." If they did that, I do not think that they would stay in that office very long. They would be out of the door pretty quickly—or indeed of any other company.

One has only to put the case to see the total absurdity for there to be a Government role in this. The truth is that the old Adam in the Labour party still lives on. Rather like the Bourbons, the Labour party forgets nothing and learns nothing.

If one strips away some of the more modern rhetoric of today's Labour party, one will see that it is back to its old policy of a national enterprise board, as my right hon. Friend the President of the Board of Trade reminded us. But instead of having one board, it will be divided into many national enterprise boards all over the country, spreading like measles throughout the regions and employing all sorts of bureaucrats to make dud investments. God knows, we went through enough of that with the National Enterprise Board in 1975. When the Conservatives came to power, we had to wind up the NEB pretty quickly, drawing a line under the huge amount of bad debt that it had incurred. Labour, however, still seems to want to go down that route.

The idea of organising a debate on manufacturing industry in an attempt to hit the Government over the head is pretty stupid for a second reason. According to the Business Monitor report in last week's Financial Times, Britain is the most outstanding country in the European Community in terms of investment in manufacturing. That was said not by the Government or the Conservative party, but in an independent survey of the entire Community. The country is in a unique position to take advantage of its manufacturing industry, and to expand it.

As I think the Opposition would agree, we live in an era of huge change. The real challenge is this: how do we manage that change, and build on our manufacturing base? The crucial point is that Government's role should be to allow change to happen, to encourage it and to help it along by making supply-side alterations. We did that in the 1980s; we are doing it in the 1990s, and I trust that we shall continue to do it. I hope that we shall continue with deregulation and keeping tax rates low, especially corporate tax rates: our low corporate tax levels are very attractive. We should not stand in the way of change.

That strikes me as the greatest indictment of the Labour party: it is still standing in the way of change. It wants to stop change; as the hon. Member for Tyne Bridge (Mr. Clelland) just said, it wants the north-east to be exactly as it was in the 1920s and 1930s, producing the same goods. We now live in a different world, however.

The shipbuilding industry, for instance, has undergone a huge change. Should we go on producing ships that no one wants to buy, piling them up, although the world's shipping lines are not buying many ships now? Of course not. The challenge is to try to ensure that the great skills, techniques and experience of shipbuilding workers can be applied to different industries. Firms should be encouraged to change. I know that that is easier said than done, but we must urge the management of change so that people can join new industries.

If we take a global, bird's eye view of British manufacturing, we perceive that, as a medium-sized country, Britain is capable of excelling in a number of areas, but not in every area. For a brief time in British history, we did excel in almost every part of the manufacturing spectrum; but it was a very brief time. We had a captive market then. We did not need to sell goods; we simply shipped them out. That was just trade: we were not an industrial country in the true sense of the word.

As my right hon. Friend the President of the Board of Trade pointed out, we now have to battle for every market. As a medium-sized country, Britain can excel only in certain areas. We are forced to concentrate on pharmaceuticals and chemicals, and motor manufacturing —we are very good at that; we have some marvellous motor manufacturing companies. Whether they are owned by British shareholders is relatively irrelevant. Most cars contain parts from many different countries: if we stripped one and tried to make the parts into a sort of United Nations, we would end up with something more like a pudding—a spotted dick, perhaps, composed of parts from different areas of Europe and the world in general.

I suppose that we all have a little bit of nationalism locked up in our heart of hearts, but we should try to suppress that. It is not relevant to the modern era.

As I have said, we must encourage change. We must run the economy so that the good industries in which we excel can do well, grow and attract investment. Inward investment has been a huge success story over the past 12 years. Investment has come from Japan and the United States; 3,500 American companies have invested in this country, and many hundreds of German companies are now investing in it, because they consider it a good place in which to invest.

Over the past 14 years, we have had stability of government—and, above all, stability of policy. [HON. MEMBERS: "What?"] Yes: we have had a Government who believe in low taxation—including corporate taxation—in deregulation, and in letting industry get on with its work. We have had a Government who have improved all the employment laws beyond recognition, encouraging companies to operate in much freer market conditions. As the report that I cited earlier makes clear, we are now the envy of Europe: Britain is seen as a good place in which to set up, manufacture goods and invest in manufacturing industry.

I hope that the Opposition will agree with my final comment. Undoubtedly, the growth area will be in the small and medium-sized companies. Our large corporations will not take on a huge number of people; one or two may start up businesses on greenfield sites and employ 500 or so employees, but that is very rare. The Government, in conjunction with the City and the banks, must meet the challenge to ensure that our medium-sized firms have adequate long-term finance. There is undoubtedly a gap there: we have not as many medium-sized firms as we should have. [Interruption.] I hope that Opposition Members will listen; I am trying to be constructive in the few minutes that remain.

There was a huge rate of growth in very small businesses in the 1980s, as a result of good policy. That growth continues, despite the downturn that the economy has experienced in recent years. We must concentrate next on encouraging medium-sized firms with turnovers of between £3 million and £50 million—non-quoted companies. That, I believe, can be done successfully only if we introduce better terms for lending. More long-term structured loans for such businesses would enable them to survive during a downturn in the economy—which, as sure as eggs is eggs, will have its ups and downs in the next few years, like every other economy in the world.

We have not achieved that yet, and I hope that Ministers will consider the matter. Through the Small Business Bureau, we have suggested a number of ways of helping and encouraging the private sector to provide the right sort of finance, as some of our major competitors have done. That is where the growth in business and employment will take place—

Madam Deputy Speaker


6.47 pm
Mr. Ken Eastham (Manchester, Blackley)

The great tragedy is that the Opposition had to organise this debate. One would think that the Government would consider an important industry like manufacturing worthy of regular discussion in the arena. The Opposition, however, had to opt to discuss it in their time, and had to listen to the President of the Board of Trade telling us how successful the Government have been. One Conservative Member after another said what a great success manufacturing industry was. That speaks volumes about their ignorance of industry and the state of the nation in terms of manufacturing.

It cannot be denied that we have a chronic balance of payments problem, and 3 million people are unemployed. Manufacturing represents only 22 per cent. of gross domestic product, and only 18 per cent. of the labour force are involved in it. We must get away from some of the silly claims that are made from time to time. It was suggested again today that cheap labour, the exploitation of workers and anti-trade unionism attracted people to Britain, but that is not so. Low pay, long hours and bashing workers will not be the answer for Britain's future. Britain will never be able to compete on the basis of cheap labour because there will always be another nation round the corner that will make things even more cheaply. When that nation has been exploited, there will be yet another one. Companies will go to Brazil, to Chile, to India. It would be a great mistake to suppose that Britain's success will be built on cheap labour. Opposition Members believe that if we trade in excellence—and we can—there is no need to bribe customers for work. Firms will win contracts because their brilliant inventiveness is recognised and sought after.

It was interesting that the President of the Board of Trade referred to people in industry. He has never been in industry. Very few Conservative Members have been in industry, whereas some of us on the Opposition Benches have. That is why we sometimes speak a little emotionally on the subject, watching the nation going down the tubes, as we have for the past 15 years.

I put my cards on the table: I come from industry. I worked in machine tools and in turbines, so my credentials are as good as anyone else's here. I compliment the hon. Member for Coventry, South-West (Mr. Butcher) on saying that it is a tragedy that not many hon. Members come from industry. Instead, we have the City slickers who are so prevalent, particularly on the Government Benches, the wheeler dealers, the asset strippers, the City boys. If they produced more, this nation would be far healthier.

Let us examine some of the most successful economies in the world. Japan has succeeded because it is an all-manufacturing nation. Manufacturing companies such as Mitsubishi, Sony, Toyota and Nissan make ships, cars, computers, videos and television sets. Japan has not been successful through indulging in speculation, buying and selling properties and gazumping, exchanging bits of paper in the City, and all these other things. It is industries that have made Japan successful. Take Germany, one of the most successful countries in Europe. It, too, has built its success on manufacturing: Mercedes, BMW, Volkswagen, Bosch, world-class machine tools—all manufacturing. That is how Germany has come to lead Europe. We fail to recognise those simple facts.

Let us look at the situation in Britain. We have the slowest growth of five of the Group of Seven nations and we are only 18th in the 21 states of the Organisation for Economic Co-operation and Development. That is the great success that we are now enjoying, yet Conservative Members, living in the clouds, keep on telling us that everything is rosy and successful. United Kingdom manufacturing jobs have fallen from 7 million in 1979 to only 4 million today. From the industrial revolution until 1982, we always had a credit in manufacturing; since 1982, we have never had a credit. Our trade deficit in the five years up to 1992 exceeded £89 billion. So it is no good Conservative Members trying to kid the rest of the nation about how successful we are in Britain.

The tragedy for Britain is that the channels that do not make anything themselves—banks and other speculators —prevent the rest of the producers getting on with the job and making things. We are tied to the system of banks, interest rates and goodness knows what, including the whims of various companies, and as a result the people who are capable of producing are never even given the opportunity to do so.

The proof of that is that the Japanese firms that come here say that our talent is second to none and have no problem with using our labour which, they say, is as good as that anywhere; yet we in this country do not recognise it or value it. Other countries must think that we are big fools not to put all that talent to good use. That talent is even encouraged to go abroad. Very often, companies abroad recognise the talent of people from this country and encourage them to take it to them.

Nowadays, we have heritage parks where we used to manufacture things. At one time, they were places of real production; now it is like two men and a dog, with a bit of a caretaker going around and showing what Britain's greatness used to be and what we used to do. The Opposition believe that we should be making things, not kidding ourselves. The President of the Board of Trade implied that manufacturing was not important, but we recognise that it is the only solution for Britain. We need a proper strategy and plan for energy, transport, aviation, construction and communications.

These days, we never go in for any kind of plan or strategy. That is not the case in other countries. What we find in British industry is feast and famine. Today we have jobs and next week we have no jobs. Three months later we have jobs and three months later still there are no jobs. There is no continuity. People try to tell us that this is good business practice. Some of our competitors must laugh their sides sore when they consider what Britain could be doing and what it has been unable to do.

At the moment, we are seeing a boom in cruise holidays and orders are starting to be placed for cruise ships. It makes me sick when I think that we are in no position now to place an order or even to find a dockyard where we can make one of those liners. That is an example of the progress that we have made—we cannot build ships any more. We have all the talent. We have people on the dole, being paid £9,000 a year to do nothing, people in the north-east and north-west who were doing those jobs—and we pride ourselves that we are doing well in manufacturing.

Only this week, the Secretary of State for Transport announced that he would spend £1 billion on the road programme. If only the Government had the sense to spend £1 billion on medium and small manufacturing firms, we could imagine the number of jobs that that would create. We have hundreds of jobs under notice in the rail workshops and we have clapped-out rolling stock which should be on the scrap heap; yet instead of acquiring new and up-to-date equipment, we have decided to refurbish existing stock. When I was in industry we called it "soling and heeling". It was not making the modern stuff of which we were capable.

Madam Deputy Speaker


6.57 pm
Mr. David Porter (Waveney)

In a world that changes as rapidly as ours does nowadays, there can be few absolutes and only a handful of timeless truths. Here are some that remain. The Government have no money of their own, only what they take from taxpayers, who are individuals or businesses. If we want to spend more on schools, hospitals, pensions and other services that we demand, we have to earn it. The world does not owe the United Kingdom a living; we have to carve one out. There will always be some people locked in a time-warp, unable to see that clocks cannot be put back in industry or in technology. The predecessors of Opposition Members stood blinking at the dawn of the industrial revolution in England; by the time they had taken hold of it, it had become the technological revolution.

The Opposition's motion and some of their speeches tonight seem to ignore the fact that industry develops and that business cannot remain static. Their motion takes no account of how rich and diverse a picture of industry we have in Britain. They are not on top of the fact that manufacturing takes many different forms. There was a whiff of nostalgia in the air, with Opposition Members lauding the old command economy. I felt that it was only a matter of time before somebody called for the return of Red Robbo.

The hon. Member for Manchester, Blackley (Mr. Eastham) gave the figures. Seven million people made less in 1979 than 4 million make today. Why? Because of technology. That is the bald and simple reason, and it is a fact that must be faced. Many of my hon. Friends have said, "It is not such a problem if we become a leisure theme park. We shall still have to make the rides, the music, the games, the food, the booze, the crockery, the furniture and the sports equipment that they need." "Do not worry," other people have said to me, "people will still need new and revamped houses, other buildings, cars, fridges, televisions and holidays, so there will always be a demand for manufacturing." That is true up to a point, but the trick of success for the Government is to create that economic climate to allow British manufacturing to make it easy for people to buy British goods within the European Community constraints for which we have signed.

I mentioned diversity and I shall now focus on my constituency, which is not, at first glance, a rich and varied economic place. Even there, however, one finds food-related processing companies—Bird's Eye Foods, the Co-operative Wholesale Society factory, the Bernard Matthews plant, Buxted Chickens and Adnams the brewery at Southwold.

Fishing is a harvesting industry, but its back-up in servicing and engineering are manufacturing organisations. Coupled with offshore industries serving the southern North sea and elsewhere, and with shipbuilders such as Richards and engineers such as AKD and George Prior, they are all important and skilled creators.

In SLP we have the largest manufacturing capability for offshore accommodation modules in England south of Teesside. There is printing by Clowes of Beccles and Clays of Bungay. Plastics are made by Fiberoyle and M and H Plastics and sports equipment is made by Harrods of Lowestoft. High-tech manufacturer Sanyo is to be found in Lowestoft and timber doors and frames are made at Boulton and Paul in Lowestoft.

Those companies are diverse and different, but they share some problems. The transport infrastructure in the coastal area east of Norwich is poor compared to that in many other parts of the country. That is part of the region's charm, but it increases the costs to industry of bringing supplies in and pushing goods out. We are 80 miles from the motorway network of England. The area has greater than average regional unemployment and is a low-wage, poor area compared to most other areas in the United Kingdom and certainly compared to the public perception of a prosperous East Anglia.

The handicap that confronts so many British businesses enforcing rules fairly, with no confidence of reciprocal regulatory respect elsewhere in the alleged European Union, is often keenly felt in a part of Britain that is only 56 miles from the European mainland—far closer than it is to London. All that does not help.

The Deregulation and Contracting Out Bill will help, and I hope that Parliament will pass that legislation. It is a pity that it cannot apply to the European Commission. The new modern apprenticeship scheme will help to improve the quality of the work force in years to come and increase its competitiveness. The economic good news will help, together with the gathering confidence of businesses throughout the region.

Getting the tax regime right must be good news, too. The lowest corporation and business taxes mean more money for investment, which means more profitability. I wonder whether we can build on those and go a little further. I suggest to my hon. Friend the Minister for Energy that we have heard a lot about downsizing the Department of Trade and Industry and the money that could be saved. I wonder whether almost doing away with the Department would be a real sign of our commitment to enterprise. It would be beneficial if we could put only some of the DTI's £3.7 million a year budget towards cutting business taxes a little further. As to the European business angle, the best help to industry is stability for a period. Let us concentrate on making the single market work before speaking about anything else in Europe.

Science and technology must be made more appealing to youngsters—boys and girls. Putting those subjects in the national curriculum has helped, but a young child's natural thirst for knowledge about how his or her world works must be translated into a real desire to invent, explore and make things in a career for young people that is challenging and rewarding.

Where are the new technologies coming from—the new jobs of the future—as machines make and repair machines? Twenty years ago, few people could have predicted that the tourist industry would be the biggest job creator in this country. Few of us here will be able to predict the ways in which technology and lifestyles will develop in the next 20 years, but obviously the making of things will still be at the heart of our future. If the real and' exciting prospects for that crucial British industry are to be realised, we must put the red tape, the bureaucracy and the regulation in balance and get our attitudes right, from Government onwards.

Manufacturing is the goose that lays the golden tax eggs of this country. We neglect it at our peril.

7.4 pm

Mr. Geoffrey Robinson (Coventry, North-West)

I heartily endorse the clarion call of the hon. Member for Waveney (Mr. Porter) for the dismissal of the present incumbents at the Department of Trade and Industry. I am sure that the President of the Board of Trade and the Minister for Energy will read with great interest his view of their effectiveness in their present roles. I hope that it will do great things for the hon. Gentleman's ministerial career in due course.

The President of the Board of Trade, sad to say, has more or less given up on the job anyway, so he might even go along with the suggestion. He has no money. He has what he spends, but it is largely arms procurement, as he said today, and we must have that—as he also said—for national defence purposes. For the rest of it, the ideas that he once had have gone by the board and the DTI is a largely ineffectual Department in any event. That was evident because the President of the Board of Trade had nothing to say other than to turn the speech into the usual knockabout with the Labour party—the type of thing that we have at every Question Time. It is the sadder because he was a Minister of whom, for a while, many of us had expected something far better, and certainly something far better in a major debate such as this.

A debate in which we are considering, for example, the future of Rover must be of major significance. I shall make one or two remarks about that and reflect on it. We must face reality and realise that the independent British volume car business disappeared 10 years or more ago. In the past five to seven years, Rover never was an independent British company in a meaningful sense. It was tied into Honda in the way in which now, inevitably, it will be tied into BMW. I would not want to choose between those two solutions.

I noticed that the hon. Member for Meriden (Mr. Mills) was suggesting that all three companies got together. In business it is difficult enough to get two companies together. I speak from the experience of having tried to create a joint venture between the Japanese and my own company—in which, of course, for the purpose of the debate, I declare my interest. That utopian idea is therefore not much good.

The best future for Rover might well have been with the Ford Motor Company. That may be a lesson for all hon. Members, and I mention it for that reason. I willingly admit that I did not support that solution at the time, and neither did any other Member of Parliament, to my knowledge. That choice was horrifically and horrendously opposed on both sides of House. When one recalls it now, the conditions on investment and the new model programme that Ford proposed were far better than anything that we could have obtained from Honda or anything that we are obtaining from BMW. One must remember that Ford already had a massive commitment in the United Kingdom, which it had to defend. BMW does not have that yet, but I trust that BMW will be as good as its word.

I am sure that you, Madam Deputy Speaker, will recall that in the late 1970s the Chrysler Corporation gave the Government the most solemn of undertakings. A Mr. Iacocca, I believe, then came to this country and tore the undertakings up in front of the then Labour Secretary of State, saying, "It is your company—you have it or we close it down." Of what value were those undertakings from what was then a highly respected multinational American corporation?

For that reason, we must take exception to the remarks made by the hon. Member for Surrey, North-West (Sir M. Grylls), who is not here at present, but who spoke earlier. The hon. Gentleman said that he had some little bit of nationalism in him somewhere, but we should never let that come out: it is bad and we should have nothing to do with it. I must tell him that nationalism is the driving force in most of the companies and managements in Europe and Japan. Perhaps some words will be said about that later. When one sells in those countries, they are nationalists to the extreme, and proud to be so. Why do we seem ashamed to admit as much to ourselves in the House and outside it when we go into business?

We have to cut the best deal for Rover that we can, and let us hope that BMW is as good as its word. In that respect, the experience of Linde, another major Germany company that heavily invested into our then privately-owned fork-lift truck industry in Basingstoke, has been extremely good. Investment has taken place, the models have been extended and the United Kingdom fork-lift truck industry has benefited tremendously.

We have a uniquely advantageous position as regards competitiveness. The hon. Member for Meriden said that our labour costs in the motor industry are about half those of Germany and even less than those of other countries in Europe. But is that such a great achievement? Is it something of which we should be terribly proud? It is merely a function of the fact that our wages and social costs are much less than those of other countries and that our currency has depreciated periodically to compensate for a higher inflation rate. There is nothing else to it.

I can quote chapter and verse on the levels of productivity and capital investment in Germany. Because of my privileged position as a trader in the motor industry I know some of the comparisons that major American and European manufacturers make of the wage and labour costs in various industries. The level of our costs is not something of which we as a country should be particularly proud, and it is certainly nothing of which the Government, after 13 years in office, can be at all proud.

Having said that, let us face the facts. We should accept that we have a unique competitive advantage. Let us capitalise on it and start to regain world markets and regress the massive deficit in the balance of trade. That is the only lesson to be learnt and I will join any hon. Member in endorsing that point of view.

For us to regain markets, we must maintain the present exchange rate with particular reference to the dollar and the deutschmark. In my experience, the present parity with the dollar is very satisfactory for us, and that probably reflects the experience of most companies involved in internationally traded goods. However, the tendency for the pound to appreciate against the deutschmark is most worrying. The Germans are in such trouble that they will cut prices in. export markets more than ever before to maintain their market share and to keep their factories running and their employees employed. It is as simple as that.

Mr. Nigel Evans (Ribble Valley)

The hon. Gentleman is wrong. Unemployment in Germany has just gone through the 4 million mark.

Mr. Robinson

I do not want to respond to sedentary interventions because there is a 10-minute limit on speeches. However, I shall do so on this occasion. What the hon. Gentleman said is true, but the Germans are nevertheless doing everything possible to secure as many jobs as they can. It is in that highly competitive, cut-throat situation that we must ensure that we maintain the advantage that we currently have because of our exchange rate.

I do not expect immediate responses from Ministers because I appreciate that that can cause difficulties. However, I draw attention to another issue to which we have to pay great attention—interest rates. The Governor of the Bank of England is known for his obsessive concern about inflation. I understand that he feels like a father whose daughter says, "But Daddy, I'm only a little bit pregnant." It will get worse, which is how the Governor feels about inflation.

Tonight's evening press states that the Governor and the Chancellor are having urgent consultations about the level of interest rates that they envisage in the next few months. My clear, unequivocal view is that interest rates must come down further because they go with the exchange rate. If interest rates do not come down further, there will be a depreciation in the exchange rate, which could threaten the recovery.

We do not want a recovery based on yet another consumer boom which could in turn lead to yet another recession. We need a sustained investment and export-led recovery that will create the circumstances in which there will be a general domestic recovery. To achieve that, we need our policy on interest rates to be linked to policy on exchange rates. Both are within the power of the Government—of any Government—to deliver. However, we have an inexperienced, sometimes disinterested Chancellor up against an extremely powerful Governor. I hope that that balance will resolve itself in favour of British manufacturing industry.

7.14 pm
Mr. Nirj Joseph Deva (Brentford and Isleworth)

I must declare my interests: I am a director of Parliamentary and Public Affairs International; I am a consultant to EDS, which is an electronic data systems company, to Rothmans, Laing International, which is a building company, and KHD, which is a gas turbine manufacturer. I must also declare that I am one of the few engineers on the Conservative Benches and I am proud to be in that position.

My constituency of Brentford and Isleworth contains many multi-national companies that manufacture and export worldwide. Anyone who has travelled on the A4 or the M4 to Heathrow airport or elsewhere in the west will have seen those buildings flash by.

When we speak of manufacturing, we are speaking of a commercial sector which employs 5 million people. It is now a leaner, more competitive, more productive and more capital intensive industry base than it was 14 years ago. At the end of the second world war, British manufacturing was at its lowest. The war had been difficult for us, whereas our competitors in Germany and Japan rose afresh like the phoenix with new technology, new investment and new productivity capabilities through the Marshall plan and reconstruction aid. For 20 years from the period 1945–48, Britain had to struggle with Victorian factories and manufacturing techniques. We had old technology, overmanning and under-production.

Also at that time, Britain started the process of decolonisation and automatically began to lose the captive international markets of more than 1 billion people who had supported British manufacturing hitherto. The newly emerging countries started forming relationships with closer neighbours and importing goods from their factories. Some countries started putting into effect socialist or self-reliance policies and managed plans. Some understood socialism at the feet of Harold Laski, others from the London School of Economics, and they set about trying to develop in that way. They failed. After their socialist experiments, they began a process of liberalisation to the extent that they are now back in the international marketplace, competing in various sectors.

With its old industrial base, and while losing its international markets, Britain had to struggle on, The Labour Government established the National Enterprise Board and the National Economic Development Council and little Neddies to try to revive our industrial base. We all know what happened: they failed abysmally.

One has only to consider the loss-making British Steel in the 1970s, the loss-making British Leyland in the 1960s and the loss-making British Airways, British Telecom and National Freight. Those nationalised companies cost the British taxpayer about £1.5 billion in 1979. Today, they are all profitable companies and instead of costing the British taxpayer money they pay taxes to the Exchequer and are helping to reduce taxes in general.

Those companies are now competing in the international marketplace, winning contracts and export orders and setting up joint ventures. How did that happen? Did British workers, managers and investors suddenly find a vitality and vibrancy that outshone, outproduced, outpriced and outdesigned their European counterparts? What happened on the road to Damascus which created that revival in British manufacturing industry? Quite simply, the Conservatives won the 1979 general election and turned the country around.

Adopting a reflective attitude, I will read out something that was said by the director general of the NEDC in 1988: In the present expansionary period which began in 1981, productivity has actually been increasing twice as fast as output, implying that further very favourable factors have been at work. Apart from the shake-out of inefficient equipment and labour practices, he stressed the importance of supply side measures such as the trend towards deregulation, reductions in income and corporation tax and in nominal interest rates, and improvements in industrial relations.

Virtuous circle growth may now set in where rapid productivity increases mean higher profits and more demand for new equipment, which on account of its superior efficiency fuels further growth. In 1981, output of crude steel per man year in the United Kingdom was 167 tonnes. In Germany, it was 227 tonnes per man year. In 1987, the UK figure had increased to 320 tonnes per man year, while the Germans were at 282 tonnes per man year. Productivity increased because of efficient production methods and more investment. The main principles were a reduction in the number of management levels, flexibility between crafts and processes and manual and staff grades, increased mechanisation, the contracting out of peak local work and support services, raising yields, reducing production costs and enhancing energy uses.

Those principles have created one of the most efficient steel industries in the world. Yet despite that, the Labour party has learnt nothing. It still believes that it can pick winners and that civil servants and Ministers can run industry. We must learn that they cannot do so. Even the Japanese have tried to do it and failed. A study conducted recently by the Japanese Ministry of International Trade and Industry showed that its attempt to spot winners had failed. The most recent copy of The Economist had a very good article on why MITI has failed to spot winners.

In 1979, manufacturing industry contributed £49 billion to the gross domestic product. Today, it contributes £114 billion and the figure is rising. Output per person is twice as high as in 1979. Between 1979 and 1993, output per hour rose by 75 per cent. Between 1979 and 1993, the volume of UK manufactured exports rose by about 56 per cent. Between 1979 and 1991, the value of direct inward investment in the UK manufacturing base reached £28 billion net. Even today, having weathered a worldwide recession, production is up in the UK whereas it is down in Japan, Germany, France and Italy.

Recently The Economist polled a group of independent forecasters who said that the UK would have the fastest growth rate of EC economies this year and next year. The recent recession is not a reflection on the performance of British manufacturing industry. It was caused by a lack of worldwide demand, not by an incapacity to supply. When that demand returns, we are fit, lean and ready to go out and sell.

Britain's export success is extraordinary. I congratulate my hon. Friend the Minister for Trade on what he has achieved. Britain exports a higher percentage of its gross domestic product than Japan and it exports more per head than the United States. We have invested about £360 billion overseas through portfolio and direct foreign investment—

Madam Deputy Speaker


7.24 pm
Mr. Austin Mitchell (Great Grimsby)

I shall not attempt to pursue the economic illiteracy of Conservative Members. The Opposition's theme should be that a great opportunity to expand and rebuild our manufacturing base, which is crucial to the economy, is being thrown away by a President of the Board of Trade who seems to have forgotten every word that he wrote while in opposition about intervention and managing the economy, and by a Chancellor of the Exchequer who has changed from being a bull-at-a-gate politician into a bear in a trap with the dead-hand keepers of the Treasury, who have been consistently wrong, and a Bank of England Governor who seems to think that he is a reincarnation of Sir Montagu Norman.

Manufacturing matters. Most world trade is in manufacturing; most of our deficit is in manufacturing. It is basic to the economy. The manufacturing base, on which we depend, has shrunk so far in the past two decades that we cannot pay our way in the world and support the superstructures.

Contrary to the success story told by the hon. Member for Brentford and Isleworth (Mr. Deva), since 1970 manufactured imports have risen four times faster than manufactured exports. Manufacturing imports make up 42 per cent. of the domestic market for manufactures in this country. We have lost 3 million jobs in manufacturing since 1979. Manufacturing output has remained much the same—it is only 2 per cent. higher than it was in 1973. Such a story of failure cannot be found in any other country.

That failure has resulted in the double deficit. The trade deficit, which amounts to about £1 billion every month, shows that we cannot pay our way in the world. We have a fiscal deficit because the tax base has shrunk as a result of people being put out of work. We are wallowing in the trap of the double deficit.

The great prospect of white Wednesday, when we left the exchange rate mechanism, was that we would have a chance to escape from both traps. We could reduce interest rates and exchange rates at the same time. The Government saw the opportunity and promptly shifted gear. From prophesying economic success if we persevered in the exchange rate mechanism, they claimed that the economic success had already arrived because we had come out of the ERM. They did not feel that it was necessary to do anything but sit and gloat.

The Prime Minister discovered manufacturing, which should have served as a warning, because as soon as he attaches his support to anything, from the Manchester bid for the Olympics to Mr. Yeltsin, it is finished. As soon as he discovered manufacturing, I began to worry. The recovery has not happened. Burdens have been alleviated that the economy should never have faced in the first place. The recovery is similar to the relief that a lunatic experiences if he slows the rate at which he is banging his head against a wall. If he stops banging, he is much happier. That is our position. Manufacturing output has not yet risen to the level of 1990. Will it rise to that level by the year 2000? Not at this rate.

According to labour force surveys, unemployment has not fallen. We need 4 per cent. growth to achieve a substantial reduction in unemployment. Job losses in, and the winding down of, manufacturing industry continues. It has lost 7,300 jobs in the first six weeks of this year. The Guardian, amazingly, joined the Bank of England in saying that manufacturing industry had increased prices too much. Prices have certainly increased, but that industry must increase its prices if it is to generate a profit. Indeed, its prices need to increase still further. That is why we should allow it to increase its prices through the exchange rate, which will generate the profits necessary for its survival.

It is economic illiteracy to say that manufacturing industry, which has exported without making a profit for years just to keep going, should not take the opportunity of the alleviation of pressure to increase its prices. It must do that. The Governor of the Bank of England shows that he knows nothing about manufacturing industry when he criticises it for increasing its prices.

Manufacturing in this country is not profitable enough, and the economically illiterate way in which the Government have run the economy has kept it from being profitable. As my hon. Friend the Member for Livingston (Mr. Cook) said, manufacturing industry is not investing but rather distributing the profits in dividends—making hay while the sun shines—because it has no faith in the future. It sees that, with the Government's record of keeping exchange rates and interest rates far too high, there is no point in investing. The Bank of England will take the opportunity to push exchange rates back up, so any investment will be crippled.

That is why the recovery is as evanescent and feeble as the Prime Minister's nervous smile. After white Wednesday, we had the opportunity to follow through with the devaluation, but we did not take it; indeed, the Government and the Bank of England have set out to reverse the devaluation. The Bank of England is deliberately undermining the competitiveness that we have. In a market economy, price is crucial, and the exchange rate is the key to price. We have been priced out of markets because the exchange rate is consistently kept too high for too long. The Government and the Bank are now resuming that policy. Since February 1993, the exchange rate has increased by about 14 per cent. against the deutschmark.

The Bank of England is obsessed with inflation, which is now a dead issue. Because of its fear of inflation, which it largely caused in the 1980s—[Laughter.] Hon. Members should read Lord Lawson's memoirs, about how the Governor of the Bank of England refused to stop the Bank lending on mortgages and the credit expansion that caused the inflation in the 1980s. The Bank was largely responsible for that and now it is obsessed with making amends. It is strangling the manufacturing revival because of its fear of inflation.

If we contrast this country's trade inside and outside the European Union, we see that in real terms the exchange rate in the European Union is now almost back to what it was before white Wednesday. That is why manufacturing exports to Europe have hardly increased at all. But outside the European Union—this is no credit to the Government—the exchange rate has depreciated and we are more competitive, because the dollar and the yen have risen. Manufacturing exports outside the European Union have increased by between 15 and 17 per cent.

It is true that now both kinds of exports are flagging, because the exchange rate is rising again—and both will peter out if that continues. However, the contrast is stark, as is the contrast between our failure and what has happened in Italy. Italy devalued much more substantially than we did, and kept the devaluation, partly through the useful device of undermining confidence by carting most of its politicians off to gaol. Italy's export success has, therefore, been far greater than ours; it has turned a balance of payments deficit into a substantial surplus since leaving the exchange rate mechanism.

That is the example which we should follow, because it shows that devaluation works. It would work by making it profitable to produce in this country, profitable to invest here and to begin to make again for the markets in which we have lost out. Most important, we could begin to fight back against the rising tide of imports to win back our own market. We can do that through the price mechanism, by making it profitable and competitive to invest, to grow and to expand in this country.

If we continue at the present rate, the profitability that has returned will be curtailed. Indeed, that is happening now. We are involved in a debtor's progress. Because the Government want to keep the money flowing in, so that people will invest in our public debt and close the fiscal deficit—between 40 and 50 per cent. of that debt is now covered by foreign money coming into the country—they keep interest rates higher than they should be to attract the investment in public debt. That further increases the value of the pound and weakens manufacturing industry. There can be no greater folly than such a process.

We must return to a competitive exchange rate, which is properly defined as one at which we can balance our trade with the rest of the world in conditions of growth and full employment. That means getting interest rates down and acting to make the exchange rate competitive. In 1945, Sir Ralph Hawtrey said: Mass unemployment cannot occur unless central banks of set purpose bring it about". Our central bank is now doing that.

7.34 pm
Mr. Gyles Brandreth (City of Chester)

The debate has reminded me that since becoming a Member of Parliament I have met only two types of people—people with problems and people who are right. I welcome the people with problems, because one can always learn from them, and occasionally one can help them. People who are right present more of a challenge—and there is no shortage of people who are right about manufacturing.

Quite a few such people have been on parade this afternoon. They have their own vivid picture of what constitutes manufacturing, and—at least among Opposition Members—it tends to be a somewhat nostalgic picture, more in the tradition of L. S. Lowry than anything else. Alongside that picture goes a conviction, an unshakeable belief, that everything in the world of manufacturing is bad news.

Those people say that manufacturing in the United Kingdom is in terminal decline, and they repeat the mantra so frequently that clearly they have convinced themselves. One's concern is that they may have convinced some other people as well. 'They seem unaware of the fact that, since 1981, as the President of the Board of Trade said, British manufacturing exports have increased by 66 per cent.—faster than those of any of the other G7 economies.

We are told that the hon. Member for Livingston (Mr. Cook) was with the Confederation of British Industry this morning. I wonder whether he was shown a CBI publication called "Competing with the World's Best," which says: recent years have seen a transformation in Britain's manufacturing base. The recent strength of exports confirms the widespread anecdotal evidence: companies based in Britain are able to compete successfully in some of the toughest, technology-intensive markets in the world. I wonder whether the hon. Gentleman was told that the CBI regretted that, unfortunately, the extent of the transformation is not widely understood. Moreover, the experience of the recession has reinforced the widely held—though incorrect—belief that Britain's manufacturing base has been run down over the last decade and is unable to compete in international markets. I imagine that the hon. Member for Livingston has learnt a lot today—a great deal this morning and, to his cost, a great deal this afternoon.

The fact that manufacturing output per head in the last quarter of last year was 3.2 per cent. up on the year before is good news—and the fact that manufacturing is not what it used to be is not bad news: it is inevitable. Everything changes; it always has, and it always will.

A century and a half ago, my namesake, Jeremiah Brandreth, bewailed the state of manufacturing in the midlands and the job losses that the new technologies of the time brought about. That Brandreth was the last of the Luddites. He was also the last man to be beheaded for treason in this country—but that is another story. They called him the hopeless radical. I see myself as the hopeful radical, and I believe that we have radically to alter our perception of manufacturing.

For a start, we must stop compartmentalising manufacturing and segregating it as though it were a sacred zone of business unrelated to the rest. We must abandon the false barrier that has been erected between manufacturing and services. It is outdated, irrelevant and absurd to imply that there is some intrinsic merit or special worth in something simply because it has been manufactured in the old-fashioned way.

We shall never succeed by harking back, but only by developing further the areas in which we have distinctive capabilities and competitive advantage, be those the elite sciences, pharmaceuticals, chemicals, retailing or financial services. In my constituency, we manufacture aluminium cans, but we are also a great centre for financial services. We can export the cans, and the financial services.

Where yesterday we might have exported widgets, tomorrow we might be exporting the design and management of airports or hospitals, or the teaching of English as a foreign language. Our success depends on recognising the areas in which we have distinctive capabilities and on retaining our competitiveness.

Over the past year, we have been able to strengthen our competitive position as a result of firm control of costs following the depreciation of sterling. It is not for Government to tell businesses how to run themselves, although the hon. Member for Livingston would not agree. That is no doubt why today he announced his plan for Government dividend controls, which were so warmly welcomed by his namesake, the hon. Member for Brent, East (Mr. Livingstone).

I talk to manufacturers and service providers in my constituency—I do not make a distinction, I see them all as business people—and they are all clear about what they want from Government. First and above all else, they want a stable economic climate. They want to know where they are so that they can plan with confidence. They want sustained low inflation, sustained low interest rates, sustained low corporate taxes and a flexible labour market.

Well, inflation has been brought down to its lowest level for 30 years, interest rates are down to 5.25 per cent. from 15 per cent., which represents £13 billion off the costs of industry, and we have the lowest rates of corporation tax in the European Union or among the G7 countries.

Also, we have created a flexible labour market, encouraging decentralised wage bargaining and strengthening democracy in the trade unions to make them more accountable to their members. Industrial strife, once the hallmark of manufacturing industry in the country, is now a thing of the past, thanks to the Government.

That is why we must continue to resist the blandishments of the Opposition and the dangerous nonsense of the social chapter. It is incredible that a major party is going into the European elections committed to the social chapter, to a minimum wage, and that some of the party's members are even committed to a 35-hour working week.

By talking to people in my constituency in manufacturing, I know that they are concerned with six key elements—banking attitudes and finance, capital allowances, export facilities, deregulation, research and development, and, in the longer term, education. In each of those areas, the Government are and have been taking action, and we must salute that. The manufacturers in my part of the world were concerned with those matters, but none—not one—was asking for a national business plan from Government.

Running businesses is not the business of Government. The Opposition will never understand that, and that is why they have opposed every privatisation since 1979. In 1979, the Government-owned industries, before we privatised them, cost the taxpayer some £2.6 billion in subsidies. In the past year, those same businesses paid some £2 billion in corporation tax.

Not surprisingly, when the Leader of the Opposition unveiled his business plan for Britain in Glasgow, the director general of the CBI, who was on parade this morning with the hon. Member for Livingston, found that Labour's policy contained "uncomfortable echoes of the past". We have been here before. Remember the Department of Economic Affairs, the national plan and the National Enterprise Board? As I recall, of 100 investments, two thirds went awry—half were sold at a loss, the other half went bust. It is incredible that the Opposition's policy vacuum should be filled with talk of another national business plan.

Today, the hon. Member for Livingston paraded himself as a latter-day Lord George Brown without the hiccoughs, and it will not wash. At least the late Member for Belper believed in what he was doing. He was a conviction politician. I do not believe that the Opposition Front Bench Members can believe in what they are doing, because it does not add up to a row of beans, and it certainly does not add up to a credible manufacturing strategy.

7.43 pm
Mr. Roy Hughes (Newport, East)

I have never purchased anything but a British car, from a Standard Ten onwards, so it was a sad day for me when British Aerospace decided to sell the Rover Motor Company to BMW. Why did the Government allow that to happen? In recent years, Rover has been building a quality product. Its success could have been built on and expanded, but, instead, it was flogged cheaply to a foreign competitor.

Now that the decision has been taken to sell out, I only wish the new enterprise well, because so many jobs are at stake. There is a tripartite entanglement among Rover, BMW and Honda, and I hope that good sense prevails, because Honda has certainly been slighted. Despite the setback, Honda needs to be encouraged to continue its mutually beneficial association with Rover. Meanwhile, BMW must recognise the delicate nature of the relationship between Rover and Honda, which may benefit all concerned.

Newport, in my constituency, has a major interest in the steel industry, especially through the great Llanwern works. Llanwern supplies large quantities of quality steel to the motor industry, and I trust that that arrangement continues. However, there has been some suggestion that, because BMW uses galvanised steel, there may be problems.

Perhaps the Minister would look into that situation, because it may cause trouble in future. British Steel is an efficient producer and its product is reckoned to be the best in Europe. Of the total United Kingdom steel production in 1990, 87 per cent. was produced by the continuous casting method, whereas the world average was only 70 per cent. There has been success in the export market, and the productivity of British Steel is reckoned to be 10 per cent. above the European average.

However, such success has come about only through traumatic change. Since the mid-1970s, the United Kingdom steel industry has shed some 200,000 jobs. Many redundant steel workers, especially those in their mid-fifties, have not worked since. Alongside that job shedding, there was considerable investment in steelmaking technology. The success of British Steel bears out the theory that what British industry needed was new investment.

Despite that success, a fresh crisis has arisen because of the recession and of over-capacity in continental Europe. That over-capacity is estimated at 30 million tonnes, which is equivalent to the steel industries of the United Kingdom and Spain. The position was made difficult because continental countries did not cut their capacity to anything like the extent to which it occurred in the United Kingdom. Germany, Italy and Spain are openly flouting previous commitments by keeping inefficient capacity running. The rules are being broken as those countries heavily subsidise their steel plants.

In the process, our industry has been undercut, and the jobs of our steel workers are being put in jeopardy. Unfortunately, the Government have not kept abreast of the situation. Resolute action was required from the Minister for Industry. He should have insisted that the Italians, the Spaniards and the Germans made capacity cuts to match ours. That has not been done, and the Minister has been left with half-baked promises which do not amount to much at all.

Meanwhile, the Government have aggravated the situation by announcing the ending of the iron and steel employees readaptation and benefit scheme. A statutory instrument to formally wind up the scheme was laid in Parliament on Thursday 27 January by the Minister for Industry, and it came into force the following day.

Incidentally, that same Minister has been weak-kneed in his dealings with countries which have failed to cut their steel-making capacity. Early-day motion 485, standing in my name and that of 120 other hon. Members, calls for a reconsideration of that decision, and I reiterate that call this evening.

The scheme is unique, as it is funded by the European Coal and Steel Community, using a levy on steel production by all companies. Since 1974, it has had no fewer than 118,000 redundant steel workers. If the Government terminate that agreement, the United Kingdom will be the only member state of the Coal and Steel Community without such a scheme. What a travesty that is, yet it is so typical of the Government. On and on they go down the path of deregulation. There have even been cuts in health and safety standards.

The Government now talk of an economic recovery, but that recovery is patchy, to say the least. It relies on increased consumer spending and the purchase of goods from overseas, rather than products manufactured in our own factories.

I sincerely hope that one day in the not too distant future the Government will be replaced by a Labour Government who truly believe in the importance of manufacturing industry. When that happens, Britain will truly be on the road to recovery.

7.50 pm
Mr. Anthony Coombs (Wyre Forest)

I follow my hon. Friend the Member for Surrey, North-West (Sir M. Grylls) in expressing surprise that the Labour party should choose a debate on manufacturing industry, for two reasons. First, our manufacturing industry is in a fundamentally stronger position than it has been in for many years. Secondly, I have yet to meet a business man who is impressed by the "business plan for Britain" which the Labour party recently proposed. One business man in my constituency said that the only business men he knew who would be impressed by it were his German competitors.

On the fundamentals of the British economy, I entirely agree with my hon. Friends. In terms of efficiency; productivity, which is still increasing; exports; market awareness; and trying to improve productivity, which has increased by an unprecedented 70 per cent. since 1979, manufacturing is leaner, more efficient and more decisive than ever. Small wonder, therefore, that this year our economy will grow by 2.6 per cent. while those of other European countries will either not grow at all or will contract. Last year, the German economy contracted by 7 per cent. and the French economy by 5 per cent., while ours grew by 2 per cent.

That view of manufacturing was emphasised by the hon. Member for Coventry, North-West (Mr. Robinson), one of the few Labour Members with an active interest in manufacturing and business. He said that the recovery is happening and must be protected, a view shared by the London Business School which, only last month, said: Our forecast suggests that the UK will settle down on a path of steady growth with historically low inflation. That is the key to sustained improvement in manufacturing capacity and output, as we saw in the 1980s, as a result of three Government policies. The first is low inflation, which is crucial to the ability to plan and, therefore, to invest. If we are to achieve more realistic pay-back periods for investment, we need low interest rates. As we have already seen on long-term Government bond rates, low inflation is crucial to low interest rates. If we want to get rid of short-termism, which has dogged British industry for too long, we need an assured, long-term inflationary climate, unlike the inflationary climate that we endured under the last Labour Government.

The second policy is flexibility. The Government are right to prevent British industry from being taken over by the social chapter. Companies in Germany are already closing down and moving their plant to this country, particularly to my constituency, because the "on costs" —not the basic wage costs—which they must pay as a result of their social policies are far too high.

When companies nowadays have to operate with stocks of only 2 per cent. of turnover—I visited one such company on Monday—they need flexibility in terms of their work force. They need not lines of demarcation but co-operation and better industrial relations. That is precisely what the Government's policy of flexibility has delivered.

It is significant that Germany, which we all thought was the home of good industrial relations, should now see IG Metall and the public sector unions threatening all-out strikes because the German Government do not have control of their economic environment and are done down by high social costs.

A sophisticated economy cannot specialise in everything, which is why this country, with only 1 per cent. of the world's population, 3 per cent. of its output and 8 per cent. of its exports, must attract inward investment if it is to survive. It is right that we should have such a fundamental climate that allows us to attract 40 per cent. of American and 40 per cent. of Japanese investment in Europe. That investment is not just one way. This country, possibly more than any but three other countries in the world, invests overseas, adding £7 billion a year to our balance of payments.

By specialisation and encouraging inward investment, manufacturing industry has a rosy future, provided that it does not adopt the nonsensical policies proposed by the Labour party, to which it seems to be wedded in view of its ideological opposition to free enterprise and profit.

The most eloquent statement on that subject was made last September by the hon. Member for Dagenham (Mr. Gould), who said of the Labour party: Where we are absolutely deficient is in suggesting that, in any respect, we have a clue about how to manage the economy or whether we should even try". That was a senior member of the Labour party talking about the opportunity that his party has had, in 14 years in opposition, to get its industrial strategy together.

The Labour party's competence on forecasting is not much better. After the Budget in March 1993, the hon. Member for Dunfermline, East (Mr. Brown) said: I make one Budget forecast—that, after the Budget, unemployment will rise this month, next month and for months afterwards."—[Official Report, 17 March 1993; Vol. 221, c. 289.] Precisely the opposite happened. That month, the following month and for months afterwards, unemployment fell by an unprecedented amount—206,000 less than throughout 1993, and in my constituency, 10 per cent. less.

Not content with that, the Labour party wants to foist on this country two policies that would be totally disastrous. First, in the European context, they seem to have swallowed hook, line and sinker, the social chapter and what some members of the shadow Cabinet have been discussing, the 35-hour week. I was with one of my carpet manufacturers only last Friday and he told me that his work force—shop floor as well as management—voted almost to a man for the Conservative party at the last general election because they were terrified of the 35-hour working week which the Labour party said that they would impose on all workers as part of its European strategy.

The Labour party also talks about a minimum wage. The two European countries that have a minimum wage, France and Spain, have unemployment rates of 15 and 21 per cent. respectively. That is because the economy is fossilised and people do not want to invest there. One of the major manufacturing companies in Europe, perhaps even the world, Philips UK, if asked whether it is interested in investing in Spain in a manufacturing capacity, will say, "Sorry, no", precisely because of the high social and non-wage costs that must be incurred in that country.

The other major policy that would discredit the Labour party in anyone's eyes, let alone a sensible business man, is its idea of closing loopholes, which the Confederation of Business Industry rightly said would amount to no less than a 25 per cent. increase in business taxation in this country. That translates to £3.6 billion a year—it is not just a one-off—which equates to somewhere in the region of one third of all existing manufacturing investment on an annual basis. If Labour Members honestly think that that would assist the country in gearing up to improve productivity still further and reduce the productivity gap between the United Kingdom and our European competitors, which has been reducing over the past 14 years under this Government, they are living in cloud cuckoo land and deserve the support of the electorate and the business community in this country even less than I thought.

I think that the Labour party has a basic antipathy to profit and wealth creation. Labour Members are obsessed with the distribution of wealth, rather than the creation of it. Their current policies and, indeed, their argument about clause 4, which they do not want to give up even 50 years after the event, is evidence of precisely that.

8 pm

Mr. Peter Hardy (Wentworth)

The Secretary of State did not stay in the Chamber long. He was out of here like the president of a banana republic who knew the reality and recognised that his friends were all right, but understood that the problems that he had shallowly skirted round remained very serious. I wanted to intervene in his speech because, during it, I received news of the statement of United Engineering Steel for the past year. That company lost £48 million. It is interesting that one of the losses was in restructuring costs.

In 1961, at the Templeborough site near Rotherham, 9,500 people worked in the production of engineering steel. They produced 1 million tonnes of steel and made a profit of £16 million. Last year, 194 people at the same site produced 264,000 tonnes of steel—an increase in productivity of 1,200 per cent. However, the comapny made no profit and closed. So one of the most successful and effective steelworks in Europe closed not long after the Minister cancelled ISERBS and said that there would not be any more redundancies. There have been 500 more job losses in engineering steelworks in our area and the Minister knows why. It is a pity that the Minister for Industry is not here.

I hope that the Minister will answer some of my points and those of my hon. Friends because our people demand answers. They demand answers because they know that the engineering steelworks in the Rotherham area are the best in Europe. They know that nothing in the Community steel industry can match us. They know that we hold the world records and Europe does not. They know that our workers and management have put everything into that industry and achieved the potential of enormous success. However, they have not met success, certainly not on the scale that they should have done, simply because the Government have been taken for a ride by more intelligent and competent nationally interested Ministers from the rest of the Community.

During the statement about the fine on British Steel, I asked the Minister a supplementary question about unfair competition and subsidies being put into their engineering steel industry by our competitors. The Minister said that that had stopped. I asked him when it had stopped and he said now. Did it stop on that day? Has it stopped since? Will it stop? Under this Administration, I do not think that it will stop because the British Government are regarded as a soft touch by our European competitors. The steelworks in Spain which competes with the works in Rotherham is bankrupt so its Government picks up the labour costs and it continues to compete. The two German plants which compete with Rotherham cannot match us. However, the Bremen local authority proposes to buy the Klockner works in order to keep it operating at a loss.

We are all right on a level playing field but we are not getting a fair deal. What is worse, Ministers are not capable of ensuring that a fair deal is obtained. If we are not getting a fair deal, let them give other people the chance to ensure that areas such as mine are not destined for the label which it has been given by the Community of being one of the 10 most deprived areas inside the Common Market. The Government have destroyed the mining industry and a large part of our engineering industry. Would they happily see the most successful engineering steel industry perhaps in the world but certainly in Europe destroyed because of the incapacity of Ministers and the inability of Commissioners properly to pursue policies?

I shall give an illustration and then I shall have to finish because of the time limit. Since 1975, the steel labour force in Britain has fallen by 78 per cent. In Germany, it has fallen by 40 per cent., and in Italy it has fallen by 47 per cent. [Interruption.] Tory Members may not represent steelworkers, otherwise they would not be amused by these tragic figures. Germany had 220,000 steel workers and now has 132,000. The United Kingdom had 183,000 steel workers and now has 41,000—and it is going down further at a rate of knots. I have to live with those figures because I live in my constituency. Last year, at one of the schools in my constituency—it is a good school—only four young people got jobs. If we do not get the economy right and the industrial base of this country reinvigorated, fewer young people will get jobs and the consequences for this nation will be an unutterable tragedy. In the forthcoming by-election, I certainly hope that the people of Rotherham will cast the verdict on the Government's record that needs to be placed.

8.6 pm

Mr. Michael Bates (Langbaurgh)

I shall begin my remarks by apologising for not being here for the opening speeches, which I would like to have been here for, but I was attending the Select Committee on Health. I trust that the House will accept my apologies for that.

Manufacturing is close to my heart as I come from the north-east. Whenever I see the subject on the screen or the Order Paper, I want to take part in the debate because manufacturing is vital. I have a great love of the instinct of manufacturing, which is making things and selling things. That is a good instinct to have for an economy.

I shall respond to some of the remarks made by the hon. Member for Wentworth (Mr. Hardy) about the subject of British Steel. I share some of his views because I have British Steel at Skinningrove in my constituency. We also have the Teesside works which is one of the most productive works in Europe, if not the world. I also share the distinct anger at the fine imposed on British Steel which was completely disproportionate to the fines placed on other steel manufacturers by the European Commission.

Let us be absolutely clear on that point—the fine was imposed by the European Commission. I totally deprecate the decision to apply that level of fine to British Steel, especially when it is compared with some companies which have been involved in the same cartel. The fines imposed on the other companies amounted to the princely sum of 8 ecu. According to a newspaper this morning, that should be about £4.50, compared with £25 million. That is more than the half-year profit of British Steel. It will have a catastrophic effect on British Steel in my constituency and across the country.

I smelt something rather unsavoury in the announcement. I put two announcements side by side; the announcement in December related to steel capacity cuts and efforts to cut capacity within the European Community. We are at one in believing that everyone else should have the cuts. That is logical because we want to put Britain first. We believe that British Steel is the premier steel manufacturer in the world. However, it is a little rich for Labour Members to talk about British Steel because that was not the score in the 1970s. It brings a wry smile to our face because the Opposition fought privatisation tooth and nail and it is that which brought about the profitability of which we are proud and which we wish to protect.

We always want someone else to take the capacity cuts. We want the Portuguese, the Spanish or the Italians to take the cuts—in fact, there should be great emphasis on the Italians who ought to be bearing the brunt of the capacity cuts. However, we are part of a community and there must be agreement. That involves some tough bargaining.

We must remember that the Labour party signed up to the decision to give away our national veto at the Council of Ministers. Where would that leave us in our negotiations on issues such as this? I have absolute confidence that our Ministers at the Board of Trade are fighting our corner well and I wish them success.

I am certain that British Steel will appeal against the fine. I dare suggest that when the ink is dry on the agreement on capacity cuts, we may find that the heavy fine on British Steel is rescinded somewhat by the European Commission.

British Steel is very much a part of the manufacturing base of the north-east. That manufacturing base is important to us because we have such a history and we have done rather well. The first railway was built between Stockton and Darlington. The first electric lightbulb was in Gateshead at Thomas Swan's house off Kells Lane—I should know that because I used to live behind it. Steamships were built in the north-east and turbines were perfected by Armstrong. That great ingenuity has been the cornerstone of the north-east and provided its wealth. That manufacturing created the demand for raw materials such as coal and iron ore which then went to the steelworks. Therefore, there was interdependency between the industries.

I could tell stories similar to those of the hon. Member for Wentworth (Mr. Hardy) about British Steel on Teesside. At the beginning of the 1980s it used to manufacture 1.5 million tonnes of steel a year with 25,000 employees. It now manufactures 3.5 million tonnes a year with 5,500 employees. That is industrial success. The separate issue involves the challenge of finding jobs and places for those who have lost their livelihoods and for the communities in which they live.

If one takes away the need for steel, that has an effect on coal. It has been a sad year for the north-east. The last deep mine in the north-east has closed. That affected members of my family. My father-in-law was a miner at Easington until a few years ago. I know that my hon. Friend the Under-Secretary who is sitting on the Front Bench has great affection for the British coal industry. We feel strongly about those old industries. However, when we can import coal for a fraction of the cost of mining it here, questions must be asked.

We talk about demand and energy generation and the way in which industry should be directed to use coal. One of the great changes in the level of demand has come about as people switch from coal fires to gas in their homes. Individual consumers have made that choice because they think that it is cleaner and more cost effective, but they deny that choice to industry. Industry must have that choice.

New industries bring in their wake new jobs and new prosperity. In the north-east, on Teesside, we have the Enron power station. It is a £850 million investment and generates power from gas. We have gas from the North sea, supplied through the central area transmission system pipeline. That is another £1 billion investment and much of the pipeline is manufactured in the north-east. That brings jobs and prosperity.

Many people from the north-east work offshore. I had the privilege of visiting the Tiffany platform in the North sea. I saw many people from the north-east using their skills in the North sea in the construction of modules, in drilling and in the upstream and downstream aspects of oil and gas production. That was very encouraging. It is said that between 11,000 and 12,000 jobs in the north-east now depend on the offshore oil and gas industry.

There is a link with the past. We can think of our great prowess as shipbuilding manufacturers. People in Sunderland built ships for the Japanese navy. We look with pride and nostalgia at our past and say that that is what we want to recreate. We are not building as many ships on the Tyne now, but companies such as AMEC are building offshore platforms. It is the same type of work but in a modern generation.

Many people in the north-east feel that previous Labour Governments—Conservative Governments that preceded them must accept some responsibility—mollycoddled British industry. If tough decisions had been taken in the 1960s and 1970s, we would not have had the pain of the 1980s during the massive transition as Britain moved towards the 21st century. It renewed its ability to compete on all fronts and some painful changes had to be made. We must look to the future and see what can be achieved.

The north-east has had great success in attracting inward investment. About 40 per cent. of all inward investment into the United Kingdom comes to the north-east. It comes because of the skills of the population —the great indigenous skills of making things, building things and selling things which made our forefathers great and which are making us great now.

There is great pride at Nissan. That company wants to stick a Union jack on the cars exported back to Japan because the people there believe that that signifies a better-built Nissan car than those they build themselves. That is the modern equivalent of selling ships from the Tyne or the Wear to the Japanese navy. We should embrace it for what it is. It is a great transformation, demonstrating our skills. We must take pride in our nation and our region.

Another reason why people come to the north-east was shown by the recent decision of Black and Decker—we are not part of the social chapter. We cannot divorce the two. I remember reading the name of Karl Kratzenburg—that is the type of name one does not forget. He was a machine shop supervisor in Limburg in Germany. He believed that capacity at Black and Decker had been shut down in Limburg and moved to Spennymoor in County Durham because, as he said, "It's simple. Industry must be flexible, the social chapter is not."

He encapsulated it all in a short phrase. I do not know whether that was a translation or extremely good English, but he got the message across and we have accepted it.

If the north-east is to demonstrate its industrial and manufacturing prowess on the world stage, we must remain competitive; competitiveness is what the Government is all about. We are not about mollycoddling, or protecting industry from the harsh whims of the market. That does nobody any good in the long term. We are now facing up to the future and to new challenges.

I will give an example of those new challenges. Rather than calling in a statutory board to tell people where, when and how much businesses ought to invest, and rather than making the old mistakes, two men—Karl Watkin, a north-east business man, and Mike McCullagh of the Marske machine tool company—have set up an organisation called Manufacturing Challenge. The organisation has two objectives, which are to double output and triple exports in 10 years.

The Opposition would tell us that a big bureaucracy, and perhaps a quango, was needed to organise and help the investment. They would sanction billions of pounds to direct that investment to various plants in the north-east. The two business men involved in Manufacturing Challenge said that they did not want a penny, and that they wanted to rebuild the manufacturing base of the north-east and develop it themselves. Business men and entrepreneurs looking after business men and entrepreneurs—that is the way it should be.

Already, 1,000 manufacturing companies in the north-east have signed up to the Manufacturing Challenge. It is a great success, and the firms are helping each other, rather than providing subsidies. One company goes to another in the north-east before it buys goods from overseas and asks whether it can get the goods in the region. If not, Manufacturing Challenge will provide help to tell the company how to manufacture those goods to customer specifications, so that a firm is buying manufacturing goods and services within the north-east, rather than going overseas. That is the modern way—the Conservative way—in which to regenerate the manufacturing base of the north-east, and it is one which I support.

Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)

Order. In the time available before the winding up, there are no fewer than six hon. Members who are hoping to catch my eye. I hope that, with a bit of co-operation, I will perhaps be able to call them all.

8.24 pm
Mr. Gordon Prentice (Pendle)

I will be brief, Mr. Deputy Speaker.

It is a pity that the hon. Member for City of Chester (Mr. Brandreth) swept into the Chamber, made his speech and swept out again, because I wanted to say something about his speech. The hon. Gentleman talked about business strategy and about industry standing on its own feet and not needing hand-outs. That is the man whose own business setting up royal exhibitions collapsed after receiving a grant of £200,000 from the English tourist board. That money was lost, and not repaid. When I hear that kind of stuff from Government Members, it sticks in my throat. The Government Members who have directorships and who are Lloyd's names and receive grants and loans are always the first people to criticise the minimum wage and the social chapter.

The hon. Member for Langbaurgh (Mr. Bates) talked about inward investment. If one looks at their performance, foreign inward investors pay higher than the going rate for indigenous United Kingdom-owned companies. That is a fact. Wages paid by foreign inward investors per head are 24 per cent. higher than those paid by United Kingdom-owned firms. Their productivity is 45 per cent. higher and their investment per head is 92 per cent. higher.

I will touch briefly on the speech of the President of the Board of Trade, which was typically vacuous. He said nothing at all, like so many of his Government colleagues. Conservative Members exist on a different planet and they operate in another dimension where they see things that other people do not see. They see growth, productivity and a booming economy where the rest of us just see dust.

The President of the Board of Trade has a nerve. My hon. Friend the Member for Livingston (Mr. Cook) referred to the right hon. Gentleman's book "Where There's a Will", which was published in 1987. In it, the President said: It is simply not an option for the British Government to tell the country's motor industry to make its own way in the world … An ominous development has been an increase in foreign ownership and control. Foreign investment and interest is, of course, to be welcomed, but control has its dangers. For the major parts of the British motor industry to fall entirely into foreign hands would leave it a hostage to decisions in Detroit, Paris, Turin and perhaps Tokyo. The amazing thing was that, when challenged by my hon. Friend, the President said that he stood by every word. When Rover was sold to BMW, the right hon. Gentleman was somewhere in the far east on a trade mission and one of his Front-Bench colleagues had to deal with the matter. The President of the Board of Trade exists in a hall of mirrors where reality is not quite reality.

The Under-Secretary for Technology put his name to a document entitled "Manufacturing into the late 1990s". That document contained all the buzz words, but was selective with the statistics. The hon. Gentleman said in the foreword that from 1981 to 1992—it is always 1981, and never 1979— UK manufacturing output rose by over a fifth". I have had the Library recalculate those figures going back to 1979. They show that output rose not by one fifth but by 6 per cent.

The Under-Secretary added that investment had risen by one third, but the Library tells me that, when the figures are recalculated going back to 1979, there has been a 12.8 per cent. decrease in fixed investment in manufacturing. In the glowing foreword, the hon. Gentleman talked of exports rising by three quarters. Of course there has been an increase in the volume of United Kingdom manufacturing exports, but it has risen by 56 per cent. and not 75 per cent.

The Under-Secretary's own Department gave evidence to the Select Committee on Trade and Industry on the competitiveness of manufacturing industry in the United Kingdom, and it was recognised that things were spinning badly out of control. After 15 years of Conservative party stewardship, the United Kingdom has slipped to 18th of the 24 OECD countries. That is a pitiful record, yet the Government tell us that everything in the garden is lovely. That does not correspond remotely to the perception of people outside.

In my area in the north-west, we lost 88,000 jobs in manufacturing industry between January 1992 and March 1993. There has been an acceleration since then, but I do not have the figures to hand. My constituency has the highest percentage of the work force employed in manufacturing industry of any constituency in Britain. We have had a cascade of job losses in recent years. In the past year, there were job losses at Smith and Nephew at the denim plant. The United Kingdom no longer makes denim for jeans and for clothing.

Mr. Oppenheim

indicated dissent.

Mr. Prentice

The hon. Gentleman shakes his head, but it is an incontestable fact that the United Kingdom no longer makes denim. There have been job losses at Rolls-Royce in my constituency, where aeroplane engines are made.

My constituency makes not just boots and shoes but high-tech components. Baxter Healthcare is a United States multinational company that makes intravenous drips and high-tech equipment for the national health service. It has pulled up sticks and decamped to Malta where, apparently, they pay lower wages than in north-east Lancashire—which beggars belief. We have seen the closure of Project Engineering and Wadkins of the Colne, which made woodworking machinery. There has been a collapse of manufacturing in my region.

The rhetoric of the Department of Trade and Industry and reality diverge greatly. When the Department of Trade and Industry gave evidence to the Select Committee on Trade and Industry, it said: Manufacturing is the key tradeable sector of the economy contributing roughly three times as much to exports as services. The hon. Member for City of Chester (Mr. Brandreth) said that there was no difference between manufacturing and services. He thinks that Britain can run itself by staging royal exhibitions—

Mr. Hardy

Not if the hon. Gentleman is in charge.

Mr. Prentice

Yes, not if the hon. Member for City of Chester is in charge. He thinks that Britain can run itself by staging royal exhibitions and developing tourism.

My hon. Friend the Member for Livingston (Mr. Cook) said that manufacturing trade moved into deficit in 1983 for the first time since the industrial revolution. It did so under a Conservative Government and it stayed in deficit, reaching a massive £17.3 billion deficit in 1989.

The President of the Board of Trade said that our aerospace industry was a triumph. Rover was taken over by BMW in Germany because British Aerospace said that it needed the capital to develop the core aspect of its business—aerospace. British Aerospace told the Select Committee on Employment—the report was published in January this year—that its problem was the availability of capital.

In its evidence to the Select Committee on Trade and Industry last year, the Department of Trade and Industry quoted the Confederation of British Industry approvingly. It said: Uncertainty about the future demand and inadequate returns on investment are consistently seen as more important influences than the cost, or availability, of finance. That is clearly not the case for British Aerospace, one of our biggest exporters.

I have a document from Rolls-Royce, which manufactures aeroplane engines in my constituency. It mentions the uneven playing field on which the aerospace industry in Britain has to compete with other countries. It states that it is a major concern that companies in the United States and other countries receive support from their Governments for research and technology that British companies do not. Since 1972, launch aid has provided £500 million, but it will have to be paid back. It is not a grant but a loan—

Mr. Jim Cousins (Newcastle upon Tyne, Central)

And the Government make a profit.

Mr. Prentice

Yes, the Government make a profit.

Rolls-Royce finds it difficult to operate in a competitive environment without proper support from the Government.

I should like to say much more, but I am conscious of the fact that many of my hon. Friends want to speak, so I shall close my remarks.

8.35 pm
Mr. Phillip Oppenheim (Amber Valley)

It was a little unfortunate that the hon. Member for Pendle (Mr. Prentice) launched such a vitriolic attack on my hon. Friend the Member for City of Chester (Mr. Brandreth). Had he not done so, I should not have been tempted to remind the House that the hon. Gentleman was the leader of Hammersmith and Fulham council which, under a Labour regime, indulged in the disastrous rate-swapping scheme that lost ratepayers millions of pounds. He should be careful before attacking Conservative Members.

Mr. Gordon Prentice

The hon. Gentleman referred to my alleged responsibility for rate swaps in Hammersmith and Fulham council, presumably when I was leader. An independent report completely exonerated me and all elected members.

Mr. Oppenheim

If I were the hon. Gentleman, I would also try to disown that disastrous policy.

On a more consensual and emollient note, I think that probably all hon. Members would agree that manufacturing is important; it is an important component of any advanced industrialised country. But the wording of the Opposition motion is particularly ill-chosen. I think that we would all agree that in an ideal world we would prefer to have a genuinely British indigenous player on the global car market. We did not lose that chance through the takeover of Rover by BMW; we lost it in the 1970s when British Leyland was the butt of international jokes and was churning out products such as the Allegro and the Marina—international jokes in themselves that were not seriously marketable on the home market, let alone on export markets.

We must ask ourselves why British Leyland got into that position. The answer, to a significant degree, is that Governments of all parties—the Conservatives were almost as much to blame as Labour—meddled and fiddled with the car industry. They told it what to do. They told the companies that they had to merge and told the British car industry where it could build its plants. They insisted—probably for well-intentioned reasons—that it should build plants in places like Liverpool and Scotland, well away from the core manufacturing areas. As a result, bodies and engines were shipped all over the country at great expense. We all know why that was done—it was a well-intentioned regional policy—but the net result was that the British car industry was severely handicapped. I have not mentioned the industrial problems that we all remember in the 1960s and 1970s. British Leyland suffered from meddling. Its successful parts—the truck and the four-wheel drive sections—were made to cross-subsidise the unsuccessful volume car sector. By the end of the 1970s, most people would not have given the British-owned part of the car industry much chance of surviving.

It is a tribute to the Government's policies and, more important, to the enormous efforts of the management and work force of Rover that it managed to grope its way back to a position where a company of the prestige and performance of BMW wants to take it over. To suggest that Rover is a jewel of British manufacturing that had a chance to be a global player is nonsense. The Rover Group, for all its successes in the past 10 years, was third in the home market and had a derisory share of the European market. It hardly sold anything in the United States or Asia and just about managed to crank up its four-wheel drive production by a few per cent. over a period when the Japanese managed to increase production by 1,000 per cent. We must get the Rover-BMW case in perspective.

It was unwise of the hon. Member for Livingston (Mr. Cook) and Opposition Members to talk about the steel industry. During the debate, they have concentrated on criticising foreign subsidies for foreign steel makers. They have told us that the United Kingdom industry is the most efficient in Europe—about which I agree. In the 1970s, Britain had a £1 billion a year deficit in steel products; we now have a £1 billion a year surplus. By the end of the 1970s, British Steel was the world's largest loss-maker and cost the taxpayer hundreds of millions of pounds each year that could have been better spent on hospitals and schools. British Steel is now the most efficient steel maker in Europe and pays money to the Exchequer in taxes that help to fund the health service and schools.

British Steel has been transformed. Why? There has been an end to the national champion-style meddling that characterised Government policy towards steel in the 1950s, 1960s and 1970s. Again, it was not just the Labour party. In the late 1950s and early 1960s, the private steel mills wanted to build a huge integrated steel plant in north Wales, but the Government said, "No. For regional policy reasons, you have to split the plant in two—half in north Wales and half in Ravenscraig."

Ravenscraig is inland, so all the coke had to be expensively shipped inland to the plant and most of the finished product had to be shipped expensively to the markets, which were not in Scotland. We all know why Governments did that; it was well-intentioned, but such meddling with the steel industry saddled it with the burden of inefficient, uncommercial capacity.

In the 1970s, when the British steel industry was nationalised, Government policy became worse. It was no longer the market or the management who decided what capacity of production the industry should have—it was a combination of Ministers, bureaucrats and trade unions.

At one point, the management proposed one figure and the politicians suggested another. That was not enough for the unions and they ended up compromising with another figure that was way above what the market would bear. As a result, British Steel was meddled almost to death and by the late 1970s it was the world's largest loss maker. That was a result of the industrial strategy which the hon. Member for Livingston proposed for British industry today.

What brought British Steel back to health was a combination of privatisation and market discipline and the end of the meddling from which the company suffered in the 1950s, 1960s and 1970s. The hon. Member for Livingston has an absolute cheek to tell us that British Steel is now the most efficient steel company in Europe, when he and his party opposed tooth and nail the policies—I admit that they were difficult policies—that had to be implemented to bring the company back from the brink of disaster. It is extraordinary that he attacks subsidies elsewhere in Europe, when his whole industrial policy is predicated on subsidies for British industry.

I should like to think that, in their maturity, the hon. Gentleman and his hon. Friends have reached a sophisticated realisation that markets work better than interventionist industrial policies, but I suspect that their conversion has more to do with opportunism and hypocrisy than with a fundamental realisation of where we went wrong in the 1950s, 1960s and 1970s and where we should be going now.

Dr. Liam Fox

Does my hon. Friend accept that the argument goes further and what he calls well-intentioned meddling is fundamental flawed? When Governments have industries in the state sector, they will always make decisions for political and employment reasons and not for economic and profit reasons. Therefore, industries in the state sector are bound to feel that they will never be subject to market discipline.

Mr. Oppenheim

My hon. Friend is absolutely right. I was coming to the fundamental reasons why state control of industries or state intervention is almost invariably doomed to failure. There are a number of reasons, and my hon. Friend perceptively put his finger on one.

First, for all their undoubtedly excellent qualities, politicians and civil servants are not business men. They do not have access to the same information as the market. The market is the aggregate of thousands or millions of decisions by investors, customers and business men and, by definition, their aggregate decisions will be better informed than those of civil servants and politicians.

Secondly, as with the steel and car industries, the decisions of politicians as to where to put investment are almost always distorted by regional and social considerations which, however well-intentioned, lead to uncommercial decisions.

Thirdly, when Governments give subsidies, they do not tend to support those industries that most need the money or could make best use of it; they tend to subsidise those industries with the most lobbying power, and they tend to be the industries that will not use the money most effectively.

Finally, all too often, Governments put money into projects that are unsuited to the underlying fundamentals of the economy. That occurs particularly in the third world. The Indians have poured money into a rocket programme and the Brazilians have poured money into a computer programme.

I venture to suggest that the billions of pounds poured into the British nuclear industry in the 1950s, 1960s and 1970s fall into that category. When one considers the huge resources in terms of the highly skilled manpower, the brain power and the financial resources that went into that industry, and the result that was achieved in terms of high-priced electricity, one thinks of what could have been produced had all those resources been efficiently directed to where they could be used most productively by the market. One can see the errors that occur when politicians and civil servants have grandiose dreams of the great industries that they would create which almost invariably end up as disasters distorting the economy, draining it of resources and costing taxpayers large sums of money.

To return to steel, the European steel industry is a classic example of an industry which has been subject to politicians and state industrial policies for the past 30 or 40 years. Every European country, including Britain in the 1950s, 1960s and 1970s, has poured billions of pounds into its steel industry and the result is the mess of inefficient over-capacity from which we all now suffer.

Industrial policy is almost invariably a beggar-my-neighbour policy. At the moment, British Steel is suffering from the ill-founded policies that are still, unfortunately, pursued in France, Italy and Spain.

The American writer H. L. Mencken said: For every complex and intractable problem there is a solution that is simple, plausible and wrong." Industrial policy is just that: simple, plausible and wrong. However, the world is more complex than that. Markets may not be perfect, but they are a great deal less imperfect than business decisions made by politicians and bureaucrats.

One of the common theories from the Opposition is that we are trying to put Britain into a low-wage market to attract industry. The hon. Member for Livingston and his hon. Friends have completely missed the point.

To be sustainable, wages have to be matched by productivity. If wages are higher than is justified by the underlying productivity of the economy, the result will be high unemployment, as has happened in Spain in recent years.

How do a Government raise productivity in an economy? One of the key policies is improving education. The key industrial policy in Britain must be to improve standards of education, which over the past 30 or 40 years have slipped below those of our main competitors. That is why it is so important for the Government to press on with the reforms which they started in 1988 and which probably will be the most crucial component if we are to recover our manufacturing expertise and prowess.

Making labour truly productive requires good availability of capital. Opposition Members have told us that we need a German or Japanese system whereby the banks closely co-operate with industry, and with two-tier boards and supervisory boards such as those in Germany.

They should tell that to Metallgesellschaft or Philips in Holland. Daimler-Benz is another good example. Those companies had supervisory boards, and as a result they were not put under shareholder pressure. They became arrogant and took decisions that no company subject to the scrutiny of shareholders would have made. They have now made vast losses. That is why in countries such as Germany and Holland the system of supervisory boards and close links between banks and industries is being abandoned.

Shareholders are the crucial link in the chain of accountability. Countries such as Germany and Japan have greater availability of investment capital which allows their companies to take a long-term view. The reason is that they save more because the pool of investment capital for industry is pre-eminently private savings.

In Britain in the 1960s and 1970s, we clobbered savers with high taxes—98 per cent. investment income surtax on the savings of top rate taxpayers. That was no incentive to save. Under Labour, we had negative real interest rates, or interest rates below inflation. Who in their right mind would save when interest rates are below inflation and when what little profit is made is taxed at 98 per cent.? I am glad that the Government have reversed that policy, yet I do not think that Opposition Members have learnt their lesson, because they went into the previous election with a policy of reintroducing the investment and income surcharge. Until they realise that private savings are the real pool of capital, and that that is what industry must draw on to invest, they will carry on making the same old mistakes.

The key lessons from the experience of Germany and Japan are that they have an awesome, rigorously educated work force, which is their key competitive advantage. Until recent years, they maintained high levels of monetary and fiscal stability and maintained low taxes and incentives for savers, which allowed industry the pool of capital for investment. We are now pursuing those policies in this country. They are achieving results. Despite what Opposition Members have said, our performance has improved dramatically in recent years. In the 1960s and 1970s, we were consistently bottom of the Group of Seven and European Community countries on overall output, manufacturing output and growth in productivity. In the 1980s, and again now, we have been at least as good as the average of the G7 and European Community countries. In many cases, we have been near the top of the league tables. We are now at least average, if not higher than that, in the league tables.

Manufacturing output fell under the previous Labour Government, yet from the way in which Labour Members speak, one would think that everything was rosy in the garden. The truth, however, is that much of British industry was dead on its feet and multinationals, such as General Motors and Ford, were falling over themselves to shift production out of Britain and on to the continent. The opposite is now true. Under the Conservative Government, manufacturing output increased rapidly during the 1980s, and will again during the 1990s. Multinationals such as Ford and General Motors, and the Japanese manufacturers, are coming back to Britain. Britain is once again a good place to make things. We may not have made up all of the ground that we lost in the 1950s, 1960s and 1970s relative to our competitors, but we have made up a great deal of it. If we maintain our policies of trying to improve education, maintaining monetary stability and giving incentives for savers, Britain will once again become a pre-eminent country for manufacturing.

8.52 pm
Mr. John Denham (Southampton, Itchen)

The hon. Member for Amber Valley (Mr. Oppenheim) has just made a rather rambling presentation of the type of extreme free market views that I had thought—until earlier today—that the President of the Board of Trade was criticising within the Conservative party in his book.

I heard the President of the Board of Trade speak this afternoon, and clearly he has also signed up to the view that the Government should do nothing, make no intervention and create no institutions to develop effective manufacturing industry. Yet the persistence of that view in the Conservative party, despite the self-evident damage that is being done to manufacturing in this country, is one of the remarkable political phenomena of the past few years.

Any cursory examination of any part of British manufacturing industry today will show that, far from the Government being able to say, "You get on with the job. What you do is nothing to do with us," it is intimately related and affected by Government policy. That is as true today as it has ever been.

In the south-east of England, outside London—the part of England where I come from—we have lost about one in six manufacturing jobs since 1990. Fewer than 700,000 people in the whole of the south-east region now work in manufacturing industry.

Since the beginning of the 1980s, at least 13,000 manufacturing jobs have been lost in the Southampton and Eastleigh travel-to-work area. Those job losses are truly massive. The hon. Member for City of Chester (Mr. Brandreth) argued that the job losses mean nothing, that they simply reflect changing technology or changing working practices. Although that element is there, it is clear from a look at industries operating in south Hampshire that the effects of Government policy have led directly to many of those job losses.

Let us take a tour of some of the major employers in the Southampton area. On Monday afternoon, I visited Aerostructures at Hamble—the visit was arranged well before this debate. It is a former subsidiary of British Aerospace and is now an independent company.

That company has shed, or will have shed when the latest redundancies are completed, some 20 per cent. of its work force in the space of three years. I was told that that is partly to do with changed working practices and the use of new technologies and processes; but a significant part is due to the fall in orders from the aerospace industry.

When we were talking about the work that that company does for the airbus project, the European fighter aircraft and the defence industry, it struck me that, although that company is working hard and successfully to move into civil aviation projects with no Government links, it is hard to argue the case because Governments —here, in the European Community, in the United States and in the third world—in terms of orders for the aerospace industry, directly affect the ability of that company to have orders to chase. The idea that a company such as Aerostructures can exist in some free-market paradise, unaffected by the decisions of Government, is quite wrong.

If one looks at it the other way round, that company does not want to be run by the Government. It wants a Government who have a vision of the future of the aerospace industry, who can back key projects, who are willing to invest in the very expensive costs of developing new projects and aircraft. That is where Government responsibility comes in. It is the way in which the Government, in so many areas of industry, have washed their hands of any responsibility for taking a strategic view of British industry that has been so damaging.

In my constituency, Philips used to have a fairly significant production of semiconductor products. That has almost entirely gone. Part of it went to the third world— that is perhaps labour cost competition—but part of it went to Holland, because the Dutch Government were prepared to work with Philips to provide the technology to develop the next generation of silicon wafers.

Conservative Members do not agree with a Government working with private industry. That is fine, but it is no use our not agreeing with it when such collaboration is under way in other countries. The result is that Philips has a high standard of research and intellectual property work going on, but without the production side to add value to the work on that site.

Pirelli, which had major job losses last year in Southampton and Eastleigh, is directly affected by the Government's failure to get major infrastructure projects off the ground, such as the channel tunnel link, with the requirements for signalling and communications cables. What Governments do, whether they have a view to the health of manufacturing industry, makes a difference.

Ford has thankfully returned just this week to five-day working. But nobody can deny that the long periods of short-time working were directly affected by Government mismanagement of the economy and Government failure to boost the small and medium-sized businesses that provide orders for Transit vans. One fifth of all jobs at British Rail Manufacturing Ltd. in Eastleigh are to go: that development has occurred in the short time since the passage of the Bill to privatise the railways. Government policies can directly destroy jobs.

It is true that there have been technological changes and moves towards more efficient working practices, but any examination of any part of manufacturing industry anywhere in the country will show that the actions of Government have considerable influence on the success of the manufacturing sector. The Government's real crime has been not to face up to the challenge—not to look at all the areas in which their actions influence the success of industry, and ensure that we make the best of that industry.

The result of the shake-out of jobs in manufacturing industry has been a large and significant change in the nature of the labour market. Conservative Members may wonder why, despite some fall in the headline levels of unemployment, they seem to be getting so little political reward for what they considered a great achievement. In fact, the well-paid, full-time, permanent jobs that used to exist in manufacturing industry are now being replaced by possibly a slightly larger number of jobs, but jobs that are poorly paid, lower skilled, often part-time and often non-permanent; they tend to be in the service industry.

One of the major reasons why the Government are given no credit for the small fall in unemployment is the current rise in job insecurity. Those in permanent manufacturing work know that the chances are that they will either lose their jobs altogether, or be shifted from pensionable permanent jobs to contract jobs with no pension rights and few secure employment prospects.

Mr. Purchase

My constituency presents a mirror image in terms of manufacturing job losses. I have a list of more than 2,000 full-time manufacturing jobs that have been lost in Wolverhampton. That position—which no doubt also applies in my hon. Friend's constituency—demonstrates beyond doubt the collapse in manufacturing output and jobs in this country.

Mr. Denham

I agree.

I have listed some of the ways in which Government policies have affected job losses in the recent past. Let me now mention some of the Government's responsibilities for future planning.

It is generally recognised that about a fifth of all jobs in the south Hampshire area depend on the defence industry, and the rundown in defence orders is obviously affecting that industry. A number of problems arise. One is that the Government's procurement policies show little concern for the health of defence-related industries. I know that Vosper Thornycroft in Southampton has had to wait far too long—more than two years too long—for the chance to tender for new minehunter orders; that has imposed a variety of costs on the company and its work force, because of the lack of orders for those world-beating ships.

It often seems that the Treasury and the Ministry of Defence feel no concern for the health of the defence industry. Even now, with the rundown in defence spending, the Government should be planning their defence procurement to give long-term security and a sense of direction to industries that are supplying the country's armed forces.

We know that the defence industry is contracting. The Government's second failure is that they have done nothing positive for, in particular, the smaller companies that rely on supplying the main defence contractors. I feel that it will be relatively difficult to second-guess the commercial decisions that major defence-related industries should make.

The real challenge for defence conversion, however, relates to small firms employing 25, 50 or 100 people—firms that supply the main defence contractors, have only ever worked in the defence sector, are used only to the rhythms and routines of supply in that sector and often have highly skilled work forces and a well-developed use of technology.

It is those companies that, all too often, are going under completely nowadays, as the number of major defence orders is reduced—and it is those companies that are likely to benefit most from advice and support enabling them to review their products and the development of new products, learn about new markets and shift into those markets, abandoning their dependence on defence.

It is a scandal that the only support available to small to medium-sized businesses wishing to reduce their reliance on defence has been the European KONVER programme. A welcome but relatively small amount of that money is finding its way to Hampshire. It appears that the Government are quite prepared to see many small defence industries go to the wall, rather than assisting them to develop new products and new markets.

The defence industry has a further significance. I did not understand why the President of the Board of Trade apparently defended public support for the defence sector, but for that sector alone. Much of south Hampshire's economy is based on successful defence industries, which are almost exclusively—or even exclusively—in the private sector.

That success is not a purely private sector success, however. It is the result of a partnership between the public and private sectors, which is very apparent in the defence industry, from research and development with the defence research establishments, through the development of the product, to the final purchasing of the product.

What I do not understand is why the Government cannot see that, if that type of partnership can be used to develop a successful industrial sector, based on private companies but with the backing of the public sector, it can be used in other sectors of the economy as well.

I want to float one idea which is peculiarly relevant to south Hampshire and to the industries there at present, where a Government of vision would be backing a new industry, an industry of the 21st century, but where this Government, I fear, will not.

Any review of the scientific or professional engineering press will show a widespread prediction that, as we move into the 21st century, there will be a whole new set of technologies and industries surrounding the development, exploration and exploitation of the oceans, whether it is for energy sources—taking advantage of differential temperatures in the oceans—whether it is to do with deep sea fish-farming, whatever the technical term for that is, whether it is to do with mining minerals on the sea bed, or whether it is to do with understanding the way in which the oceans operate because of our need for detailed climatic knowledge. Even the Government's own reports over the years have shown that there will be a major deep-sea industry.

In the south Hampshire area, there is a concentration of different skills and expertise which could be brought together to put this country at the forefront of marine science and engineering in the next century. We build every type of ship, from small yachts to steel vessels. The department of oceanography at Southampton university is a world leader in oceanographic research. The Government's own deep-sea research ships are based in Southampton. We have the nautical skills, the communications skills, the underwater cabling skills, the electronic skills. All those different skills are available in the south Hampshire area.

What is required at this stage is to turn that potential base of support for a new industry into a real new industry —something that requires insight and foresight on the part of the Government. It requires the development of the science park which is envisaged for Southampton to enable new industries to develop, based on academic research. It requires a long-term commitment by the Government to seeing this country as a centre for deep-sea research and exploration.

It need not all be done by the Government themselves, but they need to show a lead. That would be to apply the model used in the defence sector, but with rather less money, to a new industry of the 21st century. The challenge for the Government will be to do that, to the benefit of the people of my area.

9.7 pm

Mr. Richard Page (Hertfordshire, South-West)

I apologise for not being in the Chamber earlier, due to the fact that I was on the Public Accounts Committee.

My brief contribution this evening is based on the position of one who has consistently argued the need for a strong manufacturing base. That is not to decry the advantages of the service industries, which are to be welcomed; but, if the calculation is correct that we can export 80 per cent. of our manufacturing but only 20 per cent. of our service, it is folly to ignore our manufacturing base. The 80–20 split has never been seriously challenged.

I have never believed that service will save the day, so we must have a strong and powerful manufacturing base. When in the 1980s the noble Lord Ridley was looking forward to the abolition of his Department—he was Secretary of State for Trade and Industry at the time—I nearly despaired. The situation today, however, is different, and I believe that, with this Government, under the leadership of my right hon. Friend the Member for Huntingdon (Mr. Major), we are seeing a commitment to manufacturing that has been lacking for several years. Some examples of a genuine improvement in our manufacturing base are coming through. I confess a personal involvement because I shall speak about the car industry, in which I did all my training and with which I have certain involvements.

In 1991, there were 1.593 million new car registrations. The next year, the figure had increased slightly. In 1993, the figure had increased to 1.778 million, and it is calculated that in 1994 there could be as many as 1.9 million new car registrations. I regard that as a barometer of success, because the tentacles of the motor industry reach forth and down into our economy more than those of practically any other industry.

I regard the machine tool industry as an even more important indicator. Machine tools are the fundamental starting point from which our economy can start to grow. It has been a disappointment to me for years that, as a percentage of our gross national product, the amount of money that we have invested in the machine tool industry has been remarkably small. We have fallen dramatically behind Japan and Germany. At long last, in June or July of last year, the number of orders for machine tools started to increase ahead of that for sales. That is where our country's growth will begin.

Before Christmas, I told you, Mr. Deputy Speaker, that one should always remember that a man with a JCB can dig a trench much more quickly than a man with a broad back and a big shovel. If we ignore that sector of our industry, we do so at our peril. Japan does not ignore it. Germany does not. In Japan, aid is targeted to specific sectors of industry. In one year, aid might be given for NCR machines; in another year, it might be given for small business machine companies. I sincerely hope that we shall make greater efforts to increase investment of that nature.

That leads me to the second and last argument that I shall make tonight, and that is the question following on from inward investment. We have already heard that more than 40 per cent. of Japanese investment in Europe has come to this country, as has nearly 40 per cent. of the investment from the United States.

My criticism is that I believe that many pension companies, and many of our various insurance companies, have an investment policy which depends on the size of the dividends rather than one which takes a slightly longer-term perspective. Japan looks to the long term. Unless we put the investment in—whether it be in machine tools or anything else—we shall not produce future growth, and we shall not be able to compete. Therefore, I would like to think that the message will go out from the House tonight to our industries, and to our pension and investment companies, that we must invest more, especially in our machine tools, to create growth in our companies.

I promised that I would be brief, and I will be. Finally, I shall discuss trade associations, of which there are literally thousands in this country. Some of them do a good job; some exist to choose the date of the annual dinner and the annual golf match.

The Department of Trade and Industry desperately needs to receive a coherent message from one trade association per sector of industry, so that it knows the views of that sector of industry. I know that the President of the Board of Trade has asked for that. I ask trade associations to combine, so that they can give the Government one coherent message and so that the Government do not become confused by a series of messages from all types of people that does not reflect the whole of that sector of industry. We need one trade association per sector to funnel through the deregulation requirements that we shall need for the future.

I conclude with those two points—that we need to have one trade association per sector, and that we need to increase our investment in manufacturing.

9.14 pm
Mr. Richard Burden (Birmingham, Northfield)

As I come from the west midlands, I have a great deal to say about manufacturing industry, but in view of the lack of time I shall concentrate on one issue—Rover—which has underlain the theme of the debate.

The sale of Rover to BMW means that, with the exception of Rolls-Royce and Reliant, the last remaining British-owned car manufacturer has been sold to a foreign firm. The reason why it is significant has nothing to do with petty nationalism or wrapping ourselves in the Union Jack; it has to do with the fact, recognised by other countries, that we need a strategic decision-making role in our strategic industries. The sale has destroyed that role. It is ironic that the need appears to be well understood by BMW itself—the assurances that it has given since it made its bid have, ironically, been much more constructive than the response from either British Aerospace or the Government.

The story of British Aerospace's takeover of Rover and the subsequent sale of Rover by British Aerospace is symptomatic of the short-termism, sleaze and complacency that masquerade as an industrial policy under this Government. I say "sleaze" because Rover was sold to British Aerospace for a song and the sale was financed by sweeteners paid for by the taxpayer. I say "complacency" because the Government allowed it to happen and, indeed, colluded in the process. I say "short-termism" because the decision to sell Rover on was made in the short-term interests of British Aerospace's balance sheet; it had nothing to do with the long-term interests of Rover or the British car industry as a whole. That is what the deal was all about, in contrast with BMW's responses since then.

The story has now jeopardised the future relationship with Honda which had been so successful. I quite understand why Honda reacted as it did, but I ask Honda to bear it in mind that the relationship with Rover has benefited both sides and does not need to end now. Honda's understandable and justifiable anger towards British Aerospace and the Government should not and need not be taken out on Rover, Rover employees or Rover plants. I hope that the relationship will continue.

It is sad that the Government are once again jettisoning and ignoring their responsibility to build bridges and to secure, even at this late stage, a strategic decision-making role within the new BMW-Rover partnership. They could secure that role, although doing so might present them with some ideological problems.

Discussions that are taking place in Europe could allow British Rover employees to receive information, to be consulted and to have an input in a new European-based BMW-Rover partnership, but the Government are doing all that they can to veto the development of European works councils and to stop British employees having a say in their own firms. Why are the Government prepared to stand by and allow Britain's last remaining car manufacturer to be sold to a foreign firm, while refusing to allow British employees to have a say in the same firm and to contribute to the defence of British interests in the merged company? I issue that challenge to the Government. As the discussions about works councils and supervisory boards continue in Europe and elsewhere, the Government will have questions to answer if they try to block the opportunity for British employees to defend British interests as the Government have failed to do.

A conference took place in Brussels yesterday which was attended by most of the major European car manufacturers and, indeed, by the unions and by Members of the European Parliament, but interest from the British Government was noticeable by its absence. The conference tackled the problem of overcapacity in the European car industry and dealt with the restructuring and reskilling that will be necessary if the industry is to thrive. That conference began to tackle the issue that the American Government are now prepared to tackle—producing a more environmentally friendly motor car and making available the necessary investment.

The Government say that their manufacturing policy is a success. Why, therefore, are they still looking the other way and refusing to face up to their responsibility? The sale of Rover should never have happened. The fact that it did is testimony to the failure of their policy and to their neglect of manufactuirng industry. The sale took place behind the backs of Rover's employees and over the heads of people who have made Rover such a success. The Government are responsible for that. Their collusion with British Aerospace's short-termism allowed that to happen.

It is now the Government's responsibility to ensure that, at this late stage, Britain has a strategic decision-making role. They can achieve that by talking to BMW, Honda and Rover and ensuring that the partnership continues. The Government should drop their opposition to British employees having a role and a say in the decisions of a firm that those employees have had made a success.

9.20 pm
Mr. Derek Fatchett (Leeds, Central)

I thank the hon. Member for Meriden (Mr. Mills) for his kind comments about our colleague, Mr. Ron Leighton, which will have been appreciated by all my right hon. and hon. Friends. The hon. Gentleman was right to say that Ron Leighton was one of the few people in politics who held strong views, but had mostly friends and very few enemies. His death is a sad loss to the House and his constituency.

The President of the Board of Trade asked why the Labour party was concentrating on manufacturing industry during its Supply day. If he had been here for the rest of the debate he would have heard the answer clearly articulated by all my hon. Friends. He would have realised the importance of manufacturing.

Indeed, if the President of the Board of Trade took the opportunity of talking to organisations such as the Engineering Employers Federation or to many manufacturing industries, he would be aware of the importance of manufacturing. Is it not strange that the right hon. Gentleman should have the audacity to ask such a question? Is it not clear that manufacturing is important to Britain because it is the wealth-producing sector of our economy? More than 70 per cent. of Britain's exports, which finance our ability to pay our way in the world, comes from the manufacturing sector. For the right hon. Gentleman to ask why manufacturing is important and why the Labour party devotes its time to it suggests that he is out of touch with British industry and is more concerned with his personal ambitions than with the ambitions of the manufacturing sector. The manufacturing sector is important because it produces our wealth and enables us to buy personal and public services. It is about time that the Conservative party recognised that and dropped the empty rhetoric of the 1980s.

The President of the Board of Trade said that my hon. Friend the Member for Livingston (Mr. Cook) made no reference to competitiveness. When I heard that, I thought that the right hon. Gentleman's script writer must have written his speech before my hon. Friend delivered his. Then again, given the quality of the right hon. Gentleman's speech, that is unfair to the script writer. It would be better to say that the President clearly did not bother to listen to my hon. Friend's speech. When my hon. Friend talks about investment in plant, skills and people and in developing infrastructure, we can reach only one simple conclusion—that Labour Members are talking about increasing the competitiveness of British industry. It is sad that the President does not recognise that. I suspect that the real difference is not that he cannot see it but that ideologically he does not want to see it.

The Government are committed to some form of industrial policy based on the market, on deregulation and on cheap, flexible, throwaway labour and people. It is a vision that says that Britain in the 21st century can somehow compete by going down market in quality, in labour and in costs. That vision is totally redundant, and it is in no way shared by our world competitors or our European partners. Each of those countries will invest in people and in technology, and recognises their importance. It is a shame for this country that our Government are so divorced from reality that they want to turn the clock back to the economic and industrial strategies of the 19th century rather than going forward to the strategies and policies of the 21st century.

The President of the Board of Trade failed to understand the purpose of the debate, but he should know the importance of manufacturing and of what we say about competitiveness. If he had been here during the debate he would have heard important contributions from my hon. Friends about three key industries—steel, the motor industry, and aerospace and defence-related activities. The right hon. Gentleman did not speak in any detail about any of those during his opening speech.

My hon. Friends the Members for Newport, East (Mr. Hughes) and for Wentworth (Mr. Hardy) made effective speeches about the future of the British steel industry. They recognised the growth in productivity and the extent to which the British steel industry is now a world leader, but they also recognised that the Government have failed to support the steel industry in European negotiations. Before going to Brussels, the Minister for Industry claims that he will stand up for British industry and fight his corner to save jobs in the British steel industry. Would that that be true: would that we had a Minister for Industry prepared to stand up and fight for Britain, but the Government have sold the British steel industry short again.

The figures speak for themselves. My hon. Friends the Members for Newport, East and for Wentworth explained the situation clearly. Percentage job losses in the German, French, Italian and Spanish steel industries over the decade from 1980 were considerably lower than percentage job losses in the United Kingdom. We have lost on capacity and on jobs. Yet our Government are not prepared to fight for our steel industry. I tell the Minister for Energy, who is to wind up the debate, that we need protection for our steel industry, just as we want a Minister who will argue the corner for British steel. At present that simply does not happen.

When the President of the Board of Trade was trying to pretend that all was well in the British steel industry he might have considered the United Engineering Steels figures announced this afternoon. A £48.1 million loss has been returned this year, £27 million of which has gone to pay for exceptional costs in connection with closures and redundancies; 1,000 jobs have been lost in the past year. And what company is the biggest single customer of United Engineering Steels? It is Rover.

That brings me to the second issue which has dominated the debate—the future of the car industry. The linkage is clear not only with United Engineering Steels but with what my hon. Friend the Member for Newport, East said about Llanwern. Rover is a key customer of the Llanwern steelworks, and £4.3 billion worth of high-tech products are involved in the turnover of Rover and Rover-related activities. What has happened now? The key fact, and one that should dominate Government thinking, is that control over those activities—including research and development, and future products—has passed from the United Kingdom to BMW and to Germany.

The key question is not the simple debating point that Conservative Members use as to whether we are in favour of the change or whether we are talking down Rover. We are as interested or more interested than any party in the House to see that venture a success because it concerns jobs for our constituents. It is annoying when Conservative Members try to pretend otherwise. The key question is who will control the future in terms of Rover and Britain's car industry.

In the past week, the sight of the future of our last major car producer being determined in discussions between a Japanese car company and a German car company annoyed and irritated the British people. Does that not say something about the Government's failure and their abdication of responsibility towards a key industry which is at the heart of our industrial policy and our economic future? The Government have no interest. It reflects the comments of the Prime Minister the other week, when challenged about the practices of British Aerospace and the redundancy payment for their three-month-a-year chairman. The Prime Minister said that it was nothing to do with him, that it was not his responsibility and that he was only the Prime Minister. Are we not clearly being given the same answer to the question about the future of the motor industry? We have a Prime Minister who is not up to his task, a President of the Board of Trade who is more concerned about becoming Prime Minister, and Ministers who are not able to provide the leadership that is important.

The car industry lacks that leadership, and no other industries lack that leadership more than aerospace and defence. My hon. Friends the Members for Pendle (Mr. Prentice) and for Southampton, Itchen (Mr. Denham) talked about how we needed to look for ways in which the capacity and skills of the defence industries could be used for other purposes. We heard cheap rhetoric and debating points earlier from the President of the Board of Trade, but he is time-stuck and time-warped in his arguments. He must recognise that the issue of the 1990s is how those skills wil be used in the future. If there is to be a cut in the defence budget, which is clearly happening under the Government, we must ask how that industry's skills and technologies are to be used in the future. The Government have no answer. [Interruption.] The hon. Member for Harrow, West (Mr. Hughes), the Government Whip, seems to be full of ideas. He should talk to people in business.

If the hon. Gentleman considers paragraph 108 of the Select Committee on Trade and Industry report on the aerospace industry—a unanimously agreed document—he will see evidence from GEC, which was quoted at length. I would not see GEC as a socialist organisation or one dominated by card-carrying members of the Labour party, but I shall quote the report as an endorsement of what we have been saying on defence-related matters for some considerable time. GEC have caught up with the Labour party. When will the Conservative Government catch up on those issues? The important paragraph states that the division of responsibility is if we are not careful, almost a classic recipe for eventual run-down and decline of the aerospace industry, because the Ministry of Defence is, in aerospace terms, the main procurer/buyer without having the responsibility for the health of industry. The DTI, of course, has responsibility for the health but has not got the clout to actually do anything about it. That sums up the problem in our defence-related industries: it is not just that the DTI does not have the clout—it also does not have the vision of where we are going and what we need to do for those important industries.

The debate concentrated on three industries, but other issues clearly provided a backcloth for the debate. There were three important issues on which comment is needed. First, virtually every Conservative Member talked about the growth in productivity in our manufacturing industries.

Nobody could or would want to deny the statistics. There has been that increase in productivity. Sadly, Conservative Members have not looked at the next page of what should be a research script. The crucial question is not just productivity, but our ability to produce wealth and output. I will explain in simple terms what has happened. While our productivity has increased, our output has not increased compared with our European competitors.

In the 1980s, Britain's manufacturing output increased by an average of 0.5 per cent. a year. Conservative Members should go away and look at the comparable figures for our competitor countries, whose output was growing. The figures for each sector show that in key areas the annual growth rate is simply not sufficient. So productivity is growing, but output is not growing sufficiently and capacity is contracting.

In the 1980s the average growth in output in metals was 1.4 per cent., in metal goods 0.5 per cent., in motor vehicles and parts 1.5 per cent., in food 1 per cent., in textiles 0.8 per cent., and in printing 2.8 per cent. The total overall manufacturing output was 1.9 per cent. Services grew greater, with an economic growth rate of just under 2 per cent., but the growth rate in manufacturing output was not sufficient. Thus we come to the end of the 1980s with a clear condemnation of the Government's failure to protect our manufacturing base.

The figures for 1979–92 show that at the end of those 13 years output had increased by 3 per cent. under the Government. Despite three proclaimed economic miracles—the first in the early 1980s, the second under the Lawson boom and the third the economic miracle that is supposed to be just around the corner—output has increased by 3 per cent.

That takes us to the next crucial point about the Government's failure. They have argued that our productivity has increased and that we can therefore compete, but it is clear from the trade deficit figures that our base is shrinking. That is why, for the first time since 1982, this country runs a substantial trade deficit in manufactured goods with the rest of the world.

What has happened to investment in manufacturing? In only three years under this Government has investment in manufacturing been higher than it was during the last year of the Labour Government. Had Britain achieved the same investment in manufacturing in those intervening years as was achieved in the last year of the Labour Government, £20 billion of additional investment would have taken place. Had that investment gap been filled through the Government's policies, Britain would have been in the first division in terms of ability to compete and could have competed alongside other countries, but we have simply failed to do that.

Nothing better illustrates one of the deep problems of short-termism in British industry, the demand for a return for shareholders and the short-term demands on finance rather than long-term industrial strategic decisions than what has happened in aerospace and, more important, the figures for profits and investments. Will the Minister justify in his winding up speech figures which show that from 1922–93 there has been a 27 per cent. increase in profits but that at the same time investment in manufacturing has fallen by 0.3 per cent.? Again, the short-termism that has bedevilled British industry is evidenced in those figures. This debate is crucial because it shows that Labour Members understand the importance of manufacturing. We understand competitiveness. Above all else, we understand what has happened as a result of the Government's 14 years of neglect of our manufacturing base. Britain will never be able to provide its people with the living standards that they deserve and that we wish for them until we get effective policies for our manufacturing industry.

The Government have failed. Their belief in the market means that the Department of Trade and Industry is not at the centre of industrial policy. It hangs on by its fingertips as a marginal Department with a marginal President of the Board of Trade. We need a Government and a strategy committed to industry and manufacturing. The people of this country recognise that Labour can and will offer that. That is why my hon. Friends will vote tonight for a strategy which will not simply win for Britain but is already winning with the British people.

9.40 pm
The Minister for Energy (Mr. Tim Eggar)

Far from the debate illustrating how Labour Members understand manufacturing industry, it has shown how they uniquely know how to denigrate our manufacturing successes. It has shown that they uniquely are the purveyors of doom and gloom; they want to project the bad news outside the Chamber and they want to show what they regard as Britain's failures. If there is one area where they could succeed, it is in the export of doom and gloom. I am not sure whether they could succeed in exporting doom and gloom because in no time at all they would be in the business of managing, and planning and subsidising it.

I feel sorry for Labour Members. They could not possibly have known that when they were announcing to the world the failure of the British car industry—they have not bothered to do their research—there was a headline on the front page of the Financial Times which stated: Car output at highest level for nearly 20 years". Could not they find it somewhere in their hearts to pay a tribute to the British car industry—to say how well the industry has done in reaching that record level?

I do not want to be accused of being uncharitable. At 7.8 pm, the hon. Member for Coventry, North-West (Mr. Robinson), who knows something about manufacturing, was the first Labour Member to praise British manufacturers. He pointed out that we are doing well, the climate is right and there are successes to which attention should be drawn. At 7.8 pm, when the debate had been going for three and a half hours, he was the first Labour Member to recognise that there were real successes out there.

I shall tell Labour Members where the successes have been sector by sector, as did the hon. Member for Leeds, Central (Mr. Fatchett).

Several hon. Members


Mr. Eggar

I shall give way in a moment.

In the data processing and office machinery sector, there has been a 700 per cent. increase in output since 1981. The hon. Member for Livingston (Mr. Cook) should know that, because MIMTEC created 400 new jobs in his constituency, and Bull UK is planning another 200 jobs in that area. Output in the rubber and plastics sector has increased by 70 per cent; chemicals output is up by 50 per cent; data printing output is up by almost 40 per cent; and electronic engineering output is up by almost 35 per cent. Some of that is also in the hon. Gentleman's constituency.

Output in instrument engineering is up 26 per cent. Some new jobs in that industry were created in the hon. Gentleman's constituency. Motor vehicle production is up 20 per cent. and metal manufacturing is up 11 per cent. Those are the facts. That is what the Opposition have sought to denigrate and run down over the past five hours.

Mr. Geoffrey Robinson

In case it is thought that the Minister has misrepresented me, it is appropriate for me to say on behalf of all Opposition Members that when British industry is doing well, we are the first to congratulate it and to recognise the joint efforts of management and workers.

I was trying to draw attention to the fact that a major part of our competitive advantage derives from the fact that, after 14 years of Conservative rule, our wage rates and social benefits are about half the level of our major competitors in Europe. Perhaps the Minister would care to refer to that. That gives us a competitive advantage, but at what cost? Is that such a major achievement? I agree that we have benefited from it, but the Minister cannot claim that it is a super-successful economic policy.

Mr. Eggar

I am disappointed in the hon. Gentleman. I always thought that he was an independent-minded Member. I had a great deal of respect for what he said in his speech and it does not reflect well on him that when picked out for praise, he feels that he has to reject it and ingratiate himself with his honourable colleagues by saying, "I didn't mean that" and attempting to rewrite his speech. He would earn more respect in the Chamber if he stuck by what he said in his good speech.

I want to continue with the good news because that is what the British people want to hear. Last night, by accident, I met John Neill, the chief executive of Unipart. I talked about today's debate. He told me about his company. Unipart was a buy-out from British Leyland in 1987. Its main midlands factory was losing £1 million a year when the company was bought out. It was regarded as one of British Leyland's worst factories. Seven years later, it is a highly successful and highly profitable business.

Cranfield university, working with "Management Today", voted Premier Exhausts the best factory in the midlands, the best engineering factory in Britain and Britain's best factory. In a detailed benchmarking study comparing nine Japanese plants with their nine British counterparts, conducted by Andersen Consulting, Premier emerged as the only world-class British factory ahead of six Japanese factories in terms of quality.

Forgive me, Madam Speaker, for giving a detailed analysis of success by a British company in a highly competitive area. If we do not send out from the House a clear message that companies have been successful and that we respect and praise them for their success, we do nothing but run down manufacturing industry.

Mr. Hardy

The Minister may have heard my short remarks in which I paid enormous tribute to the success and record breaking of the engineering steel industry. He may also have heard the question I asked him. I said that the Minister for Industry had said that the subsidies that threaten the existence of our steel industry in south Yorkshire had stopped. I do not believe that there was any justification or evidence for the Minister to have made that comment. I asked whether that point would be cleared up tonight. I hope that the Minister does so before 10 o'clock.

Mr. Eggar

I hear what the hon. Gentleman says. I apologise to him, but I was out of the Chamber during his speech.

Mr. John Evans


Mr. Eggar

The core issue that faces this country and the House is that of competitiveness. Unless we understand that nobody out there owes us a living and that we succeed as a nation by our own efforts and ability to sell in an increasingly competitive world—that was made clear by my hon. Friend the Member for Coventry, South-West (Mr. Butcher) and others—we will never succeed. The primary role for increasing competitiveness is for industry.

Mr. John Evans


Mr. Eggar

The Government have a critical role to play.

It is not just the Department of Trade and Industry—all parts of the Government must concentrate on increasing competitiveness. We must work with industry and concentrate on those areas where we can make an improvement. That is why my right hon. Friend the President of the Board of Trade will publish a White Paper on competitiveness early in the summer, and we will be working hard to identify areas where further improvements can be made.

The House heard a thoughtful speech from my hon. Friend the Member for Coventry, South-West who talked about the need to improve training, education and technical skills. I agree with a great deal of what he said, and that was very much what I tried to achieve when I was at the Department of Employment and the Department of Education.

The Opposition motion harks back to the dark days of the late 1970s. Those were halcyon days when the right hon. Member for Chesterfield (Mr. Benn) tried to save British industry by creating co-operatives. The hon. Member for Bradford, South (Mr. Cryer) did not have the time to sit on quangos, because he was busy being the Minister with responsibility for small businesses.

Those were days when the Labour party dared to call themselves socialists, and when the nationalised industries got more than £2 billion at today's prices from the taxpayer in subsidies. The House should contrast that with the position in 1991, when those same companies—now privatised—paid £3 billion in taxes to the Exchequer at a time when those same companies were winning massive export orders for Britain.

I do not want to be unfair to the Opposition. The speech of the hon. Member for Livingston suggested that there was to be a degree of repackaging of their policies. We heard that, instead of one national enterprise board, the Opposition now want one national investment bank and lots of regional development agencies. They do not want one national enterprise board to be a failure, but lots of regional failures.

It is worth reminding the House about that great socialist invention, the National Enterprise Board. That board tried to pick winners, but more often picked losers because the board's investment performance was appalling. Instead of making an annual return of 15 to 20 per cent., it lost 15 per cent. My hon. Friend the Member for the City of Chester (Mr. Brandreth) reminded the House that the board made just over 100 investments in industry. In no fewer than 35 of those investments, the companies had either to be put into receivership or liquidation. Of the rest, 27 resulted in a loss to the taxpayer on disposal.

Whether making clocks, designing office systems, writing software, tanning hides, selling vehicles or making engineering products—it was all the same to the National Enterprise Board, which lost money on each of those investments.

Mr. Robin Cook

The Minister is running British industry down.

Mr. Eggar

The hon. Gentleman may say that, but I was not. I was running down the achievements of the National Enterprise Board which was started by the Labour party, and which the hon. Gentleman announced this afternoon that he wants to reinvent in not just one incarnation, but lots of regional agencies.

As if that is not enough, the Opposition want to go further. Instead of good, old-fashioned clause 4 socialism, the Labour party wants a new relationship—as they term it—between the Government and nationalised industries. The modern Labour party cannot bring itself to say what it means, and expresses itself in accountancy-speak. We were told the other day that it wants a new set of accounts and a new balance sheet. What the Labour party means is that it wants more state control, and more taxpayers' money spent on more nationalised industries.

The Labour party wants the private sector's money, but not its expertise. The test of the Labour party's intentions is not its glossy pamphlets or honeyed, well worked-out words, but what it will do when faced with difficult choices.

Mr. John Evans

Will the Minister give way?

Mr. Eggar

indicated dissent.

Mr. Evans


Madam Speaker

Order. I understand that the hon. Gentleman has been attempting to intervene for a long time and I appreciate his frustration. But he must understand that the word that he has used is unacceptable. I hope that he will withdraw it.

Mr. Evans

I apologise, Madam Speaker, and simply make one final appeal to the Minister to give way. but I withdraw the word "coward" as you, Madam Speaker, asked me to do so—[Interruption.]

Madam Speaker

Order. The hon. Gentleman has withdrawn the word.

Mr. Eggar

Let me take an example that is hard for the Labour party to accept—the coal industry. A headline in the Evening Standard of 28 September stated: Scargill defeats Smith in vote to renationalise British Coal". Since then, I have been asking the Labour party for its policy on British Coal. Eventually, in a world exclusive interview gained by the Yorkshire Post, we were given the answer. The right hon. and learned Member for Monklands, East (Mr. Smith) was smoked out. He said: We ought not to hesitate to take back some"— of the pits into the public sector if their activities are not consistent with national energy policy. Or if there is a doubt about safety of their operation. Or they don't have the confidence of the workforce". Let us examine that statement. If the Labour party ever comes to power, it will have an energy plan that details tonnages and quality for each pit. If the private sector does not produce from a pit in a way that the Government want, the answer is clear: the pit can be arbitrarily renationalised. That is not socialism, but Soviet planning of the sort that went out 20 years ago.

It gets worse—if the operation is not safely run, it will not be a matter for the tripartite Health and Safety Executive, but an excuse for arbitrary renationalisation. Even worse, there is the Arthur charter to pay off the National Union of Mineworkers. The right hon. and learned Member for Monklands, East, the Leader of the Opposition, has said that if the work force does not have confidence in the management of the mine, renationalisation will follow.

Presumably, all Arthur has to do to meet the confidence test is to make a single 10p telephone call to the right hon. and learned Member for Monklands, East and the pit will immediately be renationalised on the spot. That is not industrial strategy, but an extremists' charter. That is the reality behind the honeyed words, glossy pamphlets and fancy presentations that form such a part of the Opposition Front-Bench team.

The coal industry may be a difficult issue for the Labour party to confront, but where will it turn next? What about the privatised industries that it has got its sights on—it will renationalise British Steel, British Aerospace, Rover and British Gas. The Opposition should come clean and tell us what they are going to do. It is clear that they do not want simply to return to 1970s state planning and ownership—that is not enough—but are determined to destroy British industry's competitiveness. The motion does not mention that, but we should not forget that the Opposition are committed to a minimum wage.

The minimum wage will lead to the loss of up to 2 million jobs. The Opposition have never denied their commitment to it. It has never worked; there is no logic to it; it does not work in any other country and certainly would not work in Great Britain—[Interruption.] It is no good Opposition Members scoffing—those are not my words, but the words of Gavin Laird speaking on Channel 4 news.

They are not content with a minimum wage; they are determined to undermine competitiveness. They have signed up to the European socialist manifesto—to a 35-hour, four-day working week which is estimated to cost British industry as much as another £20 billion. If we add all that to the social charter, they will have destroyed British industry before they even get around to working out a strategy. The only right strategy is a competitive strategy followed by a Conservative Government.

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 277, Noes 319.

Division No. 153] [10 pm
Abbott, Ms Diane Bray, Dr Jeremy
Adams, Mrs Irene Brown, Gordon (Dunfermline E)
Ainger, Nick Brown, N. (N'c'tle upon Tyne E)
Ainsworth, Robert (Cov'try NE) Burden, Richard
Allen, Graham Byers, Stephen
Alton, David Caborn, Richard
Anderson, Donald (Swansea E) Callaghan, Jim
Anderson, Ms Janet (Ros'dale) Campbell, Mrs Anne (C'bridge)
Armstrong, Hilary Campbell, Ronnie (Blyth V)
Ashdown, Rt Hon Paddy Campbell-Savours, D. N.
Austin-Walker, John Canavan, Dennis
Banks, Tony (Newham NW) Cann, Jamie
Barnes, Harry Carlile, Alexander (Montgomry)
Barron, Kevin Chisholm, Malcolm
Battle, John Clapham, Michael
Bayley, Hugh Clark, Dr David (South Shields)
Beckett, Rt Hon Margaret Clarke, Eric (Midlothian)
Beith, Rt Hon A. J. Clarke, Tom (Monklands W)
Bell, Stuart Clelland, David
Benn, Rt Hon Tony Clwyd, Mrs Ann
Benton, Joe Coffey, Ann
Bermingham, Gerald Cohen, Harry
Berry, Dr. Roger Connarty, Michael
Blair, Tony Cook, Frank (Stockton N)
Blunkett, David Cook, Robin (Livingston)
Boateng, Paul Corbett, Robin
Boyes, Roland Corbyn, Jeremy
Bradley, Keith Corston, Ms Jean
Cousins, Jim Illsley, Eric
Cox, Tom Ingram, Adam
Cryer, Bob Jackson, Glenda (H'stead)
Cummings, John Jackson, Helen (Shef'ld, H)
Cunliffe, Lawrence Jamieson, David
Cunningham, Jim (Covy SE) Jones, Barry (Alyn and D'side)
Cunningham, Rt Hon Dr John Jones, Lynne (B'ham S O)
Dafis, Cynog Jones, Martyn (Clwyd, SW)
Dalyell, Tam Jones, Nigel (Cheltenham)
Darling, Alistair Jowell, Tessa
Davidson, Ian Kaufman, Rt Hon Gerald
Davies, Bryan (Oldham C'tral) Keen, Alan
Davies, Rt Hon Denzil (Llanelli) Kennedy, Jane (Lpool Brdgn)
Davies, Ron (Caerphilly) Khabra, Piara S.
Davis, Terry (B'ham, H'dge H'I) Kilfoyle, Peter
Denham, John Kinnock, Rt Hon Neil (Islwyn)
Dewar, Donald Kirkwood, Archy
Dixon, Don Lestor, Joan (Eccles)
Dobson, Frank Lewis, Terry
Donohoe, Brian H. Livingstone, Ken
Dowd, Jim Lloyd, Tony (Stretford)
Dunnachie, Jimmy Loyden, Eddie
Dunwoody, Mrs Gwyneth Lynne, Ms Liz
Eagle, Ms Angela McAllion, John
Eastham, Ken McAvoy, Thomas
Enright, Derek McCartney, Ian
Etherington, Bill Macdonald, Calum
Evans, John (St Helens N) McFall, John
Ewing, Mrs Margaret McKelvey, William
Fatchett, Derek Mackinlay, Andrew
Faulds, Andrew McLeish, Henry
Field, Frank (Birkenhead) Maclennan, Robert
Fisher, Mark McMaster, Gordon
Flynn, Paul McNamara, Kevin
Foster, Rt Hon Derek McWilliam, John
Foster, Don (Bath) Maddock, Mrs Diana
Foulkes, George Mahon, Alice
Fraser, John Mallon, Seamus
Fyfe, Maria Mandelson, Peter
Galloway, George Marek, Dr John
Gapes, Mike Marshall, David (Shettleston)
Garrett, John Marshall, Jim (Leicester, S)
George, Bruce Martin, Michael J. (Springburn)
Gerrard, Neil Martlew, Eric
Gilbert, Rt Hon Dr John Maxton, John
Godman, Dr Norman A. Meacher, Michael
Godsiff, Roger Meale, Alan
Golding, Mrs Llin Michael, Alun
Gordon, Mildred Michie, Bill (Sheffield Heeley)
Gould, Bryan Michie, Mrs Ray (Argyll Bute)
Graham, Thomas Milburn, Alan
Grant, Bernie (Tottenham) Miller, Andrew
Griffiths, Nigel (Edinburgh S) Mitchell, Austin (Gt Grimsby)
Griffiths, Win (Bridgend) Moonie, Dr Lewis
Grocott, Bruce Morgan, Rhodri
Gunnell, John Morris, Rt Hon A. (Wy'nshawe)
Hain, Peter Morris, Estelle (B'ham Yardley)
Hall, Mike Morris, Rt Hon J. (Aberavon)
Hanson, David Mowlam, Marjorie
Hardy, Peter Mudie, George
Harman, Ms Harriet Mullin, Chris
Harvey, Nick Murphy, Paul
Hattersley, Rt Hon Roy Oakes, Rt Hon Gordon
Henderson, Doug O'Brien, Michael (N W'kshire)
Heppell, John O'Brien, William (Normanton)
Hill, Keith (Streatham) O'Hara, Edward
Hinchliffe, David Olner, William
Hoey, Kate O'Neill, Martin
Hogg, Norman (Cumbernauld) Orme, Rt Hon Stanley
Home Robertson, John Parry, Robert
Hood, Jimmy Patchett, Terry
Hoon, Geoffrey Pendry, Tom
Howarth, George (Knowsley N) Pickthall, Colin
Howells, Dr. Kim (Pontypridd) Pike, Peter L.
Hoyle, Doug Pope, Greg
Hughes, Kevin (Doncaster N) Powell, Ray (Ogmore)
Hughes, Robert (Aberdeen N) Prentice, Ms Bridget (Lew'm E)
Hughes, Roy (Newport E) Prentice, Gordon (Pendle)
Hughes, Simon (Southwark) Prescott, John
Hutton, John Primarolo, Dawn
Purchase, Ken Squire, Rachel (Dunfermline W)
Quin, Ms Joyce Steel, Rt Hon Sir David
Radice, Giles Steinberg, Gerry
Randall, Stuart Stevenson, George
Raynsford, Nick Strang, Dr. Gavin
Redmond, Martin Straw, Jack
Reid, Dr John Taylor, Mrs Ann (Dewsbury)
Rendel, David Taylor, Matthew (Truro)
Robertson, George (Hamilton) Thompson, Jack (Wansbeck)
Robinson, Geoffrey (Co'try NW) Tyler, Paul
Roche, Mrs. Barbara Vaz, Keith
Rogers, Allan Walker, Rt Hon Sir Harold
Rooker, Jeff Wallace, James
Rooney, Terry Walley, Joan
Ross, Ernie (Dundee W) Wardell, Gareth (Gower)
Rowlands, Ted Wareing, Robert N
Ruddock, Joan Watson, Mike
Salmond, Alex Welsh, Andrew
Sedgemore, Brian Wicks, Malcolm
Sheerman, Barry Williams, Rt Hon Alan (Sw'n W)
Sheldon, Rt Hon Robert Williams, Alan W (Carmarthen)
Shore, Rt Hon Peter Wilson, Brian
Short, Clare Winnick, David
Simpson, Alan Wise, Audrey
Skinner, Dennis Worthington, Tony
Smith, Andrew (Oxford E) Wray, Jimmy
Smith, C. (Isl'ton S & F'sbury) Wright, Dr Tony
Smith, Rt Hon John (M'kl'ds E) Young, David (Bolton SE)
Smith, Llew (Blaenau Gwent)
Snape, Peter Tellers for the Ayes:
Soley, Clive Mr. Dennis Turner and Mr. Jon Owen Jones.
Spearing, Nigel
Spellar, John
Ainsworth, Peter (East Surrey) Butler, Peter
Aitken, Jonathan Butterfill, John
Alexander, Richard Carlisle, John (Luton North)
Alison, Rt Hon Michael (Selby) Carlisle, Kenneth (Lincoln)
Ancram, Michael Carrington, Matthew
Arbuthnot, James Carttiss, Michael
Arnold, Jacques (Gravesham) Cash, William
Arnold, Sir Thomas (Hazel Grv) Channon, Rt Hon Paul
Ashby, David Churchill, Mr
Aspinwall, Jack Clappison, James
Atkins, Robert Clark, Dr Michael (Rochford)
Atkinson, David (Bour'mouth E) Clarke, Rt Hon Kenneth (Ruclif)
Atkinson, Peter (Hexham) Clifton-Brown, Geoffrey
Baker, Rt Hon K. (Mole Valley) Coe, Sebastian
Baker, Nicholas (Dorset North) Colvin, Michael
Baldry, Tony Congdon, David
Banks, Matthew (Southport) Conway, Derek
Banks, Robert (Harrogate) Coombs, Anthony (Wyre For'st)
Bates, Michael Coombs, Simon (Swindon)
Batiste, Spencer Cope, Rt Hon Sir John
Beggs, Roy Couchman, James
Bellingham, Henry Cran, James
Bendall, Vivian Currie, Mrs Edwina (S D'by'ire)
Beresford, Sir Paul Curry, David (Skipton & Ripon)
Biffen, Rt Hon John Davies, Quentin (Stamford)
Blackburn, Dr John G. Davis, David (Boothferry)
Body, Sir Richard Day, Stephen
Bonsor, Sir Nicholas Deva, Nirj Joseph
Booth, Hartley Devlin, Tim
Boswell, Tim Dickens, Geoffrey
Bottomley, Peter (Eltham) Dicks, Terry
Bottomley, Rt Hon Virginia Dorrell, Stephen
Bowden, Andrew Douglas-Hamilton, Lord James
Bowis, John Dover, Den
Boyson, Rt Hon Sir Rhodes Duncan, Alan
Brandreth, Gyles Duncan-Smith, Iain
Brazier, Julian Dunn, Bob
Bright, Graham Durant, Sir Anthony
Brooke, Rt Hon Peter Dykes, Hugh
Browning, Mrs. Angela Eggar, Tim
Bruce, Ian (S Dorset) Elletson, Harold
Budgen, Nicholas Emery, Rt Hon Sir Peter
Burns, Simon Evans, David (Welwyn Hatfield)
Burt, Alistair Evans, Jonathan (Brecon)
Butcher, John Evans, Nigel (Ribble Valley)
Evans, Roger (Monmouth) Knight, Greg (Derby N)
Evennett, David Knight, Dame Jill (Bir'm E'st'n)
Faber, David Knox, Sir David
Fabricant, Michael Kynoch, George (Kincardine)
Fairbairn, Sir Nicholas Lait, Mrs Jacqui
Fenner, Dame Peggy Lang, Rt Hon Ian
Field, Barry (Isle of Wight) Lawrence, Sir Ivan
Fishburn, Dudley Legg, Barry
Forman, Nigel Leigh, Edward
Forsyth, Michael (Stirling) Lennox-Boyd, Mark
Forsythe, Clifford (Antrim S) Lester, Jim (Broxtowe)
Forth, Eric Lidington, David
Fowler, Rt Hon Sir Norman Lightbown, David
Fox, Dr Liam (Woodspring) Lilley, Rt Hon Peter
Fox, Sir Marcus (Shipley) Lloyd, Rt Hon Peter (Fareham)
Freeman, Rt Hon Roger Lord, Michael
French, Douglas Luff, Peter
Fry, Sir Peter MacGregor, Rt Hon John
Gale, Roger MacKay, Andrew
Gallie, Phil Maclean, David
Gardiner, Sir George McLoughlin, Patrick
Garel-Jones, Rt Hon Tristan McNair-Wilson, Sir Patrick
Garnier, Edward Madel, Sir David
Gill, Christopher Maitland, Lady Olga
Gillan, Cheryl Malone, Gerald
Goodlad, Rt Hon Alastair Mans, Keith
Goodson-Wickes, Dr Charles Marland, Paul
Gorman, Mrs Teresa Marlow, Tony
Gorst, John Marshall, John (Hendon S)
Grant, Sir A. (Cambs SW) Marshall, Sir Michael (Arundel)
Greenway, Harry (Ealing N) Martin, David (Portsmouth S)
Griffiths, Peter (Portsmouth, N) Martin, Michael J. (Springburn)
Grylls, Sir Michael Martlew, Eric
Gummer, Rt Hon John Selwyn Mayhew, Rt Hon Sir Patrick
Hague, William Merchant, Piers
Hamilton, Rt Hon Sir Archie Mills, Iain
Hamilton, Neil (Tatton) Mitchell, Andrew (Gedling)
Hampson, Dr Keith Mitchell, Sir David (Hants NW)
Hanley, Jeremy Moate, Sir Roger
Hannam, Sir John Monro, Sir Hector
Hargreaves, Andrew Montgomery, Sir Fergus
Harris, David Moss, Malcolm
Haselhurst, Alan Needham, Richard
Hawkins, Nick Nelson, Anthony
Hawksley, Warren Neubert, Sir Michael
Hayes, Jerry Newton, Rt Hon Tony
Heald, Oliver Nicholls, Patrick
Heath, Rt Hon Sir Edward Nicholson, David (Taunton)
Heathcoat-Amory, David Nicholson, Emma (Devon West)
Hendry, Charles Norris, Steve
Heseltine, Rt Hon Michael Onslow, Rt Hon Sir Cranley
Hicks, Robert Oppenheim, Phillip
Higgins, Rt Hon Sir Terence L. Ottaway, Richard
Hill, James (Southampton Test) Page, Richard
Hogg, Rt Hon Douglas (G'tham) Paice, James
Horam, John Patnick, Irvine
Hordem, Rt Hon Sir Peter Patten, Rt Hon John
Howard, Rt Hon Michael Pattie, Rt Hon Sir Geoffrey
Howarth, Alan (Strat'rd-on-A) Pawsey, James
Howell, Rt Hon David (G'dford) Pickles, Eric
Howell, Sir Ralph (N Norfolk) Porter, Barry (Wirral S)
Hughes Robert G. (Harrow W) Porter, David (Waveney)
Hunt, Rt Hon David (Wirral W) Portillo, Rt Hon Michael
Hunt, Sir John (Ravensbourne) Rathbone, Tim
Hunter, Andrew Redwood, Rt Hon John
Hurd, Rt Hon Douglas Renton, Rt Hon Tim
Jack, Michael Richards, Rod
Jackson, Robert (Wantage) Riddick, Graham
Jenkin, Bernard Rifkind, Rt Hon. Malcolm
Jessel, Toby Robathan, Andrew
Johnson Smith, Sir Geoffrey Roberts, Rt Hon Sir Wyn
Jones, Gwilym (Cardiff N) Robertson, Raymond (Ab'd'n S)
Jones, Robert B. (W Hertfdshr) Robinson, Mark (Somerton)
Jopling, Rt Hon Michael Roe, Mrs Marion (Broxbourne)
Kellett-Bowman, Dame Elaine Ross, William (E Londonderry)
Key, Robert Rowe, Andrew (Mid Kent)
Kilfedder, Sir James Rumbold, Rt Hon Dame Angela
King, Rt Hon Tom Ryder, Rt Hon Richard
Kirkhope, Timothy Sackville, Tom
Knight, Mrs Angela (Erewash) Scott, Rt Hon Nicholas
Shaw, David (Dover) Thurnham, Peter
Shaw, Sir Giles (Pudsey) Townend, John (Bridlington)
Shephard, Rt Hon Gillian Townsend, Cyril D. (Bexl'yh'th)
Shepherd, Colin (Hereford) Tracey, Richard
Shepherd, Richard (Aldridge) Tredinnick, David
Shersby, Michael Trend, Michael
Sims, Roger Trotter, Neville
Skeet, Sir Trevor Twinn, Dr Ian
Smith, Sir Dudley (Warwick) Vaughan, Sir Gerard
Soames, Nicholas Viggers, Peter
Speed, Sir Keith Waldegrave, Rt Hon William
Spencer, Sir Derek Walden, George
Spicer, Sir James (W Dorset) Walker, Bill (N Tayside)
Spicer, Michael (S Worcs) Waller, Gary
Spink, Dr Robert Ward, John
Spring, Richard Wardle, Charles (Bexhill)
Sproat, Iain Waterson, Nigel
Squire, Robin (Hornchurch) Watts, John
Stanley, Rt Hon Sir John Wells, Bowen
Steen, Anthony Whitney, Ray
Stephen, Michael Whittingdale, John
Stern, Michael Widdecombe, Ann
Stewart, Allan Wiggin, Sir Jerry
Streeter, Gary Wilkinson, John
Sumberg, David Willetts, David
Sweeney, Walter Wilshire, David
Sykes, John Winterton, Mrs Ann (Congleton)
Tapsell, Sir Peter Winterton, Nicholas (Macc'f'ld)
Taylor, Ian (Esher) Wolfson, Mark
Taylor, Rt Hon John D. (Strgfd) Wood, Timothy
Taylor, John M. (Solihull) Yeo, Tim
Taylor, Sir Teddy (Southend, E) Young, Rt Hon Sir George
Temple-Morris, Peter
Thomason, Roy Tellers for the Noes:
Thompson, Sir Donald (C'er V) Mr. Sydney Chapman and Mr. Michael Brown.
Thompson, Patrick (Norwich N)
Thornton, Sir Malcolm

Question accordingly negatived.

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

The House divided: Ayes 315, Noes 270.

Division No. 154] [10.15 pm
Ainsworth, Peter (East Surrey) Boyson, Rt Hon Sir Rhodes
Aitken, Jonathan Brandreth, Gyles
Alexander, Richard Brazier, Julian
Alison, Rt Hon Michael (Selby) Bright, Graham
Ancram, Michael Brooke, Rt Hon Peter
Arbuthnot, James Browning, Mrs. Angela
Arnold, Jacques (Gravesham) Bruce, Ian (S Dorset)
Arnold, Sir Thomas (Hazel Grv) Budgen, Nicholas
Ashby, David Burns, Simon
Aspinwall, Jack Burt, Alistair
Atkins, Robert Butcher, John
Atkinson, David (Bour'mouth E) Butler, Peter
Atkinson, Peter (Hexham) Carlisle, John (Luton North)
Baker, Rt Hon K. (Mole Valley) Carlisle, Kenneth (Lincoln)
Baker, Nicholas (Dorset North) Carrington, Matthew
Baldry, Tony Carttiss, Michael
Banks, Matthew (Southport) Cash, William
Banks, Robert (Harrogate) Channon, Rt Hon Paul
Bates, Michael Churchill, Mr
Batiste, Spencer Clappison, James
Beggs, Roy Clark, Dr Michael (Rochford)
Bellingham, Henry Clarke, Rt Hon Kenneth (Ruclif)
Bendall, Vivian Clifton-Brown, Geoffrey
Beresford, Sir Paul Coe, Sebastian
Biffen, Rt Hon John Colvin, Michael
Blackburn, Dr John G. Congdon, David
Bonsor, Sir Nicholas Conway, Derek
Booth, Hartley Coombs, Anthony (Wyre For'st)
Boswell, Tim Coombs, Simon (Swindon)
Bottomley, Peter (Eltham) Cope, Rt Hon Sir John
Bottomley, Rt Hon Virginia Coucnman, James
Bowden, Andrew Cran, James
Bowis, John Currie, Mrs Edwina (S D'by'ire)
Curry, David (Skipton & Ripon) Howell, Rt Hon David (G'dford)
Davies, Quentin (Stamford) Howell, Sir Ralph (N Norfolk)
Davis, David (Boothferry) Hughes Robert G. (Harrow W)
Day, Stephen Hunt, Rt Hon David (Wirral W)
Deva, Nirj Joseph Hunt, Sir John (Ravensboume)
Devlin, Tim Hunter, Andrew
Dickens, Geoffrey Jack, Michael
Dicks, Terry Jackson, Robert (Wantage)
Dorrell, Stephen Jenkin, Bernard
Douglas-Hamilton, Lord James Jessel, Toby
Dover, Den Johnson Smith, Sir Geoffrey
Duncan, Alan Jones, Gwilym (Cardiff N)
Duncan-Smith, Iain Jones, Robert B. (W Hertfdshr)
Dunn, Bob Jopling, Rt Hon Michael
Durant, Sir Anthony Kellett-Bowman, Dame Elaine
Dykes, Hugh Key, Robert
Eggar, Tim Kilfedder, Sir James
Elletson, Harold King, Rt Hon Tom
Emery, Rt Hon Sir Peter Kirkhope, Timothy
Evans, David (Welwyn Hatfield) Knight, Mrs Angela (Erewash)
Evans, Jonathan (Brecon) Knight, Greg (Derby N)
Evans, Nigel (Ribble Valley) Knight, Dame Jill (Bir'm E'st'n)
Evans, Roger (Monmouth) Knox, Sir David
Evennett, David Kynoch, George (Kincardine)
Faber, David Lait, Mrs Jacqui
Fabricant, Michael Lang, Rt Hon Ian
Fairbaim, Sir Nicholas Lawrence, Sir Ivan
Fenner, Dame Peggy Legg, Barry
Field, Barry (Isle of Wight) Leigh, Edward
Fishburn, Dudley Lennox-Boyd, Mark
Forman, Nigel Lester, Jim (Broxtowe)
Forsyth, Michael (Stirling) Lidington, David
Forsythe, Clifford (Antrim S) Lightbown, David
Forth, Eric Lilley, Rt Hon Peter
Fowler, Rt Hon Sir Norman Lloyd, Rt Hon Peter (Fareham)
Fox, Dr Liam (Woodspring) Lord, Michael
Fox, Sir Marcus (Shipley) Luff, Peter
Freeman, Rt Hon Roger MacGregor, Rt Hon John
French, Douglas MacKay, Andrew
Fry, Sir Peter Maclean, David
Gale, Roger McLoughlin, Patrick
Gallie, Phil McNair-Wilson, Sir Patrick
Gardiner, Sir George Madel, Sir David
Garel-Jones, Rt Hon Tristan Maitland, Lady Olga
Garnier, Edward Malone, Gerald
Gill, Christopher Mans, Keith
Gillan, Cheryl Marland, Paul
Goodlad, Rt Hon Alastair Marlow, Tony
Goodson-Wickes, Dr Charles Marshall, John (Hendon S)
Gorman, Mrs Teresa Marshall, Sir Michael (Arundel)
Gorst, John Martin, David (Portsmouth S)
Grant, Sir A. (Cambs SW) Mates, Michael
Greenway, Harry (Ealing N) Mawhinney, Rt Hon Dr Brian
Griffiths, Peter (Portsmouth, N) Mayhew, Rt Hon Sir Patrick
Grylls, Sir Michael Mellor, Rt Hon David
Gummer, Rt Hon John Selwyn Merchant, Piers
Hague, William Mills, Iain
Hamilton, Rt Hon Sir Archie Mitchell, Andrew (Gedling)
Hamilton, Neil (Tatton) Mitchell, Sir David (Hants NW)
Hampson, Dr Keith Moate, Sir Roger
Hanley, Jeremy Monro, Sir Hector
Hannam, Sir John Montgomery, Sir Fergus
Hargreaves, Andrew Moss, Malcolm
Harris, David Needham, Richard
Haselhurst, Alan Nelson, Anthony
Hawkins, Nick Neubert, Sir Michael
Hawksley, Warren Newton, Rt Hon Tony
Hayes, Jerry Nicholls, Patrick
Heald, Oliver Nicholson, David (Taunton)
Heath, Rt Hon Sir Edward Nicholson, Emma (Devon West)
Heathcoat-Amory, David Norris, Steve
Hendry, Charles Onslow, Rt Hon Sir Cranley
Heseltine, Rt Hon Michael Oppenheim, Phillip
Higgins, Rt Hon Sir Terence L. Ottaway, Richard
Hill, James (Southampton Test) Page, Richard
Hogg, Rt Hon Douglas (G'tham) Paice, James
Horam, John Patnick, Irvine
Hordern, Rt Hon Sir Peter Patten, Rt Hon John
Howard, Rt Hon Michael Pattie, Rt Hon Sir Geoffrey
Howarth, Alan (Strat'rd-on-A) Pawsey, James
Pickles, Eric Sykes, John
Porter, Barry (Wirral S) Tapsell, Sir Peter
Porter, David (Waveney) Taylor, Ian (Esher)
Portillo, Rt Hon Michael Taylor, Rt Hon John D. (Strgfd)
Rathbone, Tim Taylor, John M. (Solihull)
Redwood, Rt Hon John Taylor, Sir Teddy (Southend, E)
Renton, Rt Hon Tim Temple-Morris, Peter
Richards, Rod Thomason, Roy
Riddick, Graham Thompson, Sir Donald (C'er V)
Rifkind, Rt Hon. Malcolm Thompson, Patrick (Norwich N)
Robathan, Andrew Thornton, Sir Malcolm
Roberts, Rt Hon Sir Wyn Thurnham, Peter
Robertson, Raymond (Ab'd'n S) Townend, John (Bridlington)
Robinson, Mark (Somerton) Townsend, Cyril D. (Bexl'yh'th)
Roe, Mrs Marion (Broxbourne) Tracey, Richard
Ross, William (E Londonderry) Tredinnick, David
Rowe, Andrew (Mid Kent) Trend, Michael
Rumbold, Rt Hon Dame Angela Twinn, Dr Ian
Ryder, Rt Hon Richard Vaughan, Sir Gerard
Sackville, Tom Viggers, Peter
Scott, Rt Hon Nicholas Waldegrave, Rt Hon William
Shaw, David (Dover) Walden, George
Shaw, Sir Giles (Pudsey) Walker, Bill (N Tayside)
Shephard, Rt Hon Gillian Waller, Gary
Shepherd, Colin (Hereford) Ward, John
Shepherd, Richard (Aldridge) Wardle, Charles (Bexhill)
Shersby, Michael Waterson, Nigel
Sims, Roger Watts, John
Skeet, Sir Trevor Wells, Bowen
Smith, Sir Dudley (Warwick) Whitney, Ray
Soames, Nicholas Whittingdale, John
Speed, Sir Keith Widdecombe, Ann
Spencer, Sir Derek Wiggin, Sir Jerry
Spicer, Sir James (W Dorset) Wilkinson, John
Spicer, Michael (S Worcs) Willetts, David
Spink, Dr Robert Wilshire, David
Spring, Richard Winterton, Mrs Ann (Congleton)
Sproat, Iain Winterton, Nicholas (Macc'f'ld)
Squire, Robin (Hornchurch) Wolfson, Mark
Stanley, Rt Hon Sir John Wood, Timothy
Steen, Anthony Yeo, Tim
Stephen, Michael Young, Rt Hon Sir George
Stern, Michael
Stewart, Allan Tellers for the Ayes:
Streeter, Gary Mr. Sydney Chapman and Mr. Michael Brown.
Sumberg, David
Sweeney, Walter
Abbott, Ms Diane Burden, Richard
Adams, Mrs Irene Byers, Stephen
Ainger, Nick Caborn, Richard
Ainsworth, Robert (Cov'try NE) Callaghan, Jim
Allen, Graham Campbell, Mrs Anne (C'bridge)
Alton, David Campbell, Ronnie (Blyth V)
Anderson, Donald (Swansea E) Campbell-Savours, D. N.
Anderson, Ms Janet (Ros'dale) Canavan, Dennis
Armstrong, Hilary Cann, Jamie
Ashdown, Rt Hon Paddy Carlile, Alexander (Montgomry)
Austin-Walker, John Chisholm, Malcolm
Banks, Tony (Newham NW) Clapham, Michael
Barnes, Harry Clark, Dr David (South Shields)
Barron, Kevin Clarke, Eric (Midlothian)
Battle, John Clarke, Tom (Monklands W)
Bayley, Hugh Clelland, David
Beckett, Rt Hon Margaret Clwyd, Mrs Ann
Beith, Rt Hon A. J. Coffey, Ann
Bell, Stuart Cohen, Harry
Benn, Rt Hon Tony Connarty, Michael
Benton, Joe Cook, Frank (Stockton N)
Bermingham, Gerald Cook, Robin (Livingston)
Berry, Dr. Roger Corbett, Robin
Blair, Tony Corbyn, Jeremy
Blunkett, David Corston, Ms Jean
Boateng, Paul Cousins, Jim
Boyes, Roland Cox, Tom
Bradley, Keith Cryer, Bob
Bray, Dr Jeremy Cummings, John
Brown, Gordon (Dunfermline E) Cunliffe, Lawrence
Brown, N. (N'c'tle upon Tyne E) Cunningham, Jim (Covy SE)
Cunningham, Rt Hon Dr John Hughes, Simon (Southward)
Dafis, Cynog Hutton, John
Darling, Alistair Illsley, Eric
Davidson, Ian Ingram, Adam
Davies, Bryan (Oldham C'tral) Jackson, Glenda (H'stead)
Davies, Rt Hon Denzil (Llanelli) Jackson, Helen (Shef'ld, H)
Davies, Ron (Caerphilly) Jamieson, David
Davis, Terry (B'ham, H'dge H'l) Jones, Barry (Alyn and D'side)
Denham, John Jones, Lynne (B'ham S O)
Dewar, Donald Jones, Martyn (Clwyd, SW)
Dixon, Don Jones, Nigel (Cheltenham)
Dobson, Frank Jowell, Tessa
Donohoe, Brian H. Kaufman, Rt Hon Gerald
Dowd, Jim Keen, Alan
Dunnachie, Jimmy Kennedy, Jane (Lpool Brdgn)
Dunwoody, Mrs Gwyneth Khabra, Piara S.
Eagle, Ms Angela Kilfoyle, Peter
Eastham, Ken Kinnock, Rt Hon Neil (Islwyn)
Enright, Derek Kirkwood, Archy
Etherington, Bill Lestor, Joan (Eccles)
Evans, John (St Helens N) Lewis, Terry
Fatchett, Derek Livingstone, Ken
Faulds, Andrew Lloyd, Tony (Stretford)
Field, Frank (Birkenhead) Loyden, Eddie
Fisher, Mark Lynne, Ms Liz
Flynn, Paul McAllion, John
Foster, Rt Hon Derek McAvoy, Thomas
Foster, Don (Bath) McCartney, Ian
Foulkes, George Macdonald, Calum
Fraser, John McFall, John
Fyfe, Maria McKelvey, William
Galloway, George Mackinlay, Andrew
Gapes, Mike McLeish, Henry
Garrett, John Maclennan, Robert
George, Bruce McMaster, Gordon
Gerrard, Neil McNamara, Kevin
Gilbert, Rt Hon Dr John McWilliam, John
Godman, Dr Norman A. Maddock, Mrs Diana
Godsiff, Roger Mahon, Alice
Golding, Mrs Llin Mandelson, Peter
Gordon, Mildred Marek, Dr John
Graham, Thomas Marshall, David (Shettleston)
Grant, Bernie (Tottenham) Marshall, Jim (Leicester, S)
Griffiths, Nigel (Edinburgh S) Martin, Michael J. (Springburn)
Griffiths, Win (Bridgend) Martlew, Eric
Grocott, Bruce Maxton, John
Gunnell, John Meacher, Michael
Hain, Peter Meale, Alan
Hall, Mike Michael, Alun
Hanson, David Michie, Bill (Sheffield Heeley)
Hardy, Peter Michie, Mrs Ray (Argyll Bute)
Harman, Ms Harriet Milburn, Alan
Hattersley, Rt Hon Roy Miller, Andrew
Henderson, Doug Mitchell, Austin (Gt Grimsby)
Heppell, John Moonie, Dr Lewis
Hill, Keith (Streatham) Morgan, Rhodri
Hinchliffe, David Morris, Rt Hon A. (Wy'nshawe)
Hoey, Kate Morris, Estelle (B'ham Yardley)
Hogg, Norman (Cumbernauld) Morris, Rt Hon J. (Aberavon)
Home Robertson, John Mowlam, Marjorie
Hood, Jimmy Mudie, George
Hoon, Geoffrey Mullin, Chris
Howarth, George (Knowsley N) Murphy, Paul
Howells, Dr. Kim (Pontypridd) Oakes, Rt Hon Gordon
Hoyle, Doug O'Brien, Michael (N W'kshire)
Hughes, Kevin (Doncaster N) O'Brien, William (Normanton)
Hughes, Robert (Aberdeen N) O'Hara, Edward
Hughes, Roy (Newport E) Olner, William
O'Neill, Martin Smith, C. (Isl'ton S & F'sbury)
Orme, Rt Hon Stanley Smith, Rt Hon John (M'kl'ds E)
Parry, Robert Smith, Llew (Blaenau Gwent)
Patchett, Terry Snape, Peter
Pendry, Tom Soley, Clive
Pickthall, Colin Spearing, Nigel
Pike, Peter L. Spellar, John
Pope, Greg Squire, Rachel (Dunfermline W)
Powell, Ray (Ogmore) Steinberg, Gerry
Prentice, Ms Bridget (Lew'm E) Stevenson, George
Prentice, Gordon (Pendle) Strang, Dr. Gavin
Prescott, John Straw, Jack
Primarolo, Dawn Taylor, Mrs Ann (Dewsbury)
Purchase, Ken Taylor, Matthew (Truro)
Quin, Ms Joyce Thompson, Jack (Wansbeck)
Radice, Giles Tyler, Paul
Randall, Stuart Vaz, Keith
Raynsford, Nick Walker, Rt Hon Sir Harold
Redmond, Martin Wallace, James
Reid, Dr John Walley, Joan
Rendel, David Wardell, Gareth (Gower)
Robertson, George (Hamilton) Wareing, Robert N
Robinson, Geoffrey (Co'try NW) Watson, Mike
Roche, Mrs. Barbara Welsh, Andrew
Rogers, Allan Wicks, Malcolm
Rooker, Jeff Williams, Rt Hon Alan (Sw'n W)
Rooney, Terry Williams, Alan W (Carmarthen)
Ross, Ernie (Dundee W) Wilson, Brian
Rowlands, Ted Winnick, David
Ruddock, Joan Wise, Audrey
Salmond, Alex Worthington, Tony
Sedgemore, Brian Wray, Jimmy
Sheerman, Barry Wright, Dr Tony
Sheldon, Rt Hon Robert Young, David (Bolton SE)
Short, Clare
Simpson, Alan Tellers for the Noes:
Skinner, Dennis Mr. Dennis Turner and Mr. Jon Owen Jones.
Smith, Andrew (Oxford E)

Question accordingly agreed to.

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

Resolved, That this House regrets that the Opposition persistently denigrates the achievements of United Kingdom companies; recognises the importance of manufacturing to this country's economy; congratulates Her Majesty's Government on its success in achieving the conditions for sustained non-inflationary growth, low interest rates, low inflation and good industrial relations; and welcomes the fact that both the OECD and European Commission are forecasting that the United Kingdom will be the fastest growing major economy in the EC in 1994 and 1995.

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