§ The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Ian Lang)
I welcome this opportunity in the resumed debate on the Gracious Speech to debate trade, industry and transport. The Gracious Speech announces the Government's proposals for legislation to ratify the chemical weapons convention, and I am grateful to the Labour party for its support for that proposal. The Gracious Speech also mentions our important objective of world trade liberalisation and transatlantic free trade, the need to promote flexible labour markets as a basis for increased job creation and the continuing need to encourage enterprise and competitiveness and to support small businesses. They are all highly desirable objectives—
§ Mr. Dalyell
I intervene at this point as the right hon. Gentleman mentioned chemical weapons legislation, in which I have taken an interest for 30 years. Will he consider allowing an annual report on the matter to be presented to Parliament? It is a crucial subject that has been raised with his Department by the expert Dr. Julian Perry Robinson and others. There is good will towards the proposed Bill; might the Secretary of State reciprocate and consider the suggestion carefully before Thursday?
§ Mr. Lang
I shall certainly reflect on what the hon. Gentleman has said. There will be an opportunity for the matter to be pursued at that time.
The first priority for a successful industrial and commercial policy is to establish economic conditions within which enterprise can flourish. Wealth creation has always been at the centre of our policies. Without it, we will never be able to afford the level and quality of services that the British public rightly want and deserve.
But it is business—not Governments—that creates wealth. The keys to wealth creation are enterprise, competitiveness and flexibility. The Gracious Speech outlined the Government's determination to improve the competitiveness of our economy and make Britain the enterprise centre of Europe, which I am sure the House welcomes.
352 The Opposition always seek to make much—no doubt we shall hear more of it again today—of those few figures in the economy that are sometimes less encouraging. They pay little or no attention to the good news, which has been so plentiful in recent months and, indeed, years, such as last week's news on inflation and public finances, for example. I know that my right hon. and learned Friend the Chancellor of the Exchequer will take all the available figures into account in determining the course of economic policy.
§ Dr. Norman A. Godman (Greenock and Port Glasgow)
On competitiveness, in Britain, outwith the Clyde, the merchant shipyards have largely gone. Will the right hon. Gentleman confirm that the European Union's shipbuilding intervention fund is to continue operating until October next year? What are he and his colleagues doing about the fiddling of the shipbuilding subsidies in Italy and Spain? Let us have fair competition in the building of ships.
§ Mr. Lang
I share absolutely the hon. Gentleman's objective of fairness throughout the European Community. If he has any evidence to present, I am sure that he will bring it forward. For the rest, he will have seen in the news in the week before last that the shipbuilding arrangements will continue, but will be subject to review in the course of next year.
Despite the occasional variations in the economic news, it remains true that the United's Kingdom economy has grown significantly faster than the G7 average for the past two years. It is expected, along with Germany's, to be ahead of the pack again next year. What is more, we are putting the conditions in place to ensure that we keep it that way.
The Organisation for Economic Co-operation and Development, which the Labour party occasionally likes to quote, says in its report that our economic performance is "impressive", and refers to the fact that oursweeping structural reforms are yielding dividends in a more flexible, competitive and less inflation-prone economy".
§ Mr. Denis MacShane (Rotherham)
In that case, is the right hon. Gentleman proud of the fact that, according to the OECD, we have sunk from 13th to 18th in the world league table of economic competitiveness and performance under Conservative Governments since 1979?
§ Mr. Lang
I shall be developing the theme of our competitiveness and the relative improvement in our position in the course of my speech, after which the hon. Gentleman will be far better informed and able to contribute to the debate later.
I am sure that the Labour party will be encouraged by the conclusions reached by the OECD, its comment that our performance is impressive, and its recognition of what we are achieving.
§ Ms Joan Walley (Stoke-on-Trent, North)
On competitiveness, does the President of the Board of Trade agree that the British Steel plant at Shelton in Stoke-on-Trent is highly competitive? It has only just been described as the jewel in the crown, yet it is now under threat because of subsidies to steel plants elsewhere. What will his Government do, and will they use the veto?
§ Mr. Lang
The hon. Lady knows that the Government have not shirked the need to rationalise our steel industry 353 to allow it to reduce in size and thereby become extremely competitive. Indeed, British Steel is now one of the most efficient and competitive companies anywhere in the world. We expect other members of the European Community to recognise too the need to take appropriate steps. That is the position that we are pursuing in the negotiations to which the hon. Lady has referred.
A stable macro-economic environment is vital to give business the confidence that it needs to invest in future. Permanently low inflation and sound public finances are an essential prerequisite for a successful and expanding economy—they are not optional extras. That is why we set a target for underlying inflation of 1 per cent. to 4 per cent. and aimed for the bottom half of that range. Even the Labour party could not disagree that our inflation performance over the past few years has been excellent.
I should like to put that into some historical perspective. Since the Government developed their inflation target, underlying inflation has averaged 2.8 per cent. That compares with 7 per cent. during the 1980s and 13 per cent. in the 1970s. That is no mean achievement.
Business is responding to the improved environment. Over the past year, manufacturing investment is up by 11 per cent. and manufacturing investment in plant and machinery is up by more than 14 per cent. The CBI reports that investment intentions this year have been at the highest level for six years.
The Labour party is often keen on comparisons; I shall give it a few. In the past 15 years, our economy has forged ahead; Britain has beaten the European average. Our economy has grown faster, our unemployment has been lower, our productivity has grown faster, our manufacturing businesses have been more profitable and our investment in research and development is higher than the European average. The 1980s was the first decade since the war when the United Kingdom grew faster than Germany, France or Italy.
§ Mr. D. N. Campbell-Savours (Workington)
Is profitability the real measure of success? Has the Secretary of State noticed what has happened in my constituency? Campbell's, an American conglomerate and multinational, purchased a company for £58.6 million. Within nine weeks, it announced the closure of that company, which made £4 million profit last year— probably more by the time we have unravelled the books.
Is it not true that the only way in which Campbell's can now be dealt with is by the British people boycotting Campbell's soups? That is the way in which to deal with the company; the only language it understands is market forces. If British consumers are prepared to say, when they go to the supermarket, that they will not buy Campbell's soups because of what Campbell's did— closing down an extremely profitable company in Maryport—that will be the only way in which we can teach it a lesson.
§ Mr. Lang
The hon. Gentleman makes his constituency point and I understand the strength of his feeling. He asked whether profitability was important. Yes, it is. I wish that the Labour party would recognise the importance of profits and profitability. They were not, of course, the only criteria I gave. I also mentioned growth, unemployment, productivity and research and development; in those areas, the United Kingdom has performed better than the European average over the past 354 15 years. Our manufacturing productivity has grown faster than that of any other major industrialised nation since 1980 and it has risen two and a half times faster than that of West Germany.
Against that background, small businesses have blossomed. Since 1979, more than 1 million have been created. The Opposition have often made much of the importance of manufacturing so they will, no doubt, welcome the fact that our share of world trade in manufactures has stabilised after decades of decline. Since 1979, the volume of British manufactured exports has risen by more than 85 per cent.
The Opposition often talk about investment. Since 1979, investment in plant and machinery has risen by more than 50 per cent., business investment has risen by one third and overall investment has risen faster than it has in Germany, France or Italy. It has risen six times as quickly as it did under the previous Labour Government.
Investment is made to secure a return. One of the keys to increased investment is profit, which is precisely the point about which the hon. Member for Workington (Mr. Campbell-Savours) asked me. The profit and profitability—the words that Labour loves to hate—of British business have improved markedly under this Government; Labour would reverse that. It would impose huge new costs on business through regulation, through its training tax, through the minimum wage and through the social chapter. That would discourage not only inward investment, but domestic investment.
Business and manufacturing investment in the United Kingdom has been boosted by our privatisation and liberalisation policies—investment that Labour's doctrinal opposition would have prevented from happening.
§ Mr. Barry Sheerman (Huddersfield)
I have an increasing feeling of being unwell in the unreal world of this Chamber. Can the Secretary of State bring us back to the realities of life? Was he around in the 1980s when our manufacturing base was devastated? Plants in his constituency and in the constituency of every hon. Member were devastated and good firms closed down, never to reopen. Is it really true when the Secretary of State says that nothing of that sort happened? Were we all living in a dream world, or is he misleading the House?
§ Mr. Lang
The hon. Member for Huddersfield (Mr. Sheerman) seems to have forgotten the shambles which the Conservative Government inherited from his party in 1979, and the massive efforts that we had to make to reverse the trend of decline. Certainly manufacturing jobs were lost and plants were closed, but in recent years—as a result of improved competitiveness—we have achieved new investment, new growth and new export markets.
The hon. Gentleman asked me about the 1980s during my remarks on privatisation. The fact is that the Labour party opposed every privatisation measure that was brought before the House, claiming that privatisation and competition would lead to falling investment and rising prices. In fact, the opposite has been true.
§ Mr. William Powell (Corby)
My right hon. Friend's analysis of the changes in the British economy is not theoretical. If he comes to my constituency, he will see that every single one of the matters he is outlining is the truth and has led to a booming economy.
§ Mr. Lang
My hon. Friend is absolutely right, and Corby possibly illustrates that point better than any other constituency.
355 Productivity in the privatised industries has moved sharply ahead. British Telecom, for example, has raised its productivity by 140 per cent. Investment in the privatised industries has shot ahead. BT has invested £25 billion since privatisation, while Mercury has invested £2.7 billion in a new digital network.
Liberalising the telecoms market—a measure opposed by Labour, of course—has brought in new competitors and new investment. The cable companies expect to have invested £10 billion by the end of the decade. Labour's thanks for that huge investment would be to renege on the Government's commitment to the regulatory framework in favour of a sweetheart deal with one company. No wonder Labour had its wrist slapped by the director general of Oftel. Real investment in the electricity industry has increased by more than 10 per cent. since privatisation. Compare that with the 25 per cent. cut between 1974 and 1979. Investment by British Gas and the water companies has more than doubled in real terms since privatisation.
Customers too have seen major improvements, with falling prices and improved service quality. The average domestic electricity consumer will enjoy a reduction of about £90 in his bills next year. Domestic consumers have benefited from a fall in real prices since privatisation of more than 22 per cent. before VAT. Industrial customers have seen their real gas prices fall by 40 per cent. since privatisation. BT's prices have fallen by more than 35 per cent. in real terms since privatisation.
When the Labour party talks about investment, clearly it is not talking about private sector investment, privatised industry investment or manufacturing investment. It is not talking about inward investment, through which thousands of companies are investing billions of pounds to create hundreds of thousands of jobs. Labour is talking about that atavistic socialist belief that no investment matters unless it is public sector investment. If Labour wants to increase that, it should say by how much, and I invite the right hon. Member for Derby, South (Mrs. Beckett) to say so today.
How will that increase be paid for: by cutting other spending—perhaps on health or education—or by higher taxation? The electorate are getting fed up with Labour's absurd pretence that it can increase expenditure and cut taxation at one and the same time. That engenders only incredulity and distrust, and rightly so because Labour's sums do not add up.
Following the privatisation of state-run companies which used to account for around a tenth of our national output, we have greatly enhanced competition in our economy. Indeed, competition and choice have been at the heart of the Government's economic policies. As a result, competition is present to a greater degree than ever before in the economic life of this country. It is an essential ingredient in the promotion of the UK's competitiveness.
Competition must be underpinned by an effective system of competition law. I have been considering this matter, and I recognise that a reform and updating of the existing arrangements is overdue. The House is aware that the Government have decided to reform competition law in two principal areas. We intend to prohibit cartels and restrictive trade agreements unless positive countervailing 356 benefits can be shown. We intend to strengthen the powers of the Director General of Fair Trading to investigate monopolies and anti-competitive practices.
We do not intend to discard some of the real strengths of the UK system, such as the distinctive roles of the Office of Fair Trading as investigator and prosecutor and the Monopolies and Mergers Commission as the dispassionate assessor of the public interest. Nor do we consider that the case for the introduction of a prohibition on abuse of market power has been proven.
While we will wish to take proper account of the evolving relationship between European Community competition law and the competition law of member states and to consider how a prohibition on restrictive agreements modelled on article 85 of the EC treaty might fit into the UK common system, we must certainly avoid replicating those features of the EC regime which experience has shown to be unsatisfactory. The changes we make must suit our circumstances.
We must prepare the way thoroughly and on the basis of consultation for fundamental reform which the Government will then implement as soon as practicable. I can the tell the House that my Department will accordingly be undertaking a comprehensive consultation exercise in the new year. This will take the views of business, consumers and competition practitioners on the technical and operational issues which will need to be settled before the Government can give effect to the reforms to which we are committed.
It is not competition as such that costs jobs; being competitive creates them. Nor is it technological advance or trade that creates unemployment. It is the failure to foresee and the inability to adapt to change that leads to jobs being lost. That is why flexibility in our economy is so crucial, and that is why we reject the rigidities and the extra burdens that would arise from the Opposition's policies of a national minimum wage and opting into the social chapter.
Talking to the CBI last week, the Leader of the Opposition said:the real fear is that being part of the social chapter we may in future agree to the import of inefficient working practices to Britain".That is right, and we have been telling the right hon. Gentleman that for years. That is the very reason why the Prime Minister negotiated the opt-out from the social chapter.
But while the Leader of the Opposition was right to highlight the dangers of the social chapter, he was wrong to assert that it was not detailed legislation, but a set of principles. If that were all it was, why is he so keen to sign it? We could just proclaim the principles ourselves. The fact is that it is much more than that. It is a binding obligation that would lead inexorably to detailed legislation.
The right hon. Gentleman seems quite unable to grasp the fact that if the UK signs the social chapter, we would lose the opportunity to reject proposals for damaging legislation that would be imposed upon us—regardless of the views of this House—by qualified majority voting. So his claim that each piece of legislation will be "judged on its merits" is worthless. That is not an option. Once the social chapter was signed, there would be no protection for this country from laws which would raise employers' costs, undermine competitiveness and destroy jobs.
357 I welcome the Leader of the Opposition's tacit admission that some aspects of the social chapter would run counter to our interests, but the position of Opposition Members has been made more exposed by the words of their own leader. It makes their posture even more indefensible. They would sign the social chapter even though they now admit that it would damage the competitiveness of our economy. Opposition Members should read the leader of The Times on 15 November, which said:The truth is that Britain is in an enviable and much envied position. By remaining outside the Social Chapter, Britain has become a magnet for outside direct investment. To throw away such a precious competitive advantage would be madness.That says it all. Not signing the social chapter does not mean poor working conditions or low wages. On the contrary, both have improved very substantially for most workers. We have in place a fair and balanced framework of individual employment rights. One of the supports that underpins that framework is an industrial tribunal system which enjoys widespread trust and confidence. The essential work of the tribunals has grown both in scale and complexity over the years. The Government are firmly committed to ensuring that they continue to provide an effective means of resolving disputes over employment rights.
The Green Paper published last year invited views on ways of improving the operation of tribunals and of encouraging more settlements in-house or with third party assistance. Some 200 responses were received from both sides of industry, the legal profession and a wide range of other interested parties. They were broadly supportive of most of the proposals and I can tell the House that today I have announced the Government's intention to implement those proposals when a suitable legislative opportunity arises. I believe that this will be widely welcomed.
The changes proposed will make an important contribution to promoting the role of conciliation and voluntary arbitration as alternative means of settling disputes at work and to streamlining tribunal procedures. They will help to ensure that a system which has so amply proved its worth will continue to play its indispensable role in the framework of British industrial relations.
Part of the more flexible labour market that we have achieved, with all the benefits it has brought in terms of increased jobs, has been the result of the dramatic improvement in industrial relations. More than 2 million jobs were created in the last economic cycle; half a million since the end of the recession. Half of those were in the last year alone. Over the last economic cycle we have created jobs at twice the rate of countries such as France and Italy.
We have a higher proportion of our population in work than all our European competitors. We have broken out of the vicious cycle that saw each downturn in the economy causing unemployment to ratchet up another notch. For the first time since the early 1960s, unemployment peaked at a lower level in the last recession than in the one preceding it.
Even more encouragingly, the same is true of long-term unemployment. Britain is one of the very few European Union countries to have managed to break out of this cycle. Although it remains too high, unemployment has fallen faster in this country than in most of our 358 competitors in the EU or the Organisation for Economic Co-operation and Development—by more than 700,000 in the past three years. Our unemployment rate is now below that of Germany, Italy, France and Spain and well below the EU average.
Yet Labour, through the national minimum wage, wants to adopt labour market policies more akin to those of Spain and France. The rate of youth unemployment in the United Kingdom is about half that of France and about a third that of Spain. Spain and France are the only two countries to have a minimum wage along the lines proposed by the Trades Union Congress. The impact on young people in those two countries has been devastating.
While the flexible labour market has greatly improved the United Kingdom's job creation record, it has not done so at the expense of wages, whatever the Opposition may claim. Real wages at all levels have increased and take-home pay for a single production worker in the United Kingdom is actually higher than in any EU country except Luxembourg.
§ Mr. Michael Clapham (Barnsley, West and Penistone)
What does the Secretary of State have to say to the unemployed of Barnsley, following a survey in May this year which showed that 79 per cent. of the jobs that were advertised in Barnsley were advertised at wages lower than would have been possible had the wages councils still existed?
§ Mr. Lang
The average increase in real living wages in Britain since 1979 is 40 per cent. The wages of a single production worker in Britain are higher than anywhere else in the EU, and the wages of a married man in the same capacity are higher than in Italy or France.
Britain's advantage lies not in having low wages, because we do not have them—[Interruption.] We do not have them, as the figures that I have just given illustrate. Our advantage lies in having the lowest non-wage labour costs of all our major European competitors. That remains vital to creating more jobs in this country.
One of the key factors in making Britain so attractive to inward investors has been precisely the improvement in our competitive position. It is integral to our growing competitiveness and attractiveness as a location for business investment. Last week I was in Bavaria, where I met the chairman of BMW and the vice-president of Siemens Semiconductors, both major international companies and major investors in Britain. In the words of Bernd Pischetsrieder, the chairman of BMW:The bottom line is that what you started in Great Britain back in the early '80s other European countries still have to do today.Foreign firms are showing, by their major investment commitments, their approval and confidence in our policies and our work force. The UK is the No. 1 location for Japanese, United States and Korean investment in the European Union.
The United Kingdom attracts one third of all inward investment in the European Union and more than 40 per cent. of both Japanese and American investment in the Union is based in the UK. Once again, in the first half of this year, we were the top location for German investment worldwide, attracting more than double the amount of investment made in the same period last year.
What is more, more than half the inward investment into the UK last year comprised expansions of existing plants, thus confirming the confidence that inward 359 investors have in the British economy and the talents of its work force. Our inward investment record is the verdict of the rest of the world on Britain's recent economic achievements.
The inflow of investment into the United Kingdom has also had its corresponding outflow, as British firms have increasingly recognised the need to compete in a global environment. Here, too, our economy benefits considerably. Outward investment allows British companies to develop their competitive strength both at home and abroad. It helps them to gain access to world markets for British goods and services.
Britain ranks second only to the United States in its stock of outward investment. Our total stock of overseas investment amounted to £183 billion in 1994, earning £22 billion for this country. As a proportion of gross domestic product it is more than double that of any other major investor. We are the largest investor in the United States, and the largest European investor in China.
We are first and foremost a trading nation. We are the fifth largest exporter in the world and we were the only one of the major industrialised nations to increase our share of world exports last year. We export more per head than Japan or the United States. Since 1979, the volume of our exports has nearly doubled. After decades of relative decline, our manufacturers are again competitive in the world marketplace.
Underlying export volumes have risen by 24 per cent. since the beginning of this recovery—to record levels. Our exports to the European Union are growing strongly. Manufacturers exported more than a third more to the Netherlands than a year earlier and exports to Germany and Spain are up by a fifth.
We are also doing well in the world's most dynamic markets. In the past 12 years, the south-east Asian market has tripled in size, but our exports have done even better. Moreover, our exports to south-east Asia have grown faster than those of France or Germany. In the past year, our exports to Japan, Hong Kong and Indonesia have risen by more than a fifth and already this year exports to Japan are up by a third. Last year, we had a balance of payments surplus with Asia as whole, including a surplus with the newly industrialised Asian tigers.
We have been engaged in recent years in the reversal of years of decline and the achievement of long-term structural improvements in our economic performance. The Government have always taken a long-term view. The competitiveness White Papers that we published this year and last show that we have long-term challenges to meet, but we are at last gaining ground lost in the past. The White Papers set out a long-term programme for action for all parts of Government to help improve our underlying performance.
The need to continue to improve our competitiveness is more pressing than ever. The pace of change is accelerating. The world marketplace is becoming increasingly competitive. New challenges but also immense opportunities in the world's rapidly growing markets are emerging all the time. Enterprise and flexibility are essential if our firms are to seize more of the prizes on offer.
360 That is why we are determined to reduce the burden of regulation on our firms and to continue our fight against backdoor regulation by means of the social chapter. The flexibility of our labour market is one of our greatest strengths, as our competitors acknowledge.
We have been resolute in our determination to improve our underlying performance. We have not shirked the difficult and sometimes unpopular decisions that were necessary. I believe that the benefits are now plain to see. We are no longer the sick man of Europe but are well on the way to becoming its enterprise centre. The Government are determined to achieve that goal.
§ Mrs. Margaret Beckett (Derby, South)
The Secretary of State has been saying recently that the widespread feeling of economic insecurity pervading the country is just a state of mind. One thing that came out of his speech very clearly today is that the Government's state of mind is one of extraordinary complacency, especially in the light of today's poor figures on gross domestic product and total investment.
Who would have thought from listening to the Secretary of State this afternoon that growth in GDP has been revised down to 2.1 per cent. in the past 12 months and that gross domestic fixed capital formation has shrunk by 2.2 per cent. in the past quarter and risen by only a disappointing 0.6 per cent. in the past year?
Against that background, the context within which the Gracious Speech has been set, the tenor of the public debate that the Government have sought to foster and the content of the speech itself, with the exception of the chemical weapons Bill—the only legislation in the Department of Trade and Industry portfolio this Session and a Bill that we welcome, although we will have to scrutinise its exact details—testify to the Government's further lurch to the right. Indeed, the speech, the context and the public debate are all further evidence of the Government's view that, instead of good government, Britain is best served by absence of government.
As a result, we contend that Britain's industrial and economic performance is far too weak. The Government consistently dispute that claim, and the Secretary of State did so again today. There is a clear gulf between us, or perhaps, clear blue water—a gulf of both analysis and prescription. We differ not only on the nature of Britain's ills but on how they may be tackled. Nor does absence of government mean in this case just benign neglect. As the Government substitute party for public interest at every turn, their neglect approaches the malign.
Take the chair of the Conservative party, who used the press launch of the Queen's Speech to explain that its main purpose was not to further the national interest or address weakness in our economy but to smoke out the Labour party. Indeed, take the President of the Board of Trade, the Secretary of State for Trade and Industry, who went to the Confederation of British Industry conference, not to tell members what they should do for Britain, let alone what Britain's Government might do to help them to advance Britain's interests, but to tell them what they should do for the Conservative party.
Look at the changes that are being considered in the timetable for selling Railtrack or Nuclear Electric. The timetable for the latter was already thought to be tight in 361 terms of safety, yet it is being brought further forward to placate the mad tax cutters on the Tory Back Benches— none of them apparently present today.
§ Sir Wyn Roberts
Talking of tax cutting, does the right hon. Lady fully support the shadow Chancellor in his ambition to achieve a 10p rate of tax?
§ Mrs. Beckett
Yes, indeed I do. As I hope the right hon. Gentleman is aware, my hon. Friend's suggestions form part of a number of remarks in which he has suggested what sort of tax cuts should be made if resources are available for them, such as a cut in the value added tax on fuel. I hope that we will see the right hon. Gentleman in the Lobby with us, if we have a chance to put that to the vote.
In all those respects, it has become clear that, for this Government, the national interest now explicitly takes second place to the interests of the governing party. As the Conservatives focus on their party alone, they become increasingly out of touch with the people.
The other remark of the Secretary of State that was reported last week—that job insecurity is "a state of mind" and that the reality is different, when 8.5 million people have experienced unemployment since the last general election alone and millions more in every job and profession live in hourly fear, not just of losing their job but of being unable to get another—touches on one of the rawest nerves in middle England and rivals, if that were possible, the insensitivity of a Gerald Ratner or a Norman Lamont. Yet the Government continue to turn their back on proposals like our own for a Government programme to kick-start new employment and training projects, funded by a windfall tax on excess utility profits, even though Britain ranks 20th out of the 24 Organisation for Economic Co-operation and Development countries for levels of job creation since 1979—something else that no one would have understood from the Secretary of State's remarks.
Nor do other international comparisons bring us much comfort. Britain ranks 23rd in the world competitiveness tables for productivity. We were the only country, apart from Turkey, to cut seedcorn investment in research and development, although we were the people who had £128 billion in today's prices from oil. Our overall record on investment is worse than that of our competitors, and so—we believe as a direct result—is our record on growth. We rank behind all the other G7 countries in terms of our manufacturing investment as a proportion of GDP—our national wealth—and behind every country of the European Union, and we have fallen to 21st in the ranks of the OECD.
In real terms, manufacturing investment was more than 17 per cent. lower in 1994 than when the Conservatives came to office in 1979. Just as we rank low in investment, so we rank low in growth. On growth averages since 1979, Britain is bottom of the league of the G7 countries and in Europe, and this has been the slowest period of growth for the United Kingdom since the 1930s.
That is the whole of the Conservative Government's record—not highlights that were carefully selected to try to present a different picture. It is also their failure: the intensification of Britain's decline as a productive, competitive manufacturing nation.
362 Between 1979 and 1995, the value of sterling against the German mark halved. It also declined by more than 25 per cent. against the United States dollar and by 70 per cent. against the Japanese yen. In addition, as the Secretary of State mentioned, hourly labour costs in UK manufacturing are lower than in the United States of America, Germany and Japan and yet, with these two significant advantages—a lower currency and relatively low hourly labour costs—much of our manufacturing industry remains uncompetitive in not only domestic but international markets.
A few moments ago, the Secretary of State spoke about the terrible problems that the Conservative Government inherited from their predecessors—a Labour Government. But in 1983, under a Conservative Government, we saw the first ever trade deficit in manufactured goods since the industrial revolution—a deficit that has remained ever since. Only a few weeks ago, that deficit widened further.
Clearly devaluation, whether on its own or in combination with lower wage costs, does not in itself provide the panacea for declining competitiveness: the missing elements are investment and the sustainable increases in productivity that only investment can bring. In most years since 1979, the rate of new investment has been less than the rate at which old plant and machinery were scrapped. Today, the Secretary of State has argued, as Ministers have argued recently, that the increase in manufacturing investment last year was higher, at 11 per cent. That increase was from a very low base, however. As late as 1992, the real capital stock of manufacturing after depreciation was only 1.5 per cent. higher than in 1979.
Nor are we investing in skills. The proportion of 16-year-olds leaving English schools without any qualifications rose this year for the second year running. Two years ago, 6.9 per cent. of children left without qualifications. Today, the figure has risen to 8.1 per cent., and 8.3 per cent. of 16-year-olds failed to gain even one grade G at GCSE.
So in Britain today we have plant and machinery that are outdated, a work force who are low-skilled and, with little investment in plant or people, low productivity by international standards. In consequence, under this Government we have had the lowest average growth in post-war history, as well as the highest levels of unemployment and, for most people, the biggest tax rises.
That is this Government's record, and their remedy is equally disastrous. Recently, Ministers have been forced to admit that Britain is being overtaken by the so-called "Asian tiger" economies. They claim that that is further justification for their drive to lower wages and working conditions. In fact, the Government's strategy, if such it can be called, is to build a kind of Tory Euro-Disney—a never-never land run on Mickey Mouse economics—in which the people of Britain are being taken for an expensive ride.
But we are not being beaten only by the Asian tigers. We are also being beaten by the high-wage economies of France, Germany, Switzerland, the USA and elsewhere. The strategy of transforming our industrial and engineering centres into locations for low-cost, low-wage, low-skill assembly plants will not help us to compete in the global economy; on the contrary, it will cost us dear. This country's survival and that of our people depend, first and foremost, on our ability to make and sell goods in the domestic and global markets. A year ago, the president of Honda stated: 363The money game is fine, but industry is the only way for a country to survive, and I wonder how the British expect to make a living in the future.That was said on the occasion of the acquisition by BMW—which the Secretary of State quoted—of Rover. If that proves how successful we are, I wonder why Rover did not buy BMW.
The Government's neglect of our national interest continues, even when the absence of Government action threatens their own declared policy—as, recently, with takeovers and sales in the utilities. The Government's case for privatisation was that the utilities were monopolies and, as such, were bound to act with insufficient regard for consumer interests. The utilities were not only sold at knock-down prices but split into competing units with the claim that competition would act to protect the consumer and hence help the public interest. Today, we see consolidation and the potential creation of fresh utility monopolies in the private sector, as industries are subject to a wave of mergers and takeovers which the Government are failing to check, and about which the Secretary of State had nothing to say today.
We are seeing a dangerous concentration of power. In the north-west, more than one of the essentials of life— water and electricity—are in the hands of one private company. We are even seeing essential services fall into the hands of private companies whose base, origins and essential interests lie overseas—for example, in France and the United States. To make matters worse, it is an open secret that such foreign-owned utilities are investing here because they have far greater freedom to ride roughshod over the interests of British consumers than they would at home.
I have written to the Secretary of State more than once, as did my predecessor, calling on him to refer not just individual bids but the entire electricity industry to the Monopolies and Mergers Commission for independent investigation of public and consumer interest. In that respect as in others, Britain needs the industrial strategy that the Government lack—a strategy for investment in Britain's future.
The Secretary of State had little to say today about small and medium-sized firms, although lip service was paid to them in the Queen's Speech. Such firms are often the most dynamic enterprises in any given industrial sector, and in countries such as Germany they form an important part of manufacturing industry. The owners of many small businesses, being hard-pressed for time, work 70 hours or more a week and often face tremendous barriers in getting their hands on information and serious hurdles in the way of obtaining accessible finance. A Labour Government would seek to tackle that funding gap. We have already developed plans to match investors with lenders through tailor-made accessible services at no additional cost to the public purse, using an enhanced network of business links throughout the UK—an idea that the Government, we are pleased to see, are beginning to take up.
We are equally concerned about technology-based firms, which often find it difficult to borrow because of bank preference for collateral. We have advanced ideas for enhanced business links to address that market failure through an equity underwriting scheme that would 364 underwrite a certain proportion of equity invested by a venture capitalist and in return look to receive a share of profits accrued later.
Another market failure that the Government could address is the lack of information available to so-called business angels. It is estimated that the amount of finance available from that source is £3 billion to £5 billion, yet a major problem for such investors is in obtaining information about potential investments in good industrial and commercial ideas. By working with private sector organisations already involved in matching such investors with companies, we could investigate how a national on-line database could be established and made available. The cost of all such plans could be offset by the rationalisation of existing schemes and an element of profit sharing from the equity underwriting proposal, to make better use of existing resources.
In the long run, many profitable small businesses create their own capital. We want to provide every encouragement for the reinvestment of profits by smaller firms. As part of a review of tax obstacles to long-term investment, we are examining how the balance of the tax take on small businesses could be redistributed, to provide strong incentives for the retention of earnings for investment.
More widely, my colleague the shadow Chancellor recently proposed that in this month's Budget, the Chancellor of the Exchequer should, for a limited, 12-month period, double the first-year tax allowance for new investment from 25 per cent. to 50 per cent.—the kind of stimulus to new investment that is widely accepted as the most effective. We want not only an increase in investment but an improvement in its quality and effectiveness. As a nation, we need to enhance innovation, celebrate it and deploy the best in design because innovation and design are necessary for our national pride, and they are crucial in maintaining our living standards in an increasingly competitive world. Britain has some of the best designers in the world, but they are not put to sufficient use with others in British business.
I was interested to hear the Secretary of State's remarks about his intention to produce a consultation paper on competition and corporate policy, which we will study with interest. We have proposed rationalising the Monopolies and Mergers Commission and the Office of Fair Trading into a single competition and consumer standards office, charged with identifying and dealing with restrictive practices, such as price fixing and rigged tenders, and anti-competitive practices such as abuses of monopoly power.
In the past, the Government seemed to rely exclusively on an administrative approach, whereas we believe that a more prohibitive approach would be more effective. We shall scrutinise the Government's proposals in their consultation paper to see whether, as the Secretary of State suggested today, the Government intend to move towards a more prohibitive approach.
The establishment of the right economic climate for the regeneration of industry is not enough. The training and education of our work force need to be improved. We have the urgent need of an advanced industrialised society competing in hostile, global markets for highly productive, well-educated and skilled people. We need to raise education standards and to foster the lifetime development of new skills. There is no doubt that Britain 365 has a number of world-class manufacturing companies— everybody could name some, but there are too few of them.
Much of the country's weakness rests with the short-term adversarial culture fostered by the Conservative party and encouraged since the 1980s. Britain needs to take the long-term view, and that requires partnerships, not division. We need to look to the future, identify fresh markets and opportunities and set out to play a major role in those markets.
In too many industries, such as biotechnology, our lead is under threat from abroad. In other industries, such as fibre optics, our lead has probably already been lost. In others, such as environmental technology, we may still have a lead. It is essential that we seek to stay in the lead—to exploit the opportunities of a new market, as our competitors do.
In 1991, Taiwan took a policy decision to move from a low-cost, low-wage, low-skill economy to higher value, high-tech industries. Taiwan identified 10 sectors of high-tech content in which there would be global demand into the next century, including aerospace—in which Taiwan had no production capacity. Instead of concluding that the country was excluded from such markets, Taiwan set out—the Government working in partnership with industry—to develop plans from scratch. It started planning and building for the future through a partnership between the Government and industry—something that has not happened in this country for the past 16 years.
The responsibility rests on the Government not only to undertake competent macro-economic management but to create the political climate in which a cultural shift in favour of manufacturing can occur. Taiwan and Japan have shown that that can be done. Britain needs to begin to re-create high-quality, high-paying, high-productivity jobs based on skills and investment that generate ever more value added per hour, and to do so on the basis of co-operative relationships between employers and employees.
Most successful world-class companies focus not only on narrow financial criteria but on people and relationships. They involve their employees in a process of consultation and decision making in company affairs. That is the kind of view that is encapsulated in the social chapter, the provisions of which—although no one would have thought so, to hear the Secretary of State today—are already met and exceeded by world-class companies such as Nissan, AT and T, Motorola, United Distillers and many others.
Those provisions are important for achieving basic rights and standards for employees and are accepted by all our European competitors. What the Secretary of State said today about the remarks of my right hon. Friend the Leader of the Opposition to the CBI was profoundly misleading. My right hon. Friend was seeking to address the misleading propaganda coming from the Government about what signing up to the social chapter would entail.
As my right hon. Friend told the CBI, if there are new developments in social policy and legislation, we believe that Britain should be involved in the discussions, arguing our corner, putting Britain's case when those matters are raised with our European partners, and not leaving an empty chair. We believe that the only way forward for Britain is a hard-headed analysis of how to build that 366 high-wage, high-skill, high-investment and high-employment economy, and then total determination in the bid to achieve it.
We are not alone in our analysis. In pre-Budget submission after pre-Budget submission, the representatives not just of the TUC but of the CBI, the chambers of commerce, the training and enterprise councils set up by this Government and the small business associations have called on the Government to take action to stimulate and to sustain investment. They have called, as we have done, for further tax incentives for investment in research and development. They have called, as we have done, for capital allowances to promote investment, only to be told that they are old-fashioned. They have sought, as we have sought, Government action to improve our infrastructure.
In this year's submission, the CBI pleads for investment in education and training to be protected and has expressed the hope that any tax cuts will not be bought at the expense of Government capital programmes. These bodies are all calling on the Government to cease to absent themselves from the field, and to take up the role that only Government can play.
Labour's project is for national reappraisal and national renewal on the basis of a new consensus, a consensus that speaks to the real condition of Britain today—the consensus that we need to encourage long-term relationships between finance and industry. We need to build economic strength from the bottom up and not just from the top down, and that is why it is important to co-ordinate industrial and economic development at a regional level.
The new consensus states that the interdependence of public and private sectors is more important than the boundary between them, and that is why we propose real public-private partnerships to invest in infrastructure, in addition to what the Government can do rather than in substitution for it. The new consensus believes that small and medium-sized enterprises are the engine of growth in the economy, and that is why we propose new ways of stimulating the small business sector.
We need, most of all, a new consensus of partnership. Today, it seems, Britain may be beginning to turn to Labour, under whose Governments Britain achieved greater growth than we have averaged over the past 16 years. Britain may be beginning to see that, if we are to build a successful economy, we need partnerships between Government and business, between employer and employee and between investors, banks and entrepreneurs.
Contrary to what the Government say, there is always a choice of course to pursue. Unless we choose a fresh course, Britain's competitive weakness will continue, and so will Britain's slow decline. The Queen's Speech sets out clearly the lack of vision of this Government—a Government who have run out of ideas, who have run out of steam and who have almost run out of time.
§ Mr. Michael Alison (Selby)
Although the topic for today's debate is, strictly speaking, investment and the areas that the right hon. Member for Derby, South (Mrs. Beckett) covered in her speech, there is fortunately no law of the Medes and the Persians that forces one to 367 confine oneself to those topics, and I earlier gave notice that I am hoping in my short speech to venture into the terrain of tomorrow's debate, as indeed the Home Secretary did earlier.
I shall make one or two comments on the Family Law Bill—the Lord Chancellor's major effort and initiative to reform the divorce laws. I naturally do not expect the Minister to answer the points that I raise in my speech; and I would like to apologise to the right hon. Lady for the apparent, but unintended, discourtesy in not plunging—as her distinguished speech certainly merited—straight into the debate that she has launched on this topic.
Like, I suspect, many colleagues, I am neither a lawyer nor familiar with the legal intricacies of divorce. As a lay legislator confronted by the Family Law Bill, I have had to plunge into the quicksands of this very tricky area. Two especially arresting facts have struck me about the Government's proposals in the Queen's Speech.
The first of those facts is that 75 per cent. of divorces currently finalised are secured, usually in a matter of three or four months, by the petitioners cheerfully and openly opting to advance one of the three so-called faults, or fault-based facts—adultery, cruelty or desertion—to demonstrate that their marriages have broken down irretrievably. They opt for this route because expediency, in their view, deserves precedence over sensitivity. The speed of getting the divorce outweighs the potential blame or opprobrium associated with the idea of fault.
The Lord Chancellor's proposals will close the stable door—the so-called "quickie" divorce route—to alleging fault, by introducing an irreducible one-year time lapse between petitioning for divorce and securing it. The interesting question is whether, by shutting the stable door on this "quickie" divorce option, a very important horse has irrevocably bolted. In other words, has the concept of fault in divorce now necessarily finally fled from the courts' cognisance of what has happened before when divorce proceedings are launched? I, for one, hope that fault will not be finally removed from divorce proceedings.
A marriage contract, which has such immense human significance—to state as well as to Church—cannot really be conceived as expendable, or as simply time-expired like a window-cleaning contract. If we evacuate fault, marriage becomes as banal and bland as an ordinary, secular contract. I do not believe that it is in the interests of either party to divorce proceedings, or of anyone else involved, that fault, which distinguishes the marriage contract from a casual, secular, material contract, should be ignored.
It is paradoxical that the Lord Chancellor advised us in his draft Bill that the actual Bill should be sanitised on fault. Fault is admittedly difficult to pin down in personal relationships. It causes much anguish and bitterness between members of the broken partnership, let alone the pain that is caused to the children who are involved. If a sanitised approach to divorce proceedings is necessary, why do 75 per cent,. as I have already suggested, of petitioners cheerfully opt for the route of fault merely to shorten proceedings by a few months? It cannot be so necessary to evacuate the concept of fault if it is chosen so freely by so many people.
368 Is it the truth that the Lord Chancellor has with some subtlety deliberately left himself with the opportunity of allowing fault to be reintroduced within the framework, perhaps on the basis of responding to the initiative of his critics in Committee, by means of a rather interesting and unobserved back door?
The Lord Chancellor has said himself that the second crucial feature of his proposals has not been widely noted. It is to be found in clause 10 of the Family Law Bill. Effectively, it allows the courts to prevent the dissolution of a marriage, perhaps indefinitely, even if the magic period of one year has elapsed since the petition for divorce was presented. Although bringing forward the idea of a strictly limited period in which divorce proceedings might extend to 12 months, the Lord Chancellor has introduced, by the back door, discretionary powers for the courts to disallow such a divorce, even after the passing of one year, if the courts judge that grave financial or other hardship would be caused to the applicant and that it would be wrong in all the circumstances to allow the divorce to proceed, in spite of the passing of 12 months.
A new and draconian dimension of restriction has thus been written into the Bill. Yet the Bill has been castigated by many of the Lord Chancellor's critics as being over-liberal in the provision of rapidity. Current law allows a discretionary court ban only when, after five years of separation, a divorce is being sought by one party alone. In the Bill, however, the Lord Chancellor, unobserved by many, has strikingly increased the power of the courts in all divorce proceedings to disallow a divorce on the ground of economic hardship and so forth in spite of the base-line provision of a time limit of 12 months.
It is worrying, in the light of the Lord Chancellor's striking initiative in taking powers to extend the normal provision of 12 months and to widen grounds for refusal, that the important new power that I have described can be operated only on the basis of "no fault" in a marriage being established and brought into reckoning. If a court's findings on financial hardship and other considerations are considered to be well founded, it cannot make sense for the court to go ahead without some cognisance being taken of the character and nature of the marriage—that is, in other words, the underlying reality of the marriage, for that marriage, by judicial edict, is about to be extended almost indefinitely under the clause 10 provision.
If there is an underlying area of the marriage, which is now to be extended by the power of the courts, of profound disharmony and fault, and if, for example, the wife in the partnership is judged by the court to be likely to be left penniless and homeless if the divorce goes ahead, and the divorce is thus disallowed by the Lord Chancellor's special back-door restriction on the ground of financial hardship, can the court really be intending to lock the wife into a marriage that may feature repeated adultery by the husband as well as repeated cruelty and violence? Clearly not. It would be a contradiction if that were to happen.
A way must be found, therefore, if the Lord Chancellor's powers to refuse a divorce are accepted, to establish some finding of the fact of fault in a marriage, perhaps as part of the analysis that is inherent in the mediation procedures on future arrangements for home, children and finance, for example. That must be done on the basis of the Bill's own logic. Although the Bill 369 represents an attempt to sanitise the proceedings in court, it means inherently and necessarily that some attempt to analyse the presence of fault must take place if the Lord Chancellor's provision that there should be an indefinite postponement of divorce is to be acceptable. I hope that the Lord Chancellor, who will be leading debates on the Bill in another place, will take cognisance of this important dimension.
§ Mr. Denzil Davies (Llanelli)
We are told in the first sentence of the Gracious Speech that the President of France will see the Queen next year. I have no doubt that, after he has seen the Queen, he will see the right hon. Member for Huntingdon (Mr. Major), the Prime Minister, if the right hon. Gentleman is still Prime Minister next year. I would not wish to comment, and cannot do so, on the state of mind of the right hon. Gentleman, but it would seem to me that his job is pretty insecure. I suppose that the President of France will still be the president next year. He has most of his seven years in office to go. Judging by the present mood of the French people, who knows what will happen? Perhaps before long they will start putting up the barricades and throwing cobblestones. For the purposes of my speech, I shall assume that both Jacques and John will be holding their respective offices next year.
The Prime Minister and the president will be able to talk about many things—for example, nuclear tests, Maastricht two or Maastricht one-and-a-half, depending on one's view of the treaty. They will, of course, be able to talk about Helmut. It is always Helmut. They can talk also about the public sector borrowing requirement. We are fortunate that the Minister who is to reply knows everything about the PSBR. He was a Treasury Minister for a few years.
There is a reference to the PSBR in the first sentence on page 3 of the Gracious Speech. I do not know the French for public sector borrowing requirement. Even if I did, I would not be allowed to use it. Indeed, I would be called to order. But the French is probably more eloquent than the English.
§ Mr. Davies
It could very well be the same, as the hon. Gentleman says.
In English, at the top of page three, we read that Her Majesty's Government want to balance their budget. They want to eliminate the wretched public sector borrowing requirement. Indeed, the President of France is trying to do something similar. He originally thought that he had to go down only to 3 per cent. of gross national product. He is still at around 5 per cent. or 5.5 per cent. and is having terrible problems. Then he went to see Helmut, who told him that the rules had changed and that, to ensure that the German mark does not end up as some kind of spaghetti money, it is necessary to go down further, probably to 1 per cent. of GNP with regard to the budget deficit.
So John and Jacques, then, can talk about balanced budgets, or at least getting close to them. Looking around Europe, we see that it is not only Britain and France that are talking about balanced budgets. The Germans, and they may have some difficulty, the Italians, the Dutch, the 370 Belgians—even the Swedes, of all people—are seeking to reduce public expenditure to reach a balanced budget. Whatever the long-term economic effects might be, the social consequences on the poor, the unemployed, the disadvantaged—I believe that they are now called "the excluded"—of Europe will be dire.
I would like to blame the Maastricht treaty for all of this. I certainly blame the treaty for much of it. But the whole fashion of the public sector borrowing requirement goes even beyond that treaty, because the Prime Minister opted out of the single currency and is determined, apparently, to achieve a balanced budget. In the United States, balanced budgets are all the rage, on both sides of the political divide. Even President Clinton says that he wants one; he wants one that is slightly different from that of Newt Gingrich, but they both want a balanced budget.
As we survey the economic and financial scene, we see that balanced budgets are the latest fashion. Fashions come and go—flared trousers, sideburns, mini-skirts— and we now have balanced budgets, but obviously not as attractive. No self-respecting Chancellor of the Exchequer or Minister of Finance when they meet their masters, the governors of the central banks, in Basle or Washington, would dare appear in anything but the best balanced budget suit.
Whether or not a balanced budget is good for an economy is immaterial: nobody will ever find out, probably, because by the time the evidence has accumulated and been assessed, fashion will have changed, and those who participated in the exercise will either be dead or in old people's homes—if any such homes are left. As the Secretary of State will know, one way to achieve a balanced budget is to put up taxes. Indeed, a few years ago, people used to talk openly—even those on the radical right—about putting up taxes to achieve a balanced budget. Today, that has all gone. Nobody would dare now say, "You should put up taxes to achieve a balanced budget." That would not do. That would upset the "comfortable majority", as John Kenneth Galbraith once described it.
By all means let us have balanced budgets. The financial and economic establishment want them—economists write about them all the time and long articles are written—so long as they do not have to pay for them. We cannot have the financial and economic establishment paying for balanced budgets. They are a great thing. They are a splendid fashion, but somebody else must pay for them.
Who is going to pay for them? We know who: the poor, the unemployed, the disadvantaged, the excluded. They will pay for them because, of course, the other method, as the Secretary of State will know, of achieving a balanced budget is to cut public expenditure. As social welfare is the largest element in public expenditure, if we cut public expenditure we shall cut social welfare and have to cut it more than anything else. That is what is happening. In the United States, social welfare is bearing most of the brunt. Next week in the Budget, we shall discover the position in Britain.
As far as the Queen's guest next year, President Chirac, is concerned, I read in the papers last week that the stockbrokers, bankers and financiers of the Paris Bourse were rolling in the aisles because their President had announced that his Government had decided, at last, that 371 cutting social security, cutting the welfare state, was the way to achieve the 3 per cent. or, probably, Helmut's 1 per cent.
§ Mr. Dafis
I remind the right hon. Gentleman—I am sure that he knows already—of the same pattern that is emerging in the relationship between the developed world and the third world, because when third-world economies run into trouble, the International Monetary Fund imposes structural adjustment programmes to achieve a balanced budget, and the effects on the poor in those countries are absolutely appalling.
§ Mr. Davies
Indeed: that is because the IMF people who go to those countries have all been taught in the same school. They have the bug. They have the fashion, and that fashion is balanced budgets.
The poor of Europe—the excluded—will pay for the single currency if it ever comes about. Extending it a bit wider than Europe, we could say that the poor of the western world will pay for a balanced budget. The policy of many countries—supported by many parties in many countries—is hypocritical and immoral. But the comfortable majority and its representatives have convinced themselves that it is not. Indeed, they have convinced themselves that, far from being immoral, cutting social welfare is good for the poor, that it takes the poor out of the dependency culture.
There are many groups in our society—I do not criticise or decry this, as it is a fact of modern life and modern government—who are part of the dependency culture. I shall not go into detail. We could talk about the farmers, who may well have good reason for it. We could talk about the European fighter aircraft. Some people would say that that is part of the dependency culture. We could talk about money for the arts and for various pressure groups. They are also in the dependency culture. Apparently, it is only the poor who have to suffer cuts in social welfare, so they can be taken out of that wretched dependency culture.
§ Mr. Peter Snape (West Bromwich, East)
My hon. Friend has left out—no doubt inadvertently—one other group which is part of the dependency culture. It was defended earlier by the Secretary of State for Trade and Industry from the Government Front Bench. I think of employers who pay wages that are below decent minimums. They are part of the dependency culture because the Government subsidise such employers, despite the disincentive, they say, that such subsidies cause to other people.
§ Mr. Davies
My hon. Friend makes a valuable point. There is a long list. In this case, it is the poor who are the target.
Hardly a day goes without me reading in the broadsheets that some think tank is considering the reform of the social welfare system. Those think tanks are usually staffed by the sons and daughters of the comfortable majority. Many of them, perhaps, find it difficult to find work in the competitive market economy. Those think tanks are asked—it is a rather idiotic phrase that we all use—"to think the unthinkable". That, of course, means cutting the welfare state.
372 My right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) coined a phrase, "warm words". The warm word is reform. If the poor are listening and they hear that word, I suggest that they run for cover pretty fast, if they can find any cover.
I recall, throughout the 1980s, sitting here and listening to Ministers talk of tax reform. I must say that I did not see much reform—and, having read the batch of Finance Bills that have been enacted over the past few years and talked to accountants, I think that it is clear that those accountants do not believe that much reform was introduced. In fact, the legislation is now more complex than ever.
"Reform" was, and still is, code for "cuts". "Social welfare reform" really means cuts in the welfare state. If the "reform" procedure eventually came up with a plan for increased expenditure, it is impossible that the comfortable classes would allow Governments to find the money.
The other "warm word" is "tough". "Tough" is one of those transatlantic words: I believe that the phrase "tough love" was coined somewhere in the United States. The poor are our children, it seems. We know what is best for them; we love them, but we must be tough with them. The Victorian equivalent of that phraseology was "Spare the rod and spoil the child". We have squared the circle, then. We can have balanced budgets; we need not put up taxes; we can cut welfare; and the poor will thank us for it.
The Secretary of State referred to competition, and to the various new papers aimed at reforming the monopolies and mergers system that keep being published. Some people believe, or profess to believe, that a competitive and dynamic market economy can generate enough wealth to keep the comfortable majority in the state to which they have been accustomed, while also securing social justice—or social cohesion, as the Europeans call it. I hope that those people are right, but the increasing evidence emerging from western economies—not just Britain—is that the combination of a competitive market economy with tight inflation targets and a balanced budget will not produce sufficient wealth both to ensure social cohesion and to keep the comfortable majority in reasonable comfort.
I do not know about this, but one of the inevitable consequences of a competitive market economy, controlled by central bankers and with inflation targets, may well be a large pool of unemployment. If that is the case, and if we start taking money from the poor to alleviate the insecurities of the comfortable majority, the Queen's guests—Jacques, John and even Helmut—and their heirs and successors may well reap a terrible whirlwind.
§ Sir Wyn Roberts (Conwy)
It is always a great pleasure to follow the right hon. Member for Llanelli (Mr. Davies). Not only is he a former Chief Secretary to the Treasury; he is the right hon. Member for Llanelli. Both facts qualify him to make the kind of deeply thoughtful speech that he has just made—and he covered a good deal of ground.
I followed what the right hon. Gentleman said about the philosophy of the balanced budget. He described it as "fashionable", but I am not sure that it is more fashionable 373 than the facts that two and two make four and that most Treasuries insist on that basic principle. The right hon. Gentleman said that it was, of course, possible to achieve a balanced budget by raising taxes and/or cutting expenditure, but he did not tell us what the Opposition would do if they were in government. Now he points, rightly, at Opposition Front Benchers; as far as I can make out, they will do neither.
Speakers from the two Front Benches gave us two contrasting pictures. Certainly, the speech delivered by my right hon. Friend the President of the Board of Trade carried a stronger ring of truth than what we heard from the right hon. Member for Derby, South (Mrs. Beckett): at least I recognised the picture drawn by my right hon. Friend of inward investment in this country.
The right hon. Lady mentioned Taiwan. I have been to Taiwan on more than one occasion, and have visited Chung Wa in Taipei—a company that is now investing heavily in Scotland, and creating some 3,000 jobs. I should tell the right hon. Lady that one of the great attractions of Chung Wa is the university campus in the middle of its factory complex. I heard the head of the company, Dr. Lin, lecturing some 2,000 of its employees.
I was told that there were two rush hours in Taiwan— one at about 6 pm, when people came home from work, and the other at about 10 pm, when they came home from their technical training colleges. That is not simply a matter of Government provision; it suggests a considerable will among the people of Taiwan to acquire higher skills.
I shall return to the subject of the economy—particularly in relation to Wales—but I want to concentrate on the broadcasting Bill that is to be introduced by my right hon. Friend the Secretary of State for National Heritage. I understand that it covers changes in the rules governing media ownership, as discussed in the White Paper published in May this year, and the advent of digital broadcasting, which was the subject of another document that appeared in August.
I feel that the Government are right to conclude that there is a continuing need for specific regulations on media ownership beyond those of general competition law; but, like many of my right hon. and hon. Friends, I look forward to a diminution of that need, because regulations tend to distort the operation of the market.
We have an example in the cogent case put by the director of the Newspaper Society, Mr. Nisbet Smith, to my right hon. Friend the Prime Minister on behalf of regional and local newspapers. He argues that their prohibition from owning radio and television stations in their circulation areas, while national newspapers and magazines are allowed to do so,will lead to a reduction in reader and consumer choice, by making it harder for regional and local newspapers to provide a genuine alternative to the editorial agenda set by London newspapers, and will distort competition between the print media. National newspaper and magazine companies will become multiple media companies in their circulation areas and be able to dominate regional and local newspapers which will be prevented by the Government from becoming multiple media companies in their circulation areas.As an avowed regionalist who believes that our society is unhealthily dominated by a one-track and often blinkered metropolitan view—perhaps we shall hear an example of that later in the debate—I have a great deal of sympathy for the argument that the Newspaper Society 374 advanced on behalf of its 240 member companies, which include the Liverpool Daily Post and the Western Mail in Wales. Far from safeguarding media diversity, the proposals in the broadcasting Bill are likely to undermine it.
We need to develop rather than discourage regional strengths. I always admire the different parts of the United States—the mid-west, the east side and the west coast—which appear to have great independent strength. We have lost many regional strengths over the years, and I am sure that Britain is the poorer for it.
With the advent of digital television and radio, we face the possibility of abundant choice, or possibly an over-abundance of choice, and all our broadcasters are looking hard at their prospects for survival. What we know to be good should be encouraged to flourish; that is the basic principle from which I start. Our Welsh language channel, S4C, in conjunction with Channel 4, provided a worthwhile service, and continues to do so, I am glad to say, because I had a hand in its creation in the early 1980s. The matter was raised at Question Time and I was pleased by the reply of the Minister of State, Department of National Heritage, my hon. Friend the Member for Harwich (Mr. Sproat).
I understand that the White Paper proposes that both S4C and Channel 4 should be guaranteed a joint place,on condition that the broadcasters seek, either by splitting the service or rescheduling, or both, to make the full Channel 4 service available as far as possible throughout Wales without reducing the availability of the S4C service in Wales.That sounds reasonable and it looks fine on paper, but I am told by those who have carefully considered the practical implications that it is a tall order. The more that I examine the complexities, the more I am inclined to believe that it is a prescription for a conflict that should and could be avoided.
I urge my right hon. Friend the Secretary of State for National Heritage to consider the feasibility of a different solution. As the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) said in his question this afternoon, S4C merits parity of treatment with the other main services in Wales. So does Channel 4, and each eventually deserves its separate and independent digital equivalent of the single analogue that they currently share.
In progressing to that, I urge my right hon. Friend to give top priority to the S4C service, because I suspect that some people are waiting in the wings for her to fail to do that, so that they can restage the battle that accompanied the birth of the Welsh language service in the 1980s. I am sure that she will not be foolish enough to repeat the mistake that was made at that time, when the Government abandoned a manifesto commitment, only to be forced to honour it under public duress and by the pricks of their own conscience.
Such an arrangement will mean that S4C will eventually have to be able to supplement its current subsidised Welsh language output with programmes from other sources if it is to provide as complete a service as it successfully provides now. The White Paper has anticipated that by stating clearly in paragraph 2.46 that the BBC and Channel 4/S4Cwill be prevented from subsidising any new commercial venture from the funding arrangements for their existing or guaranteed services.375 I accept that, and I express my faith that those who are concerned with television in Wales will rise to the challenge and will be able to provide the additional programming on a commercial basis. I do not think that it is beyond the wit of man or woman to devise a suitable scheme to facilitate that.
I said that Channel 4 merits an independent service in Wales. Some of its programmes, especially the 7 o'clock news programme, are missed by Welsh viewers, and Channel 4 has put a strong case to the effect that it no longer requires the protection that is afforded by the Broadcasting Act 1990, which now has the unintended result of an escalating annual transfer of funds to the ITV companies. If the funding formula were abolished, Channel 4 would aim to boost the proportion of British material, double its investment in British films, substantially increase its drama output and enhance its schools and education programmes.
That would also allow Channel 4 to play a full part in the introduction of digital services. That sounds an attractive package, and I have no doubt that Channel 4 would deliver it. I hope that my right hon. Friend the Secretary of State for National Heritage can go at least some way towards meeting Channel 4's request to be relieved of its current perverse obligation to subsidise ITV.
The right hon. Member for Llanelli spoke about the opening part of the Gracious Speech. I shall refer to the end of it, which, as usual, contains the request that the Almighty's blessing may rest upon our counsels. Nowhere do we need divinely inspired counsel more than in dealing with legislative devolution, which is not specifically mentioned in the Gracious Speech but is linked to the good governance and economic development of the United Kingdom. That features prominently in the speech.
Since the Address was delivered, the Government have made it known that there will be an announcement on St. Andrew's day of some changes affecting the Scottish Grand Committee. I understand that those will have ramifications for Wales, and that has caused a stir in the Principality. I suspect that what is envisaged for Scotland is a further instalment of the White Paper, "Scotland in the Union: A Partnership for Good". That seems to be a sound approach, because it at least preserves the unity and integrity of our parliamentary system, whereas other proposals plant the seeds of conflict and disintegration.
Although the proposals are not yet known, I have heard them disparaged already by hon. Members who do not seem to realise that they are thereby disparaging themselves after all, Scottish and Welsh Members are themselves a Parliament in miniature in the Scottish and Welsh Grand Committees, however circumscribed their powers may be. There is no doubt that there are aspirations in Scotland and Wales for political recognition of their respective, collective national identities, but how to meet that aspiration and give it a satisfactory expression without damaging the interests of the United Kingdom as a whole poses problems that defy solution, as those of us who were involved in the debates in the late 1970s know only too well.
I know that my right hon. Friend the Secretary of State for Wales is introducing proposals to develop the Welsh Grand Committee—I hope, to allow debate on the principle of measures or parts of measures as they affect Wales. If such steps, which are minor compared with the 376 Opposition's proposals, are not welcome and workable, the people of Wales will know what to think of the major moves that the Opposition have in mind to divorce Wales from Westminster.
What concerns Welsh people, like other peoples in the United Kingdom, is their standard of living. Although our economy has made significant strides forward during the years of Conservative rule, there are still worrying clouds over the landscape. There are, however, patches of light, too.
In recent years, the unemployment differential between Wales and the rest of the UK has been narrowing. In the latter half of 1992, the Welsh unemployment rate fell below that of the rest of the UK for the first time since 1924. We have been level pegging more or less ever since, but still below the European average. What concerns me, however, is that our gross domestic product per head remains comparatively low, and that is reflected in earnings and disposable incomes. In 1994, as a whole, average gross weekly earnings of full-time employees in Wales were 10.5 per cent. below the Great Britain average and, overall, wages were lower than in any other region. The decline relative to the rest of Great Britain has been going on since 1984.
Those are stark and true facts that must be set against the fall in unemployment and the 11 per cent. increase in the civilian work force in employment. We need a strong and continuing regional policy to correct that imbalance and to bring Welsh wages up to the Great Britain average.
§ Sir Wyn Roberts
I am coming to an end. [Hon. Members: "come on."] I give way to the hon. Gentleman.
§ Mr. Hughes
The right hon. Gentleman expressed an interest in broadcasting, and I know that, before he came to the House, he was an employee of a television company. Did he see "Kane's Wales" last night on BBC Wales, which conclusively revealed that Wales is the poorest region in western Europe? Substantial arguments seem to support that claim.
§ Sir Wyn Roberts
I did not see the programme, but Wales can be all things to all men in just the same way as we heard two contrasting speeches from the Front Benches, I am sure that one could make similar contrasts in Wales.
My real complaint against the Opposition and their obsession with devolution is that they distract attention from Wales's real need to strive and battle ever harder to develop its economy and to bring increased prosperity to its people. A Welsh assembly will not create jobs, except for the boyos of the Labour party perhaps. It will not bring a single foreign or British investor to Wales—it will scare them away. It will sap such power as Wales has in Westminster and in Whitehall and dissipate scarce resources in what will prove to be a petty squabbling shop rather than a talking shop.
Wales will be torn apart. We shall see north versus south, the valleys versus Cardiff, and unitary authorities versus the assembly. Of course, I wish that it were all going to be different and that we would be inspired by our own assembly to achieve the great advances that our people need and are capable of achieving, but our history is against it, and I fear the worst.
§ Mrs. Diana Maddock (Christchurch)
Competitiveness and economic success in future are dependent on wise investment today. We hear a lot from Conservative Members about tax cuts, particularly about how cuts in the standard rate of income tax might save them from electoral defeat in the not too distant future, but we hear very much less about the cost of investment cuts, particularly in terms of reduced investment in schools, small business assistance and transport infrastructure, to give but three examples.
Other hon. Members will speak today about those sectors, but I intend to deal with one sector of investment that is of particular significance to Liberal Democrats: investment in housing, and the Housing Bill. I do not believe that I must make the same pleadings as the right hon. Member for Selby (Mr. Alison), first, because housing is inextricably linked with our economy and vital if we are to have a competitive, flexible and successful economy; secondly, because the Chief Secretary to the Treasury was a Minister with responsibility for housing, and should be able to answer the issues that I am raising today.
Why have the Liberal Democrats chosen today to talk about housing and the Housing Bill? Outside this place, we get far more votes than we are ever allowed true representation. That means that we may get five bites of the cherry on the Queen's Speech. Housing has been one of the issues that has been way down the political agenda, and that is why we have chosen to debate it today—not because we think that the other matters under debate today are of less importance.
§ Mr. Barry Field (Isle of Wight)
I share the hon. Lady's view that housing is important. Will she join me in condemning the Liberal Democratic-controlled unitary council for scrapping an agreement that goes back years to pay housing benefit direct to landlords on the Isle of Wight; cynically to ensure that housing lists grow ever longer and tenants spend their housing benefit on anything but their rent; and to create mayhem where there was good order and discipline?
§ Mrs. Maddock
I wondered what it was that one of the Tory Whips had whispered in the hon. Gentleman's ear, and it has now become obvious.
§ Madam Deputy Speaker (Dame Janet Fookes)
Order. The rule is clear. If the hon. Lady does not give way, the hon. Gentleman must resume his seat.
§ Mr. Barry Field
I was just accused of taking instructions from the deputy Chief Whip. He came to me and said that he had met someone at Buckingham palace from the Isle of Wight, that he has just had a letter from him, and that he would like to reply to it.
§ Mrs. Maddock
I am sure that, at some point, one of the Whips may have put that point in the hon. Gentleman's ear, whether it was this afternoon or not.
378 For many years, I was a city councillor in Southampton and listened to the pleading of landlords who had to pay back rent that had been given to them in housing benefit when their tenants had done a moonlight flit. It is not easy to know which is the best way to deal with that matter. Clearly, my Liberal Democrat colleagues have weighed up local circumstances in the Isle of Wight, and they have come to a conclusion.
Investment is about putting money in now to save greater expenditure in the long run, and to enable us to produce wealth. Investing in good-quality housing, which will last longer and need fewer repairs, is a prime example. We certainly need that now. At the current rate of building, our homes, both public and private, will need to last for a few hundred years each.
Investing in the construction of new homes and schools is one of the most effective ways of getting people back to work. This year and next year, it is estimated that 12,000 more construction workers will lose their jobs solely as a result of last year's cuts in housing association building. It is estimated that, for every pound spent on construction, at least half will be saved not only in lower benefits, but in increased tax revenues.
Investment in housing cannot be measured only in terms of money and finance; the value of investment in homes has a tremendous effect on people's lives. To be homeless can be crippling. Not only is it very stressful: it is also very damaging to people's physical health. Homelessness means that people are often excluded—they are divided from society and shut out from opportunity, education, meaningful work, health care, financial support and, fundamentally, decent housing.
Many such people become trapped in a downward spiral, with the escape route shut off by the many measures enacted by what I believe to be an insensitive and dogmatic Government. For a party that talks so much about the need to help families, its actions on social housing are a betrayal. Investment in supporting families is crucial. Two of the main causes of family break-up are lack of and insecurity in homes and jobs.
Almost 20 years ago, the wider problems of homelessness were recognised in law for the first time, when, in 1977, the Liberal Member for Isle of Wight, Stephen Ross—sadly, no longer with us—introduced the Housing (Homeless Persons) Act, with support from all sides of the House. That Act was passed because people inside and outside the House recognised that homelessness was a long-term problem and that, unless long-term solutions were found, it would lead to countless other problems in health, work and other aspects of people's daily lives.
If we regress to a position where temporary accommodation and 12-month contracts are the norm for homeless families, we will be denying them the security and the stability that they need to get back on their feet. The repeal of the Housing (Homeless Persons) Act, which is effectively what the Government appear to be proposing in their Bill, will be a monumental step backwards in the battle against homelessness. Since it was introduced, the Act has helped hundreds of thousands of homeless families to find a decent home and a stable environment and to recover after the terrible trauma of being made homeless.
I do not deny that there is a serious problem with the length of local authority waiting lists throughout the country, which sometimes leads to people blaming the 379 homeless for apparent queue jumping. In fact, it is a clear and obvious consequence of the way in which the Government have starved councils and housing associations of funds.
The proposal to change the rules on access to social housing is little more than an exercise in scapegoating to try to shift the blame for Britain's housing crisis away from the Government. By their own speeches, Ministers have fuelled a belief—some of them have even convinced themselves—that homeless people are all queue jumping. Now, they feel that they must act if they are to retain any credibility.
Quite apart from everything else that the Government are proposing, these reforms are really something of a con trick. Putting homeless people into temporary accommodation and then on to the waiting lists will not make the waiting lists any shorter or make any difference to the speed with which most of the people currently on them will be housed. The Government's proposals will not reduce housing need or housing demand and they will not increase housing supply.
The Government are failing everyone in housing need. They are also failing the construction industry. The reason for the huge waiting lists for local authority housing is clear—it is quite simply the severe shortage of affordable housing. Fewer houses were built in the social sector last year than in any year since the war. If the rumours about Budget cuts are true, there may be only enough money to invest in 16,000 new properties in the social sector next year. Currently, the waiting list for housing in Birmingham is 16,000.
What I find even more distressing is that the Government are now trying to hide behind the Awua judgment—the legal decision that Brent council's obligation to house a homeless family was adequately fulfilled by placing them in temporary accommodation for 28 days. That judgment has set a precedent that was certainly not intended in the original legislation. It cannot be allowed to stand. It is the logic of the madhouse for the Government to claim that it somehow makes their proposals all the more acceptable. In fact, it makes it absolutely essential that the law in this area is clarified. Liberal Democrats will be fighting tooth and nail to keep the spirit of the current law in the new Bill.
I want to turn from quantity of housing to quality, because both are equally important. I hope that the Home Energy Conservation Act, which I successfully piloted through Parliament last year, will come into force in April. It should lead to some improvements in home energy efficiency, provided that the resources and the investment are put in place. However, at the same time the Government are proposing the negative step of scrapping mandatory renovation grants. They are doing so at a time when 1.75 million homes are either unfit for habitation or below a tolerable standard, and living in those 1.75 million homes are 4.25 million individuals.
I would be the first to accept that the present system of home improvement grants for private home owners is far from perfect. It is very complicated and bureaucratic, and it depends not only on where someone lives, but on whether he can find his way around the red tape involved in getting a grant. In addition, mandatory grants can be 380 awarded only after a property is ruled to be unfit for human habitation, so it is often a case of shutting the stable door after the horse has bolted.
It could be argued that giving more discretion to local authorities would allow them to tackle problems earlier. However, I and many others in the housing sector truly believe that the Government will use the proposed reforms as a smokescreen to hide a further reduction in funding.
Improving the standard of our housing stock, both public and private, should be a major plank of Government policy. It is certainly a sound investment for the future and a way of creating jobs. However, it is not only home improvement grants that the Government are intent on taking away from home owners. Mortgage interest relief has been slashed, at a time when the market has been at its lowest ebb for a long time. Recent cuts in income support for mortgage holders have left home owners with no real effective safety net. The claim that private insurance schemes are practical options for most home owners has been blown out of the water by report after report.
There is no doubt that housing and housing matters are inextricably linked to the economy. The President of the Board of Trade spoke earlier about the need for flexibility. We now have one of the most inflexible housing systems ever, across all tenures.
There is an inherent contradiction in the Government's economic policy that has badly hit home owners—that of trying artificially to pump up the housing market while at the same time pursuing a general anti-inflation policy. One does not have to be an economist to recognise the contradiction there, and to predict the effects that we are now seeing, with more than 1,000 houses being repossessed every week and, consequently, even more pressure on local authority waiting lists. It is one area where the Government have certainly introduced competition. On top of that, an estimated 1.5 million people are trapped in negative equity.
How have the Government responded in their proposed housing legislation? It would appear that they have abdicated all responsibility for the problems faced by home owners and tenants alike, and are proposing legislation which looks likely to consist largely of gimmicks and smokescreens and which, by all accounts, will not provide the long-term programme of investment in homes, which are the vital anchors for all our families.
What could have been a sensible policy to encourage housing association tenants to buy their homes is dreadfully flawed, because the Government are more concerned with the dogma of introducing the right to buy than with the consequences of those sales in some areas. Thankfully, I believe that the Government have finally bowed to pressure and exempted much rural housing from the scheme. Even so, the scheme remains problematic in many areas.
I am astonished when I see how much effort the Government and others are putting into devising ever more devious ways to allow public bodies to go to the private market to obtain capital—not because it is a bad idea, but because Ministers are so bound by their obsession with the notion that it is somehow wrong for public bodies to borrow.
Borrowing to finance revenue spending is the road to disaster, although I have to say that Tory colleagues in my county of Dorset are always encouraging my local authority to do just that. However, borrowing for capital 381 expenditure for investment is lasting. These are the principles on which industry works. One would think that the Government would by now have recognised them, too.
Why should housing associations be able to go to the private sector to seek finance to build homes, but local authorities are not allowed to do likewise? Local authorities are democratically accountable for their spending. The Government's position is even more hypocritical, given the news that grant-maintained schools will be allowed to borrow in the private market. That blows a hole in the Government's policy and their defence of what they have done in this sphere.
We need to be prepared to use our imagination to break free of the constraints which prevent investment. I am thinking of the rule according to which all spending, including capital investment, contributes equally to our main measure of Government borrowing. That point has already been alluded to today. There is no logic in that notion. It makes councils, which desperately need new homes for homeless people, keep millions of pounds locked up unused in their bank accounts.
The Liberal Democrats would separate capital and revenue spending and give local authorities the freedom to invest the money they have in new homes. We would also allow local authorities direct access to capital markets to finance local projects. In all my time in local government and in the House, I have yet to hear a convincing argument as to why local councils' financial wings have to be kept as clipped as they have been by the Government, especially for projects that are likely to reduce their costs in the long term, and create much-needed jobs in their area.
The Labour party seems to be very hesitant and timid in this sphere. I have been waiting for the long-promised housing policy document that the hon. Member for Greenwich (Mr. Raynsford) told me was coming earlier this year. Regrettably, the Labour party seems to be similarly blinkered when it comes to reform of the measurement of the public sector borrowing requirement. I understand that Labour's Treasury team has ruled out any change in Government accounting rules to release funds for investment.
There is too much timidity in politics today. Too many politicians seem scared to challenge traditional orthodoxy.
§ Mrs. Maddock
There are always exceptions to every rule. Interestingly, it is quite often women who are prepared to put their heads above the parapet.
At the moment, the Government's housing agenda appears to be led by the right wing of the Conservative party, which seems to have a set of fairly simple messages: expand home ownership, regardless of sustainability, cut welfare payments, and the notion "private sector, good; public sector, bad". The long-term costs of those measures to the economy and the loss of democratic accountability seem not to come into it.
Liberal Democrat housing legislation this Session would take the agenda in a new direction—that of real investment for the long term. We would liberate local authorities from outdated Treasury rules by differentiating between capital investment and current expenditure. We would allow local authorities to spend the receipts from the sale of their council houses to provide new social 382 housing and would allow housing associations to do the same without imposing a wholly inflexible right to buy. We would also make it crystal clear that local authorities have a continuing duty to offer long-term secure tenancies to families made homeless through no fault of their own.
We would also give local authorities new powers to bring back into use the 800,000 empty properties in England. We would look to invest in our young people by making councils responsible for providing accommodation for homeless 16 and 17-year-olds who currently slip through the welfare net and are treated neither as adults nor as vulnerable minors. This is our agenda: secure homes, flexible tenures, partnership, the extension of choice for all and, fundamentally, an adequate supply of high-quality housing, which is absolutely vital if we are to have a competitive, flexible and thriving economy.
Investment in our people is the best guarantee for all our futures—decent education and training, health care, help for the unemployed through investment in our infrastructure and help for small businesses. However, to make the most of such investment, the firm anchor for most of our families is a safe, decent and affordable home.
§ Mr. David Porter (Waveney)
We are more than half-way through our lengthy debate on the Queen's Speech and, so far, the theme has been well laid out—it is clearly the battleground for the next election, or at least part of it, as the speech of the hon. Member for Christchurch (Mrs. Maddock) demonstrated. It was none the less a thoughtful speech.
As always on such occasions, it is not only what is in the Gracious Speech that is significant; reading between the lines and considering what is not in it are equally important. I deal first with what is in it and the three priorities: making Britain the enterprise centre of Europe, stepping up the fight against crime and increasing choice still further in education. Few will disagree with those laudable aims, but I feel that we would do better to invest our subscription to Europe in this country rather than subsidise competition in other countries through our net contributions to the European leviathan. If the Budget next week were to cut European spending, it would be a popular Budget indeed.
Clearly, we shall not be the enterprise centre of Europe if we adopt the social chapter and the minimum wage, so the Government are right to continue to oppose them. I regret, however, the narrowing of our vision from the workshop of the world to the enterprise centre of Europe, as Europe is not expanding economically while so much of the rest of the world is.
The fight against crime is absolutely spot on. I just wonder how much of national resource is lost in crime. The Government's earlier work is having some success in the form of falling recorded crime in most areas, against the trend of rising global crime. However, people's impression is not always one of falling crime. It is that impression—that confidence—with which we have to deal in law and order as in economic well-being.
Some years ago, I was condemned by a number of people in East Anglia for suggesting that the police should intern some criminals, at least for a time. Judging by the outcry, one would have thought that I was calling for gas 383 chambers for them. I am now delighted to report that Suffolk police are targeting some people's activities, especially in Lowestoft and Beccles, with encouraging results. Quite often one person can be responsible for quite a large number of crimes.
Turning to education, the increasing of choice or parental preference in education has run alongside the drive to improve standards and must be supported. All right hon. and hon. Members, as parents or grandparents, want our children to do better than we did, and in a world where no one owes the United Kingdom a living, they have to be our best investment.
In reality, we know that in rural areas, and in most towns too, there is no choice for parents. Children go to the local school. Economics and common sense dictate that. But within that constraint, it is surely right and proper to extend choice as widely and deeply to as many people as possible in pre-schooling, statutory schooling, tertiary education and training. Vouchers are an excellent, simple device to help broaden diversity of provision and widen choice.
In the same way, once we stop thinking that only councils can provide housing, or that only the national health service can directly provide beds, or that local authorities alone can supply public services, we will immediately open up choice again—within a regulatory framework to ensure standards.
My right hon. Friend the Member for Wokingham (Mr. Redwood) said in the debate on the Queen's Speech on Wednesday that people do not object to paying benefits to those in need in our community, and that we do not mind helping those who face a genuine threat before they come to this country, and he is quite right. People, citizens and taxpayers of this country will not, however, tolerate abuse of our hospitality and taxes by bogus asylum seekers, any more than they will any longer in the main tolerate abuse by those who cheat the social security system. Incidentally, in all the flurry of the weekend's post, there were only two letters from my constituents about the Queen's Speech, and both were about bogus asylum seekers.
Like my right hon. Friend the Member for Selby (Mr. Alison), I have serious doubts about the consequences of the divorce reform proposals, but a free vote should help that. Otherwise, I commend what is in the Queen's Speech.
I turn to what is not in the Loyal Address. There is no measure to deal with our membership of the common fisheries policy—a nightmare which gets worse each week. If we were serious about allowing a British industry to thrive, our exit from the common fisheries policy would be a priority.
There are no commitments on roads—we have to wait for the Budget next week for those. The title of today's debate includes transport and investment, and it is accepted that roads, as appropriate, are an investment. The outstanding success of the port of Felixstowe in Suffolk is in good measure attributable to the fact that the A14 from the midlands and its connections to the motorway network run directly into the port.
By the same token, the pledge in the White Paper "Roads to Prosperity" in the 1980s to dual the A12 fully from London to Great Yarmouth would be an investment 384 of relatively modest proportions but would produce a far bigger economic gain for Lowestoft. However, that policy seems to be a little unfashionable at the moment. In particular, the Wrentham bypass and the new crossing of Lake Lothing at Lowestoft would have environmental benefits as well as create some economic returns.
The signals are that we may be putting back even further some of that road investment. In recent years there have been some spectacular, if random, improvements in road communication in East Anglia, but that is a redressing of the neglect of previous decades. In economic terms, isolation is not an acceptable substitute in East Anglia for a coherent transport investment strategy, as in other parts of the UK, and certainly in other parts of the European Union.
In the Queen's Speech, there is no push to go for all schools becoming grant-maintained, which is a pity. Sadly, in Suffolk, there is not a single grant-maintained school—mainly because of a perceived satisfaction with the local education authority, under both its present Labour administration—although some discontent is creeping in—and its previous Conservative control. Also, Suffolk has developed a wide range of partnerships. There are schools in pyramids and clusters, with business and industry, and those sharing teachers and parts of the curriculum. It is a profound strength and is recognised as such by parents and teachers.
The other probable reason for there being no GM schools is the enormous success of our three-tier system—primary, middle and high schools—with the transfer ages of nine and 13, which cut across the key stages of the national curriculum. That forces schools to work together.
Personally, I would like all schools to become self-governing and LEAs to be demolished, but I am aware of the charge that, while we are empowering parents and local providers, we are not always building in the right democratic answerability. School governors report to parents, and some are elected by parents, so there is an element of democracy, and it needs fostering.
The same is not true, however, in health, as is well illustrated in my area. Due to the history of the configuration of health authorities in Waveney and Great Yarmouth, together with increasing numbers of elderly people, a review is being conducted on hospital provision for the elderly in north Suffolk. The proposals and the consultation process could lead to the closure of beds, wards and, ultimately, unless there are concrete alternative agreed uses, closure of community hospitals at Lowestoft and Beccles, even though the preferred policy is for community hospitals.
Quite rightly, the Minister for Health has told campaigners that local bed provision is a matter for the local health authority's providers and purchasers. However, the danger is that the public will lose faith in the consultation process if their views are persistently ignored by local authorities and trusts, rubber-stamped by the regions and eventually by the Secretary of State.
Therefore, there is a perceived gap in public accountability in a public service as vital as health care. I sound that warning to my hon. Friends on the Front Bench. That perceived gap cannot be neglected indefinitely, and if not now, then in some Gracious Speech soon, it will have to be considered.
385 In reading between the lines of the Gracious Speech despite the huffing and puffing of the Opposition, I think that it is part of a continuing programme to modernise the state for the next century. Privatisation, deregulation and competition have not been lost sight of. Record inward investment finds fertile soil in Britain today. The fact that some of the trade unions are starting to flex their muscles again, sensing that the Labour party could soon be dancing to their tunes in Downing street, shows how important it is that we keep up that drive.
We need to remove still more red tape; we need to enforce fewer regulations from Brussels—and Whitehall. We need to use tax reductions for individuals and business to stimulate the economy. We need to encourage those barometers of our economic health—retail and construction—in a positive way. We need to use taxes to make family stability attractive again. The Queen's Speech is a step on that road, and the Budget will be the next. But the Government need to keep thinking, acting and believing more aggressively—in a political sense—if all that has been achieved is not to be thrown away.
§ Mr. Barry Sheerman (Huddersfield)
I congratulate my right hon. Friend the Member for Derby, South (Mrs. Beckett) on an excellent speech—her first from the Front Bench in her new role. It was such a refreshing change to hear someone trying to consider the broad scope of investment in our country, especially as it affects wealth-creation processes and the manufacturing sector. I look forward to the winding-up speech from my hon. Friend the Member for Birmingham, Ladywood (Ms Short) the shadow Secretary of State for Transport.
Like many hon. Members, I was attracted to politics by its potential to improve the conditions of life for the people of our country. My discontent was with the inability of our economy and our society over many years to give the less privileged people in our country a real stake in its fortunes or a real chance of a decent standard of living.
Of course, a few of the ideas and strategies to achieve greater prosperity, which some of my generation and I embraced—when I was in manufacturing industry and, indeed, later when I was at the London School of Economics—have been worked on, modified and changed a little. While I worked in the manufacturing sector and, indeed, right throughout my career, I have always held the conviction and been committed to a belief—it remains totally unchanged—in the fundamental importance of the creation of wealth in offering the inhabitants of these islands the opportunity of the good life.
There are many definitions of that good life, but I like the pretty handy one that it means: a nice home, a well-paid job, good holidays, and decent levels of education, health and social care. We all intuitively know what the good life is and what we want for our constituents and the people of this country. I continue to be convinced that the creation of that wealth must be primarily through the manufacturing sector of our economy.
The Queen's Speech has the usual obligatory references toencouraging enterprise and competitiveness and support for small businesses",386 and "further deregulation", and it promisesincreased competitiveness encouraged by raising educational skill levels, advancing knowledge, and promoting an efficient and flexible labour market.But there is little sign of positive plans to achieve those goals and, overall, the Queen's Speech gives little sign that the Government are aware of the perilous situation facing our national economy, as Britain plummets to 18th place in the world prosperity league. Apart from one tiny Bill, which has cross-party support, nothing in the Queen's Speech will do anything to help our manufacturing enterprises.
From every side of industry, we hear calls for the Government to take radical steps to reinvigorate our industries—investing in them and building up their international competitiveness, educating and training a modern, multi-skilled work force and giving them the modern infrastructure of services that they need to thrive. That is the industrial agenda which any Government must address and which should have been addressed more effectively in the past 16 years.
As co-chairman, with the hon. Member for Coventry, South-West (Mr. Butcher), of the parliamentary manufacturing industry group, and as one of the instigators of the networking for industry initiative, I have been privileged, over the past two years, to hear the informed opinions of industrialists, academics, bankers, trade unionists, corporate analysts and financial journalists on our economic and industrial position. What is fascinating is the remarkable similarity of their views, not only in terms of the challenges that we face, but in terms of their prescriptions for bringing our manufacturing sector back to rude good health. They are all deeply committed to ensuring that Britain remains in the ranks of the wealthiest and most successful nations when the world and the competitive situation change faster each day and when a fundamental shift in global economic power is well under way.
In a debate a few weeks ago—it was one of the Wednesday morning debates, which are such a refreshing part of our changed structures—we were informed by the Under-Secretary of State for Trade and Industry, the hon. Member for Amber Valley (Mr. Oppenheim), that Britain's economic decline commenced in the 1850s. I could not resist the temptation of shouting out that it was the Whigs' fault. The Minister hinted in his winding-up speech that, by implication, it could not be the Conservative party's fault.
I do not want to dwell in the 19th century, but to look briefly at the development of our economy since 1950. It is broadly agreed that, over the past four decades, the UK trade balance in manufactures has been in long-term decline. That is an all-party responsibility and I do not make a party point. The inexorable downward trend since 1950, with periodic ups and downs, is clear.
Equally marked was an upward trend in the non-manufacturing balance, which was briefly interrupted in the mid-1970s by higher world oil prices, but which was resumed when North sea oil came on stream, just after the Government were elected in 1979. The long-running improvement in the UK's non-manufacturing balance was caused by an improvement in the UK's balance in food and raw materials, and, when that tailed off, by the boom in oil production.
387 Throughout the period, there was also a persistent, though fluctuating, surplus on services. The tailing-off in the food and raw materials balance and the declining balance in oil towards the end of the 1980s were not, however, accompanied by any significant recovery in the balance in manufacturing trade. On the contrary, it too deteriorated. There was a growing emphasis on the success of services. We all remember the Conservatives' obsession with services and how they said, "Forget manufacturing industry. Look to the horizon, where all our constituents will work in the service industry."
I intend to concentrate on the belief that service jobs will replace manufacturing jobs and that services will replace manufacturing industry as the source of our wealth. With the growing emphasis on the success of services at the expense of manufacturing, a central policy question must be answered by all parties. Labour Members, especially Front-Bench Members, are looking at the problems in the long term. It was refreshing to learn from the remarks of my right hon. Friend the Member for Derby, South that we are looking at a long-term strategy for manufacturing industry. The argument in the 1980s was whether service industries had the potential to close the widening visible trade gap. If services cannot do that, what scale of manufacturing trade recovery will be required to have a significant beneficial impact on future trends in output, growth and employment?
One of the most illuminating attempts to look at the problem has come from the Cambridge economic policy group, which has pioneered an analysis that helps us to look in detail at three scenarios. I will take the House briefly through those scenarios because they are vital to everything in our modern economy. The first scenario examines the development of the economy if it continues along the familiar pattern of the existing trend—in other words, if we follow through the Queen's Speech with no new policies, no new investment and no change.
In the second scenario, we would shift to an enormous expansion of the financial and miscellaneous service sector. Let us take the view of the 1980s and follow it to its logical conclusion. In the third scenario, there would be a considerable effort to boost investment in the manufacturing sector, which would consequently be a success.
Let us consider scenario one. When the implications of existing trends in trade competitiveness and overall economic performance are explored, taking into account the unintended but beneficial effects of the 1992 devaluation and making quite optimistic assumptions about world trade, the picture is extremely gloomy if we go on from here with no real change. Economic growth would be relatively slow and unemployment would remain high. There would also be an unacceptably large deficit in the balance of payments. By 2003, the country would face serious external problems.
The second scenario focuses on the rapid growth of financial and miscellaneous services, a category which covers virtually all internationally traded services except for travel and transportation. It includes banking, insurance, telecommunications, films and television, consultancy, royalties and other business services. It is an area of non-manufacturing trade in which Britain's 388 international performance is, admittedly, good and in which significant further improvement may be feasible. All that is accepted in this scenario.
The second Cambridge scenario reveals, however, that such exports cannot compensate for serious failings in the manufacturing sector; that is at the heart of the problem. Offsetting the prospective manufacturing deficit would require an inconceivable increase in the export of financial or miscellaneous services and would assume transformation in those services that is far beyond the range of possibility. Indeed, the increase in financial activity envisaged would be roughly equivalent to absorbing all the current international financial activity of New York and Tokyo, in addition to the increase already envisaged in natural growth trends in services. Depending on services is at the centre of the argument.
The third scenario focuses on the manufacturing sector. It assumes an increase in size and an improvement in the international competitiveness of manufacturing industry greater than that suggested by the current trend level. The assumed improvement is substantial, but it is conceivable with the right combination of industrial policy, financial incentives and a realistic exchange rate. In this scenarip, we see unemployment falling considerably from now until 2003 while the balance of payments deficit is eventually eliminated. The clear strategy is to increase gradually the growth rate of manufactured exports and to reduce that of imports. On that projection, by 2003, manufactured exports would be 14 per cent. higher and imports would be 4 per cent. lower than if we had followed the current trends.
The improvement in trade performance would be accompanied by greater productivity in the manufacturing sector, where output would be 14 per cent. greater in 2003 than if we had followed the current trends. There would also be an increase in the output of business and other services allied to the manufacturing sector whose contribution is crucial to the performance of manufacturing.
Hon. Members may say, "Where do we go from there?" There are three ways in which to look at the long-term future of our economy.
The third scenario shows that our only viable course is to follow an investment programme in our manufacturing sector. We must not neglect the service sector, but if we think for one moment that services can make a difference to our declining manufacturing sector, we have another think coming. I wish to make a comparison. If the third scenario is followed, the deficit in manufacturing trade will not only be eliminated by the end of the century as the sector records a rising surplus, but, by 2003, the current account will be in balance and Britain will no longer be accumulating debt.
The point is not that manufacturing will replace financial and miscellaneous services, but that the scale for potential improvements in manufacturing is so much greater than in financial and miscellaneous services, due mainly to the much larger scale of manufacturing trade. People often talk about manufacturing and services as though they were of equal weight, but we must look at the reality.
In 1993, the combined value of UK imports and exports of manufactures was £206 billion, while the figure for financial and miscellaneous services was £26 billion, or a little over 10 per cent. of the manufacturing total. To close 389 the balance of payments gap would therefore require eight times as great a percentage improvement in services performance as in manufacturing performance. To achieve the envisaged transformation in manufacturing is difficult, but possible. To improve the performance of services as envisaged would be quite unachievable and impossible.
Transforming manufacturing industry would be a major challenge in organisational and human terms, but would not be prohibitively expensive in terms of investment. We are saying that, while it is a hard row to hoe, it is not impossible. At present, gross domestic fixed capital formation in manufacturing is around £12 billion a year, or 2 per cent. of GDP. In our scenario, the figure would have to be increased by 3 per cent. of GDP. In cash terms, this would imply an extra £6 billion a year, which is less than one sixtieth of total consumers' expenditure and, funnily enough, is not far off what the media have speculated the Chancellor of the Exchequer will soon be handing out in tax cuts.
In conclusion, clearly there is a pressing need to address the industrial agenda in a radical and innovative way. All the signs are that only one party in this country is tackling that imaginatively. The Conservative Government—on the other hand—appear doomed to get further and further out of touch, not just with the electorate but with manufacturing industry and its leaders. The leaders of manufacturing industry in this country wonder what world the Government are living in, and the Secretary of State today painted a picture that is not recognised by ordinary people out in the real world of manufacturing.
I have been a little disheartened that only about half a dozen Conservative Members—not including those who are paid to be here—have been in the Chamber during the debate. Of those Members, one talked about families and divorce law, another about television and another about local government. Today's debate was, I thought, a prime opportunity to talk about investment in manufacturing, transport and the infrastructure, but that challenge has not been taken up by Conservative Members. Perhaps that can be attributed to the fact that so few Conservative Members have any knowledge of or experience in manufacturing industry. They have not worked in the industry and they do not know it, although a couple of them—more than a couple, in fact—are consultants to the industry.
The Queen's Speech will be greeted with dismay by manufacturers, managers and workers across the country, as will—I suspect—the forthcoming Budget. The Government are incapable of thinking about the long-term future of Britain's wealth-creating capabilities, and they are entirely obsessed with the short-term goal of bribing enough voters to secure them a further term in office. Such an eventuality—unlikely as it may be—would be a dark day for the British manufacturing sector.
§ 7.4 pm
§ Sir Michael Grylls (North-West Surrey)
I shall do my best to remedy the disappointment of the hon. Member for Huddersfield (Mr. Sheerman) at the earlier speeches from Conservative Members by referring to trade and industry in some way. I was excited when the hon. Gentleman said that he was going to talk about wealth creation. By doing so, he stood out like a sore thumb from a large number of his colleagues who do not appear to approve of wealth creation. But with all courtesy to the hon. Gentleman, I was disappointed that he allowed 390 himself to get dragged along by the arguments for and against services and manufacturing industry. In a global business sense, those are fallow arguments, as both sectors need each other.
The hon. Gentleman was wrong to suggest that the Government have been hooked on the service industry at the expense of manufacturing industry. Some of the great success stories of the past few years would suggest that Britain has developed as a newly industrialised country. We talk about countries in the far east as NICs, but Britain in a way is also a NIC because we have been re-industrialised after the disasters of the 1970s, when it was almost impossible to run a firm sensibly. Trade union law was totally out of control, and the then Labour Government refused to reform it. The reforms brought in by the Government in the 1980s were vital in changing that climate.
On the positive side, I agree with the hon. Gentleman that we need to focus strongly on supporting and encouraging manufacturing industry. I wish to refer to two matters in the Queen's Speech in that context. The first is the Government's determination to maintain control over and bear down on inflation. That contributes to the fact that manufacturing industry is increasing, because we are now seen to be a country of relatively low inflation, and that is vital.
The second matter is the Government's intention to continue to do everything they can to support and encourage the development of small business. A huge amount has been done to turn around the anti-enterprise—particularly anti-small business enterprise—culture which existed in our economic and industrial scene for too many decades after the war. Even during the recent downturn in the economy, the number of new businesses being started each year has never fallen below 400,000.
The hon. Member for Huddersfield would no doubt say that a lot of firms have gone out of business, and that is of course true; it happens as part of a life and death cycle. But it is vital that new enterprise is growing like grass all the time. The hon. Gentleman will agree that, if that does not happen, the industrial climate will not be healthy. I can remember when talking about small business in the late 1970s was an off-beat thing. The late Lord Lever was the Minister in charge of the matter in the then Labour Government, and he was very good, but small business was an off-beat thing to worry about.
That argument seems to have been won. Everyone realises that small businesses are important. Even the hon. Member for Christchurch (Mrs. Maddock) made a passing reference to small businesses. She did not tell us what the Liberals would do for them, other than spend a great deal more taxpayers' money on all sorts of things. No doubt that money would have to come from small businesses. The argument that small businesses are a central part of our economy has been won. I was delighted to see small businesses feature strongly in the Queen's Speech.
I hope that the Government will continue to nurture small business and look at ways of encouraging, for example, greater provision of long-term money to finance small and medium-sized firms. I hope that the Government will encourage larger firms to pay their bills more quickly by giving a good example and by forcing them to publish in their annual accounts how quickly they pay their bills.
391 The hon. Member for Huddersfield spoke about manufacturing industry. It is a mistake and it is clearly wrong to go around saying that our manufacturing industry is disappearing. He will be aware, as the House is aware, of the huge success of the British pharmaceutical industry. The majority of the most successful drugs currently sold around the world are made by British firms and were British innovations. That is a huge success story.
Although much of the car industry is foreign-owned—that is not the most important factor—it is located in Britain and is providing British jobs and creating wealth and exports for Britain. The British car industry went through the most appalling disaster period. Sales and production went down and down, but they are now going up and up. It is well known that all the major manufacturing firms are now located in Britain. That is a huge advantage not only to the big firms but to the small firms which supply them and which have been sharpened up by the arrival of new companies.
The first Japanese firm that came to Britain in a big way was Nissan, which came to Washington in the north-east. One of the great by-products of that happy decision to invest in the north-east was the encouragement to small suppliers to the car industry to sharpen up their act. I remember talking to Nissan about that in Tokyo just before it came over. The increase in competitiveness among British component suppliers has not only made them more efficient in Britain but encouraged them to export to the continent and other countries, which they have done successfully. That would never have happened without inward investment.
It is wrong to knock British manufacturing industry on the head. If one analyses British industry realistically, one can see that, 100 or more years ago when the industrial revolution started, we were first, so we were almost bound to decline relatively. The hon. Member for Huddersfield made an all-party point. Both Conservative Governments and Labour Governments have made terrible mistakes in dealing with manufacturing industry in the post-war period. That is history. We went down, but now we are coming up again in almost any sector that one cares to talk about—washing machines, cars, refrigerators or prescription medicines. That is why I say that we really are a newly industrialised country.
I have mentioned the effect of inward investment on the car industry. It is almost wholly beneficial. I plead guilty as much as anyone to having the old-fashioned feeling that it is a shame that we cannot own the industry, but once we get over that and think more clearly, we recognise that the world is a global marketplace and ownership does not matter very much.
§ Sir Michael Grylls
In a moment.
If there are 10,000 jobs in Washington with Nissan, that is 10,000 jobs, whether I own the company or a Japanese gentleman owns it. Those jobs are the same. Those exports are the same. Of course the hon. Member for West Bromwich, East (Mr. Snape) is going to say that dividends go back to Tokyo. That is true, of course they do, but we must look at the other side of the coin. Britain has the biggest investments in the United States of America. Those companies employ not British but American 392 people, but the dividends come back to Great Britain. The world is one place. So we must tear out of our hearts the over-nationalistic feeling that it is a shame that manufacturing is not British.
§ Mr. Snape
I hope that the hon. Gentleman will not accuse me of being over-nationalistic if I put it to him that I would prefer decisions affecting British manufacturing industry and workers to be made in Britain, as I would prefer dividends and profits to remain in Britain rather than be repatriated abroad.
§ Sir Michael Grylls
Decisions in large-scale manufacturing are not made by just one lot of nationals, whether British, Japanese or American. The boards of directors of the multinationals are made up of members of all nationalities, so we must not get hooked on the idea that companies are from one country.
The hon. Member for Huddersfield said that not many Members were involved in manufacturing industry. I have been personally involved for more than 20 years. I have seen how decisions are made. If a company is American or Japanese-owned, decisions are shared. Decisions are not made in isolation. No one makes a decision about a business, for example, in Great Britain without taking into account the British interest.
The multinationals used to be part of the demonology of the Labour party, but perhaps that attitude has slipped out. If it has, that is a good thing. Many of the wiser multinationals will go on the local stock exchange to encourage local money and have a high local profile. I think that is a good idea. Some firms do it and some do not. It is one world now, certainly in large-scale manufacturing.
There is a contest for inward investment. The real political point is that, if we do not have the right climate here, inward investment will stop coming. Investment went to the United States because, by and large, the United States has been historically welcoming to enterprise. Therefore, many British investors and companies invested in America because they could do so profitably and successfully. We are now attracting the lion's share of investment within the EC by Japanese and American companies because we offer a favourable and attractive climate of low corporate taxation, less regulation and low inflation. We tinker with that at our peril.
I was intrigued by the speech of the leader of the Labour party at the Confederation of British Industry conference. He said all sorts of things, but it was what he did not say that was important. He said that the Labour party no longer believed in penal taxation. I am not sure what he meant by penal taxation. Was he saying that he did not believe in the personal taxation at 80 and 98 per cent., corporate taxation at 55 per cent. and death duties or inheritance tax at 80 per cent. presided over by the Labour Government? What level was he talking about? He was not specific. He never said what he would do for small firms, as the Gracious Speech did. He never said what he would do about the 100 per cent. allowance on inheritance tax for non-quoted companies. Will that be reintroduced under a Labour Government? If it were, it would be hugely damaging to the economy.
I welcome the words on inflation, and urge my right hon. Friend the Secretary of State for Transport to use his good influence in the Government to ensure that we do not let up on that work. It is frightening to have to say 393 this but, after all the work that has been done to bear down on inflation, by and large Britain still does not have credibility in respect of it, although the figures are good. The average is 4 per cent.; under Labour it was 15 per cent.
The figures are good, but there is a suspicion in many of the financial markets that, sooner or later, the British Government will let up on the fight against inflation. I do not believe that this Government will do so, but I urge my right hon. Friend to maintain that policy very strongly indeed. Manufacturing and service industries and small businesses totally depend on the success of that policy. If one allows inflation to rip, one destroys companies, jobs and the manufacturing and service industries. I urge my right hon. Friend to keep up that good work.
§ Mr. John Garrett (Norwich, South)
Lack of investment, particularly in education, industry and transport, is a fundamental determinant of economic performance. We do not find any reference to investment in Her Majesty's speech. There is talk of "support for small businesses" and the authorisation ofthe construction and operation of a high speed rail link between London and the Channel Tunnel.Those two references pale into insignificance when set against the proposed reduction in the public sector borrowing requirement and the reduction in the share of national income taken by the public sector.
It is as clear as day that long-term public investment will be sacrificed to the short-term political benefits of cuts in income tax. That will be very bad news for my constituency. The city that I represent, having come through the past two recessions with its industrial base damaged, now faces the most devastating local recession, with about 3,000 redundancies announced in the past year: the closure of Rowntree Nestle, a factory that has been in the city for about 300 years; the sale of Colman, with more than 100 redundancies already; cuts at Norwich Union amounting to about 1,200 jobs; the closure of an Eagle Star office, with the loss of 130 jobs; the loss of another 170 jobs at Anglia Television; and job losses at British Gas and Eastern Electricity. That is hundreds of job losses in a city that was prosperous for a very long time.
The city of Norwich is reeling from those blows, and we now face the uncertainty of the privatisation of Her Majesty's Stationery Office, where 900 people are employed. HMSO is highly successful, and to privatise it is pure ideology. As a major supplier to the public service, it has spent the past 200 years preventing Government Departments from being ripped off by private contractors. To replace those jobs, we need investment, both public and private, and we certainly need the initial stimulus to come from public investment in infrastructure, transport, education and training.
The county of Norfolk has a deplorably low level of infrastructural development. Norwich is the only city of its size not to be attached to the motorway network. It desperately needs a fully dualled link to London and the dualling of the east-west A47 to link Yarmouth and Norwich to the midlands. I am not extra-enthusiastic for road building in general, but I am convinced of the need for a basic road network in East Anglia, particularly from London to Norwich and east-west across the county of 394 Norfolk. Those links are absolutely essential. Much of Norfolk is a low-wage area with limited job opportunities and rising unemployment. Those two projects would breathe economic life into the county.
The dualling of the A47 and All is also necessary to allow trading links with Europe to be developed further. Yarmouth and Norwich have had long-standing relationships with the low countries and it is essential that we take advantage of those by improving our infrastructure. As a result of the trunk roads review of 1994, no new schemes are to be started in East Anglia in 1995 and 1996.
Investment is also needed in rail connections in the region. It is clear from the use of superannuated rolling stock and the frequent signal and equipment failures that there should be investment in track and rolling stock on the London to Norwich line. Such investment has been paralysed by the impending privatisation of the railways. Rail privatisation is highly unpopular and quite staggeringly costly. All surveys show that the policy has no public support. It has cost £100 million in consultancy fees and £700 million in fees to the City of London already. Railtrack, which is worth up to £6.5 billion, is expected to be sold for £3 billion. Meanwhile, investment is stifled. The railways need investment, not privatisation, and the public want a reliable network, not a fragmented, private monopoly.
On rolling investment in our national economic recovery, the recovery has been remarkably slow. The former Chancellor and the one before him promised that the green shoots of recovery were coming through. Business investment has grown by 4 per cent. since the trough of the recession. Historically, we have not only a far lower level of investment than our competitors but a lower rate of growth in investment. The Bank of England noted earlier this year that capacity constraints had appeared because of our low level of investment. It is difficult to comprehend that, in the past 16 years, so few of the receipts from North sea oil—our wealth—have been diverted into productive investment, either in industry or in infrastructure.
§ Sir Michael Grylls
The hon. Gentleman was trying to provoke me on the subject of investment. Does he not recognise that there has been enormous investment in British Telecom and the other privatisations, including all the water companies? If that has happened with those privatisations, is there any reason to suppose that it will not happen with the privatisation of British Rail? Of course the same thing will happen.
§ Mr. Garrett
I do not believe that that has happened with privatisation. The force of technology alone would have obliged BT to invest at a very high level. As for the water utilities, it is a pity that some of those companies did not invest in stopping leaks instead of paying their executives inflated, fat-cat salaries and declaring profits of that size. The hon. Gentleman's point is worthless.
We have a lower rate of investment growth than any other G7 country, as well as lower employment growth. In the league table of income per head, we have fallen from 13th to 18th, and Britain is now 21st in the league table of investment per head. In this country, investment per head per annum is £1,600, whereas it is £2,250 in France, £2,600 in Germany and £3,900 in Japan. That is the size of the investment gap that we suffer. It is no 395 wonder that the output of British manufacturing industry is only 1 per cent. higher than it was in 1973 during the three-day week. The latest figures show that total investment for the third quarter fell by 2.2 per cent. compared with the second quarter of 1995, and increased by only 0.6 per cent. in the past 12 months.
Investment in education and training should be a top national priority. The only reference to that policy area is the voucher scheme for nursery education and allowing grant-maintained schools to borrow on the open market, for whatever that is worth, and students to choose between public and private sources of loan, the benefit of which is completely lost on me. The many students in my constituency are living in poverty. They have borrowed to the hilt. Allowing them to borrow from a bank will not make any difference. Their accommodation costs are approaching their total income on full grant and full loan. What more encouragement could be offered to a future generation of educated people?
We spend far too little on education, and hon. Members on both sides of the House know of the anger in their constituencies at the recent cuts in education funding. Education and training, as other Governments know, are the crucial factors in economic growth. We have cut local authority expenditure, which in turn has crippled investment in education.
The Gracious Speech should have outlined a statutory framework to ensure that all employers make a proper contribution to the training of their work force. We got none of that. The city that I represent used to be one of the best housed in the country, with some 25,000 council properties. The best 6,000 of those properties have been sold off. The area suffers from acute housing stress, with many families in bed-and-breakfast accommodation, a record housing list and no new construction. Housing investment using the receipts from the sale of council house sales would be an investment in family quality of life. There is an investment famine in industry, education, transport and housing—and we are all the poorer for that.
I was sorry that there was no whiff of any proposals for constitutional change in the Queen's Speech. Our country's institutions—not least this place—desperately need modernising. The House needs more power and responsibility vis-a-vis the Government and more control over the Government—any Government. The authoritarian control of Parliament by the Government must be reversed by more critical examination of legislation, as the leader of my party suggested in respect of the new asylum and immigration legislation. The House also needs to undertake more informed scrutiny and use greater powers in respect of protecting human rights. There is a need to implement the European convention on human rights in domestic law. Our country is the only one in western Europe that has not done so.
There is a need to devolve power to local government and to reform the House of Lords. There is a crying need for a freedom of information Act. I regret that those ideas are too radical for the Government, who have run out of steam and are putting all their hopes into short-term tax cuts.
§ Mr. Barry Field (Isle of Wight)
I hope that the House 396 will allow me a little latitude, in the same way as it was tolerant to my right hon. Friend the Member for Selby (Mr. Alison). I apologise to Madam Speaker for not observing my right hon. Friend's courtesy in writing to her in advance of tonight's debate to say that I would be departing a little from the chosen subject.
I ask for a little latitude as this is my maiden contribution to the debate on the Gracious Speech, and it is the first occasion on which I have spoken as Chairman of the Deregulation Committee. I want to use the occasion to express on behalf of all my constituents the gratitude of the Isle of Wight to Her Majesty the Queen for appointing my noble friend Lord Mottistone as our first home-grown governor.
The Isle of Wight is, in every sense and facet, a unique community. It has the great good fortune among all the shire counties of having a governor who is appointed by Her Majesty. The office goes back hundreds of years and there has in its history been a number of interregnums. The last followed the untimely death and heinous murder of Lord Louis Mountbatten. His Excellency Lord Mottistone is the first governor to have been chosen from within the island's community. He is a distinguished member of the Seely family, whose record of service and public duty for the benefit of the island is remarkable.
In an era of exceptional cynicism and constant denigration of our great British traditions and dynasties, it is remarkable that the Seely family should have such an unbroken record of public service. His Excellency would be the first to admit that he is a man of modest means. Unlike other governors appointed in 1992, but on the Prime Minister's recommendation, to Bermuda and Hong Kong, the Governor of the Isle of Wight is unpaid.
In the days of the Nolan committee, I know that I speak for the whole island when I say that David Mottistone is a prime example of service before self. His dedication to and enthusiasm for all his duties has been exceptional. He has crossed the most difficult of all the rubicons on the Isle of Wight—he is universally trusted.
§ Madam Deputy Speaker
Order. I should caution the hon. Gentleman against crossing his personal rubicon. I do not see how his remarks relate to the Queen's Speech. Tolerance in this instance relates to the subject matter chosen; it does not go so wide as to exclude the Gracious Speech altogether. The hon. Gentleman must either refer to the Queen's Speech or—
§ Madam Deputy Speaker
I would not make so bold. I am sure that the hon. Member for Isle of Wight (Mr. Field) can oblige me and will not have to resume his seat.
§ Mr. Field
I was almost on the final lap of that part of my speech. As you will appreciate, Madam Deputy Speaker, I am the only Member of Parliament who speaks for an entire county.
During Lord Mottistone's time as Governor of the Isle of Wight, he has been a tower of strength and wisdom to us all, and we wish him a long and enjoyable retirement. I have always made it clear to the Government that if someone upsets Hampshire, 15 Members of Parliament will arrive on their doorstep. If someone upsets the Isle of Wight, they get me and two rather infamous labradors. Our not-so-secret weapon has always been the Governor of the Isle of Wight. The offices of many junior Ministers 397 have telephoned me to ask how his excellency should be addressed. On one occasion, I was even asked why we had a governor.
§ Madam Deputy Speaker
Order. I must ask the hon. Gentleman to address the topic of the Queen's Speech.
§ Mr. Field
The subjects for debate tonight are investment and transport. We have heard much about inward investment. I am particularly attracted to a figure that is often conveyed by the Governor of the Bank of England. The United Kingdom owns £250 billion-worth of the rest of the world, whereas the rest of the world owns £200 billion-worth of the United Kingdom. It is obvious that the balance is much in favour of our nation.
I hope that my right hon. and hon. Friends in the Departments of Transport and of Trade and Industry, and others throughout Whitehall, will ensure that the implications of the social chapter and the minimum wage for every type of business and enterprise throughout the United Kingdom are costed, so that we will have examples of precisely what they would mean for British industry and commerce, from the corner shop to the biggest industrial company. I commend to my right hon. Friend the Minister for Industry and Energy an article in The Times by Stanley Kalms of Dixons, who attended the Confederation of British Industry conference. Apparently, his was something of a lone voice—but, as so often with minority opinion, the lone voice is often the one that bursts the bubble.
The minimum wage should not only be costed for every business but we should hear from our ministerial colleagues, particularly in view of the strength of feeling about deregulation expressed in the Gracious Speech, precisely what is to be done about the interfering, petty bureaucrats who think it appropriate to order a greengrocer to remove his wares from the pavement—a tradition that goes back years. That reveals to my right hon. Friend the Minister and to me precisely where the heart of the Labour party lies. Derbyshire county council did not have anything better to do with its time than to take that poor man to court: how ridiculous.
As to the effect of a minimum wage on tourism, the Isle of Wight has a low gross domestic product. My right hon. Friend the Member for Wales—[HON. MEMBERS: "Does it have only one?"] Only one who speaks Welsh. My right hon. Friend the Member for Conwy (Sir W. Roberts) is also the only Member of Parliament for Wales who is so well respected, as well as being one of the longest-serving Ministers for a Department of State—a record that is unique since the turn of the century. The minimum wage would be very damaging to tourism at our seaside resorts, which already have to compete with the sunshine economies of the rest of the EC. Worse, we have heard in the past few days that Labour wants to abolish A-levels. That too would be extremely damaging to this nation's competitiveness.
Our privatisations have been extremely successful, of course. As I speak, British Telecom is experimenting with smart card technology on the Isle of Wight. As a result of my representations about the international nature of Cowes week, BT has installed multilingual telephones. The company has also done great service to the Isle of Wight by promoting teleworking; for a community linked to the mainland by a ferry service, that obviously represents the employment of the future.
398 Our local partnership investments are already a legend throughout the country, performing sterling work on the Isle of Wight. I should, however, add that we do not have as many multilingual telephones in this country as are encountered abroad. The same goes for multilingual cash machines. The UK is one of the principal destinations for international tourism, so I hope that the Minister will give his Treasury colleagues a boot up the backside, in an attempt to get the clearing banks to do a little more investing in hole-in-the-wall technology.
Rail privatisation on the Isle of Wight has been a particular source of frustration. Ours was the first railway line in the country to be privatised, but now we seem to be at the back of the queue. There is all-party support for the 12-mile line that runs from the end of Ryde pier to Shanklin, on which steam could be reintroduced. Thus far, I am sorry to say, this is one opportunity for tourists that we have been frustrated in our attempts to enhance.
We were pleased to receive assisted area status, and we hope in due course, with the assistance of the DTI, to get objective 1 status. None of us believes any longer that there is a crock of gold at the end of the Brussels rainbow, but such status would allow a community such as ours access to other funds currently denied to it.
Another great success of privatisation has been that of the docks, under Associated British Ports and the trust ports. I refer also to the abolition of the dock labour scheme. I was sorry that the Queen's Speech did not mention abolishing light dues or opening up the shipping register to make it more competitive—or requiring trust boards to publish their accounts. They are, after all, quasi-public bodies. I have been frustrated in my attempts to extract the trust board accounts from the Yarmouth harbour commissioners, and I know that many of my constituents have had the same experience.
The Minister will know that ferry services to the Isle of Wight are currently the subject of an inquiry by the Monopolies and Mergers Commission. I hope that, when the report reaches the Minister's desk, he will consider it carefully, bearing in mind the impact of the ferries on the island's economy. He may even contemplate divesting one of the routes so as to create greater competition. On the table at the moment is a proposal for the western Solent from Associated British Ports.
Colleagues in the Department of Transport have recently told me that light dues cannot be waived for vessels to and from the Isle of Wight. I hope that they will give careful consideration to what the master of the Cowes harbour commissioners, Captain Henry Wrigley, wrote recently. He said that the Minister for Aviation and Shipping does indeed possess the means to adjust light dues on vessels plying to and from the island.
I sincerely believe that the Navy may yet abandon its responsibility for buoys in the eastern Solent. If that happens, vessels travelling to and from the island may face an increase in light dues. This is a tax that my constituents, alone among all constituents represented in this House, have to pay. This additional charge on the island's residents is quite iniquitous: our economy is already struggling.
I still hope that the idea of the Lyndhurst bypass will be resurrected. I wrote to the transport authority on the Isle of Wight council asking whether the Liberal Democrats would support me during the passage of the 399 relevant Bill through this House. They refused, which was sad because it is the best route from the island and the one that could most usefully be enlarged.
I wish that the health service had made an appearance in the Gracious Speech. The National Health Service Act 1977 set up the arrangements under which hospital travel costs could be paid for constituents. The Isle of Wight was specifically included; the Bill was drawn up in such a way that there was no requirement to meet travel costs if a community was within six miles of the nearest land mass. That was varied by an order of 1987, to allow travel costs for treatment for communicable sexual diseases to be paid for my constituents, 35 per cent. of whom are over retirement age. On the other hand, the travel costs of those with cancer or heart disease cannot be paid. Yet they are paid for residents of the Scilly isles—a remarkable anomaly.
I was sorry to hear nothing in the Gracious Speech about national identity cards. There is a universal view in this country that we, like many of our EC partners, need such a card.
I am pleased to note that the Lord Chancellor's Bill will include domestic violence measures. I am glad that they are back on the agenda for the coming Session because I, with others, was responsible for setting up a women's refuge on the Isle of Wight. It has successfully sheltered women who have suffered violence in their marriages. I detected some cynicism in Body Shop's recent campaign among colleagues—it seemed to bear no relation to the facts of what is happening.
My right hon. Friend the Member for Witney (Mr. Hurd) began the debate on the Loyal Address with a request in respect of education. I agree with him. The Isle of Wight council, under Liberal Democrat control, is wasting well over £1 million a year of taxpayers' money on things like a waste-derived fuel plant, the electricity generation side of which recently went into liquidation. Considerable sums were paid out to no advantage for the Isle of Wight.
Be that as it may, some schools retain substantial unspent sums from their budgets, while others have little or nothing, owing to sickness and absence. I should be failing in my duty if I did not represent them tonight, and I shall shortly be seeing the Minister for Local Government, Housing and Urban Regeneration to make my point.
I am sorry that we have not done more to try to prevent social security fraud. As I said earlier to the hon. Member for Christchurch (Mrs. Maddock), the Liberal Democrat spokesman, I am extremely disappointed that the new unitary authority on the Isle of Wight, under Liberal Democrat control, scrapped a system that had worked for years of direct payment to landlords. They were not made to every landlord because not every landlord is a good one. Bad landlords were not part of the scheme. Tenants on the Isle of Wight are now complaining about the difficulties that they have in managing their affairs because payments are no longer made direct to their landlords.
The hon. Member for Christchurch has talked about dogma. Surely the ending of direct payments was a dogmatic decision. It was taken cynically and deliberately to create extended waiting lists on the Isle of Wight. We had been so successful in transferring housing stock to housing associations and reducing waiting lists.
400 The hon. Member for Christchurch referred to my predecessor, Stephen Ross. I remember Stephen Ross telling me in the House that he regretted some aspects of the Housing (Homeless Persons) Act 1977. Indeed, the leader of the local authority has said likewise. The Act broke the local connection, which was so valuable in enabling local housing committees, with which I have been involved, to know which families were good tenants. The Act destroyed much of the ethos of our council housing estates.
We are fed up on the Isle of Wight with people moving in from all parts of the country, playing the system like a grand piano and overtaking local residents who have waited patiently on the housing waiting list, as one would expect.
§ Mrs. Maddock
Is the hon. Gentleman aware that housing benefit fraud is a problem with landlords who take money from "tenants" who do not exist? It is a difficult matter to deal with. I am sure that my colleagues on the Isle of Wight considered such matters before taking what they considered to be the most appropriate action to stop fraud. I know that they were and are faced with a real problem.
I regret the hon. Gentleman's comments about the Housing (Homeless Persons) Act 1977. I knew Stephen Ross personally. I am sure that he never regretted the fact that he had made proposals permanently to deal with the real problems of homelessness as they bear on individual families. The Act has nothing to do with the way in which various councils interpret the rules. There is no reason for homeless people not being dealt with according to their needs under the Act. It is—
§ Madam Deputy Speaker
Order. I remind the hon. Lady and other hon. Members that interventions, by their nature, should be short, whatever the provocation.
§ Mr. Field
The hon. Lady is wrong. Stephen Ross told me that he regretted some aspects of the Act. Housing benefit fraud has not been a major problem on the Isle of Wight. I am certain that the hon. Lady's colleagues on the Isle of Wight have done nothing more than peddle naked political dogma. The Isle of Wight has enough problems without creating additional ones. Unfortunately, the Liberal Democrats have cynically and deliberately created more problems. That is not my view and mine alone; it is shared by some tenants and some landlords. It is also the view of some of those who operate the present scheme. The hon. Lady cannot escape with sweet and honeyed words. I recall what was said by my predecessor. Her response will not wash. If he were still alive, he would tell her off for taking such an approach.
I am extremely disappointed because we have lost a proud housing record on the Isle of Wight. We were the first part of the United Kingdom to transfer all local authority housing stock to housing associations.
As the hon. Member for Christchurch spoke of dogma, I remind her of the actions of Mr. Bill Le Breton when he led Medina. He peddled dogma and let the North British housing association on to the island. That caused considerable problems. Tenants of that association's properties have long campaigned to have the right to buy. I promised the management of the association that, if it did not get its act together and recognise the right to buy, on which my right hon. Friend the Secretary of State and I have corresponded at considerable length, it would be 401 necessary to introduce primary legislation. Tenants have the expectation of the right to buy and there is no reason why an organisation such as the North British housing association, which is alien to the Isle of Wight and did not conduct itself very well in the early stages, should be refusing its tenants the opportunity to buy.
I am tempted to stray, Madam Deputy Speaker, into—
§ Mr. Field
I shall acknowledge your strictures, Madam Deputy Speaker, and conclude by saying that the windfall tax seems to have left the tree remarkably bare. It has been suggested by the Opposition that income tax should be reduced to 10 per cent. It seems that we are fast approaching what I call the McIntosh factor. Andrew McIntosh was the leader of the Greater London council for only one day. I do not believe that the leader of the Labour party would be leader of it for any longer than that. He is the Trojan horse to end all Trojan horses. I do not believe that the electorate will buy that at the next general election.
§ Mr. Peter Snape (West Bromwich, East)
I adhere to a long-held tradition in this place by referring to the speech by the hon. Member for Isle of Wight (Mr. Field), who preceded me. Apart from the cliche-ridden nonsense of his final sentences, I congratulate him. Over 22 years I have never heard anyone ruled out of order during a debate on the Gracious Speech. It is a wide-ranging debate. Perhaps your intervention, Madam Deputy Speaker, has brought home to the Conservative Whips Office the dangers of press-ganging incompetent Conservative Back-Bench Members and causing them to enter the Chamber to make fools of themselves.
The speech by the hon. Member for Isle of Wight might read well. I doubt whether it will, but much depends on the journalistic ability of those who edit the local newspaper on the Isle of Wight. I know, however, that it did not do much for his reputation in the House or for our standard of debate generally.
As I wish to direct my remarks to investment and transport, I start by declaring an interest as a member of the National Union of Rail, Maritime and Transport Workers, a vice-president of the Railway Development Society and a non-executive director of West Midlands Travel, which is now part of the National Express group.
I shall move briefly from controversy to partial tranquillity and harmony by congratulating the Secretary of State on his recent appointment. I was unable to do so a couple of weeks ago during his first debate in his new job, but that was not for want of trying. It is ironic that he is about the 12th Secretary of State for Transport under successive Conservative Administrations. I hope fervently that he will be the last Conservative Secretary of State for many years. The right hon. Gentleman is probably less of an ideologue than some of his predecessors. I know his private views on rail privatisation and I shall not embarrass him by repeating them. I understand the difficulty in which he finds himself in defending nonsensical privatisation.
I shall make a special plea for the west coast main line and the need for investment. In common with hon. Members on both sides of the House, I have been pressing 402 for investment in the line. I thought that we were near a conclusion a couple of years ago when the then Minister of State, Department of Transport, the right hon. Member for Kettering (Mr. Freeman), promised that upgrading and modernising the line would start by mid-1995.
Alas, that proved to be another Tory pledge on which we could not rely. It does one no harm, obviously, in the present Conservative Administration, to be caught out making pledges that cannot be fulfilled. I notice that the hon. Gentleman—as he was then—is now a right hon. Gentleman and a member of the Conservative Cabinet, so he is surrounded by people who make pledges that they cannot fulfil. It is a particular disappointment to me and to some of my hon. Friends that the breakthrough that we thought we would get on the modernisation of that line has not materialised.
Over the past few years, a number of deputations have been to see Transport Ministers to make the same plea that I make this evening. Their pleas were about the earlier promises that public money was available to upgrade the line. It should not be a party political issue, but regrettably it is. In any other civilised democracy, the provision of proper transport links is not something that causes great political debate. Most political parties in most other parts of the world, whether they are regarded as being on the left or the right, regard good transport links as essential to the flourishing of a modern economy and treat them accordingly. Regrettably, we do not possess such political maturity in the United Kingdom.
I do not make this plea on behalf of the railway unions, the Railway Development Society, or even railway enthusiasts, whether or not they be wearing anoraks. I make it on the ground of the general economic good of the country. The lack of investment in the railway industry generally, particularly in the run up to the farcical privatisation, and in the west coast main line in particular is enormously damaging to the economic prospects of this country.
I understand that, recently, yet another delegation, from an organisation called West Coast Rail 250, met the Minister of State, Department of Transport following publication of its own report on the need for west coast main line upgrading. I understand that the outcome of that meeting was only that the line would be refurbished to existing standards over the next nine years. Regrettably, there is neither programme nor funding to upgrade it for high-speed operation. My understanding is that the refurbishment programme includes essential maintenance and renewals plus the development of a signalling system that would pave the way, eventually, we hope, for higher speeds. It does not provide for new trains or for track improvements to allow them to run at higher speed.
I have, over the years, been guilty of boring the House with stories of my own railway experience— [Interruption.] I had not realised that I had bored the Whip on the Government Front Bench. [Interruption.] I am sorry, he is not the Whip. I had not realised that I had bored the hon. Gentleman, because I do not know who he is, but I have bored hon. Members on both sides of the House with stories about my own railway career. I have no wish to repeat any of them. But having said that, I contradict myself—
§ Mr. Snape
Just one story, then, and I promise not to make it too boring.
403 There is a signal box just outside my home town of Stockport, called Edgeley junction No. 2, which was built by the London and North Western railway in the early 1890s. It is still there. I was not there when it was built, I hasten to add, but I was there at an early stage in my career. Trains are signalled quite safely as they pass it, using a lever frame that dates from the time when the box was originally built. The point that I am somewhat laboriously seeking to make is that at least one of the signalling instruments in daily use in that signal box is older than signalling instruments that I have seen in the railway museum at York.
There cannot be, I hope, a more poignant plea for greater railway investment than that. I hope to soften the heart of the Secretary of State when I say that such a situation surely is unacceptable as we move towards the 21st century. The sooner we have investment in that particular line, the better.
I ask the Secretary of State to make a few journeys between London and Birmingham on the part of the west coast main line that I and my hon. Friend the Member for Birmingham, Ladywood (Ms Short) on the Front Bench make quite regularly. It would be instructive for him to ride on rolling stock and behind locomotives, all of which are more than 20 years old and many of which are rostered to do more than 1,000 miles every working day. Is it any wonder that, occasionally, things go wrong and gaps appear in the service?
Because of the fragmentation of what was formerly a unified service, there is little spare capacity when things go wrong and trains are cancelled, causing inconvenience to passengers—or "customers" as they are known these days. They are not out of service very often, but some of the faults with the air conditioning, internal doors and windows, are all too familiar to regular travellers. Indeed, conductors on the trains repeatedly point out such faults to those of us whom they recognise in the hope that we can do something about it, because their daily reports do not seem to make any difference.
They are not alone in investing in Members of Parliament mythical powers, which, of course, we do not possess. Although some of us have done our best to persuade the powers that be within the railway industry to repair regular faults, because of the lack of spare capacity and, inevitably, the lack of money, they are not repaired.
Not only would passengers benefit from the upgrading for which I am pleading this evening. Significant reductions in journey times and increased capacity would surely allow modern high-volume freight trains over the whole length of the line, while track realignment, tunnel improvements and beefed-up power supplies would allow both passenger trains and freight trains to run at higher speeds. In addition, bridge and tunnel clearances should be increased to allow piggy-back freight and other improvements to increase freight capacity.
The piggy-back consortium recently published a report on the need to upgrade the line and to carry out some of the bridge and platform alterations, which are costed at around £700 million. Coincidentally, that is one of the many estimates that I have seen for the total cost of privatisation so far. Again, although I do not expect the right hon. Gentleman to agree with me this evening, I suggest that that sort of money would be better spent on the improvements that I have outlined tonight.
404 One of the problems is that there is no one in the driving seat to take that essential work forward. As I understand it—if I am wrong, the Secretary of State will correct me— Railtrack is expected to make an application to the EC in the near future for assistance with the funding of the west coast main line infrastructure. Will the Secretary of State give the House some assurances this evening that any such application will receive the support of the Department of Transport and of the Government generally?
As I understand it, and despite previous promises, no public money is available as a capital lump sum. Instead, the Department is to shovel public money through revenue subsidies to privatised train operators, even though privatisation of the west coast main line will not go ahead because of the very lack of investment and of modernisation to which I have referred.
Again, my understanding—I apologise to the House for being vague—is that, because of the hiatus in the run-up to privatisation, it is for Railtrack to provide options so far as different upgrading levels are concerned, which the franchising director would then discuss with potential franchise holders. If, as predicted, the train operator needs extra subsidy to run an upgraded service, I understand that the franchising director will make a case to the Department.
Again, it is a bureaucratic nightmare. It is not the short cut to a better railway that we were promised when privatisation was announced—and, in my view, it constitutes an abdication of responsibility for the Department to indulge in what I can only describe as an expensive evasion of its duties and those of its Ministers.
§ Mr. Michael Fabricant (Mid-Staffordshire)
I wonder whether, in the new spirit of openness following the Nolan report, the hon. Gentleman would like to tell us how much he received from the privatisation of West Midlands Travel plc? Indeed, could it possibly be argued that he is advocating its case here?
§ Mr. McAvoy
We have just witnessed the pathetic sight of a Tory Whip going round the Chamber with a copy of the Register of Members' Interests trying to stir up sleaze. Opposition Members know that that belongs firmly on the Conservative Benches.
§ Mr. Snape
First, let me deal with the question of whether any benefit can accrue to the company of which I am a non-executive director from the modernisation of the west coast main line. I honestly believe that there is no such benefit: we run the stage carriage service in Birmingham, and I can see no connection. However, for obvious reasons, I declared an interest.
Conservative Members attack Opposition Members for having no business connections. They say that we know nothing about business; indeed, they say that we are unemployable. I was originally elected to the board of West Midlands Travel by both management and trade unions, and was re-elected by what I can only describe as eastern-European-type majorities—between 93 per cent. and 95 per cent. of the work force. As for the remuneration that I receive, if the hon. Member for 405 Mid-Staffordshire (Mr. Fabricant) is sensible enough to read the annual report—as requested by Cadbury—he will find exactly what he wants to know.
§ Mr. Deputy Speaker
(Sir Geoffrey Lofthouse): Order. The debate should not be delayed by arguments of this nature. If complaints are made against any hon. Member, we now have a Parliamentary Commissioner to whom to refer them.
§ Mr. Snape
Conservative Members do not seek to make complaints; they seek to draw inferences. The matter referred to by the hon. Member for Mid-Staffordshire was the subject of legal action between myself and The Daily Star, which led to an apology by the newspaper—and to insignificant damages, I am afraid; nevertheless, a small contribution was received with thanks.
I congratulate my hon. Friend the Member for Ladywood on her current portfolio. She has spent the past few years dealing with what have been called—I say this in no derogatory way—women's issues. I feel that better public transport—particularly in regard to buses—is definitely a women's issue. For too many years, the provision and design of buses appear to have been dictated by male accountants rather than the needs of customers. It is about time that bus designers took account of the fact that many daytime users are women, and that many of those women have shopping and buggies containing young children. The sooner that bus designers and operators cater for that market, the better the service will be.
§ Sir Peter Fry (Wellingborough)
I am interested in what the hon. Gentleman has had to say about comfort on buses. Does he agree that all parties in the House must support the Government to prevent the European Community from insisting on a seating plan that reduces the number of seats and increases the number of standing passengers?
§ Mr. Snape
Indeed. The great difference between bus journeys here and those on the continent is that, in many continental cities, journeys are comparatively short and standing is much more acceptable that it would be in the United Kingdom. I support the hon. Gentleman's plea: we should be left to design buses suitable for the British market. I hope that The Secretary of State will also support that idea.
I do not wish to hog the debate, but I should like to say a little about the aftermath of bus deregulation. I want to persuade the Secretary of State, for as long as he holds his present post—I hope that my hon. Friend the Member for Ladywood will soon take that post from him—of the need to improve bus services throughout the United Kingdom.
It is all very well for local authorities to create bus lanes and impose restrictions on parking, but all too often—as we know to our cost—such restrictions are not observed by motorists. Few experiences are more annoying than sitting in a motor car in a traffic queue and watching people deliberately flout the regulations by driving up bus lanes. The police will say, understandably, that they have not the resources to police the bus lanes, but I am afraid that until there is proper enforcement we shall not persuade motorists to leave their cars at home—and it must be a question of persuasion. I am sure that the Secretary of State will agree that people cannot be compelled not to drive to and from work. Until we can 406 provide bus, rail and light-rail services that are nearly as quick and comfortable as private cars, exhortation will remain just that.
Let me take the Secretary of State further along the same road—if that is not too dreadful a pun. We also need to introduce quality thresholds for buses. One of the problems of deregulation is that, when reputable operators seek to run a comprehensive service, that service is frequently undermined by operators who purchase second-hand vehicles and run them on the busiest routes for a few hours in the morning and a few hours in the evening. I am not sure whether that is what the Government intended in the 1986 legislation, but it is certainly not a sensible way of trying to attract people out of their cars. We do not want town and city centres throughout the country—particularly during rush hours— to be cluttered with ancient buses, many of which look as though they ought to be in Lord Montagu's museum.
We need proper standards of vehicle specification, and proper standards of investment in new vehicles. We need proper driver training, and proper publicity and service standards. The comprehensive service that many reputable operators run throughout the country is being undermined by certain people who are attracted by the cheap end of the business. We also need to examine—as I know the Government are—the environmental impact of buses, and new technologies.
Many reputable companies—I will not talk specifically about mine, in case the Government Whip rushes in with yet another copy of the Register of Members' Interests— are anxious to look at new technologies. Let me remind the Secretary of State that a compressed natural gas public service vehicle costs around £140,000, as against about £110,000 for a conventional bus. If the passenger transport authorities, the local authorities and the Department of Transport were prepared to participate in a programme backing the introduction of such vehicles, we could do a good deal to reduce the pollution about which people in many towns and cities are rightly concerned. Operators will not buy and introduce such vehicles if at the busiest time on a route their profitability is undermined by the activities of those of whom I spoke earlier.
I apologise to hon. Members for detaining them for so long. Regardless of what hon. Members read in the Register of Members' Interests I have participated in debates on these issues since I was elected to the House more than 20 years ago. For obvious reasons, I hope that the Minister will not be in post for much longer, but while he is there, I welcome the fact that perhaps he is a little more open-minded than some of his colleagues. I hope that, when my hon. Friend the Member for Ladywood takes over, she will have a fresh look at bus and rail services because behind their improvement lies the improvement of the general economy of this country.
§ Mr. Deputy Speaker
Order. I understand that the winding-up speeches are to start at 9.20. That leaves 60 minutes for the remainder of the Back-Bench speeches. Six hon. Members hope to catch my eye during that hour and most of them have been here for most of the debate. I hope that that will be considered by those hon. Members who speak.
§ Mr. William Powell (Corby)
We always listen with interest and respect to the hon. Member for West Bromwich, East (Mr. Snape) when he speaks on transport issues. I hope that he will forgive me when I say that I do not propose to follow his remarks. However, I listened carefully to his speech, and perhaps my hon. Friend the Member for Wellingborough (Sir P. Fry), who understands these issues better than I do, will have some observations—if he is called.
The general background to the debate is investment, and I shall speak about that issue as I see it in my constituency. During the 12 or 13 years that I have been in the House, there has been massive public investment in virtually all areas of my constituency. There has been investment in industry under the Industry Act 1975. My hon. Friend the Member for Isle of Wight (Mr. Field), who has left the Chamber, said that he was pleased that his constituency was now an assisted area.
If there is better news than that of becoming an assisted area, it is that an area is no longer assisted. That has happened in my constituency, and since the announcement, the decline in unemployment has been accelerating. Investment in the private sector has continued robustly to expand, and more and more industry is moving in without any public subsidy provided through assisted area status. That is on top of the expansion of existing companies, which is also happening at a robust rate.
There has been massive investment in roads, and that has brought about an enormous improvement, most of all to the A14, but also to many of the less important roads. There has been no investment in railways but that is because I have no railway stations in my constituency. My constituents use either the excellent rail system in the constituency of my hon. Friend the Member for Wellingborough, that in the constituency of my right hon. Friend the Prime Minister, or the one in the constituency of the chairman of the Conservative party, my right hon. Friend the Minister without Portfolio, the Member for Peterborough (Dr. Mawhinney) There has been massive investment in and reclamation of derelict land. There has been massive investment in local authority schools and grant-maintained schools, of which we have some of the best in the country. There has been investment in the city technology college and Lodge park technology school and in education and training in the Tresham institute. I was pleased to be present a few days ago at the opening of another significant expansion of its facilities, which were paid for by the public sector.
I can testify from my own experience that the picture of no public investment is completely untruthful. One could take the matter even further, but I should like to deal with two items of legislation in the Gracious Speech, one of which has been commented upon and the other has not. They are the proposals for legislation about MI5 and for reform of our divorce laws.
I shall deal first with our divorce laws. I rather regret the fact that we need any divorce laws at all, but, man being a fallen person, the reality is that the law needs to 408 be reformed. When I studied law quite a long time ago, the existing divorce law was going through the House. Part of my university course entailed reading and studying what was being said in the House at that time about the proposals that led to the Matrimonial Proceedings and Property Act 1970, the Wilson Act, which has formed the basis of our divorce law ever since.
One of the interesting facets of the 1970 Act was that, to all intents and purposes, it was sponsored by the Church of England. It followed a report called "Putting Asunder", that had been commissioned by Archbishop Michael Ramsey. It formed the basis of the legislation which Mr. William Wilson, who at that time was the Member for Coventry, South, had proposed. Therefore, I read with amusement and some interest Church criticisms of the operation of legislation which it had the primary responsibility for promoting in the first place.
There was substantial discussion before the 1970 Act was passed. I vividly remember the doughty work carried out by my hon. Friend the Member for Birmingham, Edgbaston (Dame J. Knight) in opposing that reform. She made a number of predictions, all of which have been fulfilled, about what would happen, because there is a deep truth about the way in which one can draw any divorce laws.
It is that, broadly speaking, however the law is written, one third of people will find it a perfect fit, one third will find it rough justice with which they can live although around the edges there are problems, and one third find it completely unacceptable. All that happens when the law is changed is that people are shifted from one category to another.
Finding justice in such uncertain human relationships is an elusive art. As my right hon. Friend the Member for Selby (Mr. Alison) underlined, although our noble and learned Friend is being valiant in presenting his new proposals, and although they will meet some of the criticisms about how the existing law operates, the reality is that all that will happen as a result is that a few people will be shifted from one to another of the categories of satisfaction with the law.
Human relationships are not so carefully defined that they are capable of fitting neatly into patterns of this sort. I hope that the new law will be an improvement, but I fear that many people will be disappointed as a consequence of its operation.
§ Ms Short
This is the second time that this issue has been raised. The thinking behind the new proposals is to prevent couples who are, sadly, divorcing fighting over children, and getting more and more conflict and pain within families in the divorce process. I wish that those who criticise would recognise the importance of that point.
§ Mr. Powell
I have sufficient professional experience of these matters to know perfectly well that what the hon. Lady says is true. Equally, I know that, although that is the underlying impulse of the proposals, we live in an imperfect world, and the legislation will not always work out in the way we want. I suspect that, as a result of the changes, a significant number of people will say that they preferred the law that we are about to repeal. There is no way in which we can ever draw divorce laws that will enable everybody to be satisfied with the rules.
409 I shall now deal with the important legislation relating to the future activities of MI5. Organised crime stalks our country in a way that is deeply damaging to our commerce and to the fabric of our society. I wish to concentrate on two areas of organised crime, and I hope that, in its renewed co-operation with the various police authorities, MI5 will pay particular attention.
When I first raised the question of theft of heavy goods vehicles around the country, there were no statistics, and few policemen were prepared to concede that it was a serious sector of organised crime. As a result of what I and others have said over the years—I am pleased that the hon. Member for Huddersfield (Mr. Sheerman) is present, because he has also played a big part in raising this issue—the police now take such matters much more seriously.
The Home Office has just published some research into heavy goods vehicles theft. It provides the most comprehensive range of information about that matter for the police and the public authorities. It reveals the seriousness of what has been taking place, which has immense consequences for our commerce, but it gives few clues to why such crimes are carried out.
In a sense, we know why such crimes are carried out: it is big business, and the people behind it are making large sums of money. They are operating on a ruthless scale, perhaps stealing a vehicle in London, having it customised and cut up in Birmingham, Manchester, Nottingham or Leeds, and exporting the parts around the world, with large sums of money involved. That is happening on a big scale. I therefore hope that the recently published Home Office research will be used as a basis for a concerted campaign to break the gangs who are behind one of the most ruthless sorts of organised crime.
We know that death stalks our land as a result of drugs. Some people take the view that our drug laws are simply unworkable, and that the best thing to do would be to liberalise them. Of course, we are all entitled to our private views—I know that the hon. Member for Birmingham, Ladywood (Ms Short) has her private views about this, to which she is entitled—but I take a radically different line about our drugs laws.
I wish their enforcement to be made much more rigorous. I do not particularly want young police constables to spend their time persecuting people taking minor quantities of marijuana. I do want gangs who supply drugs to be pursued across the world with the utmost determination. Intelligence and co-operation across police boundaries and national frontiers will be needed to ensure that that happens.
I pay tribute to Customs and Excise and to the police for the increased number of seizures that they have made in recent years—that has been admirable—but we all know that many more drugs are getting through, and that that simply must be stopped.
One of the matters that parents raise most frequently with me in my constituency involves their complaints that drugs are available in or close to schools. Hardly a school in this country is able to say that it is always drug-free. That affects even junior and infants schools. Of course, pupils at such schools are not particularly going out and buying drugs, and they are not being pushed towards them, but the vicinity is being used by drug pushers, and there is no question but that many school children, in both the public and private sectors, are using drugs.
410 I want a strong campaign in our schools to counteract that most sinister danger to young children. I understand the reluctance that many head teachers may have to identify their school as in any way having a problem, because clearly, a school with a reputation for being a drugs haven is likely to find its reputation suffering as a consequence. Therefore, some of the responsibility for sweeping clean our schools and their vicinities from drugs must be assumed by much greater co-operation between local education authorities and police forces.
The chief constable and chief education officer usually have offices next door to each other in county hall or in the town hall. There is no reason why, at county level for Northamptonshire or at borough level for Birmingham, there should not be an agreement between the local education authority and the police force whereby police forces will be encouraged by the local education authorities to undertake searches of schools and their vicinities.
In that way, the initiative does not come from a head teacher, a disgruntled parent or someone who does not wish to place that responsibility on their shoulders, but would be regarded as a regular and necessary part of the co-operation that is needed between police and local education authorities—not merely to provide lessons on the evils of drugs, although that must be done, but to ensure that drugs are sought out and found and that the people who are responsible for the drugs are brought before the criminal courts.
I would take the process one step further. Over the years in which I have been in the House, on a number of occasions, we have given increased and enlarged powers to the courts and the police in dealing with drugs. Not everyone in this country is always completely enamoured with the American legal system, but certain aspects of it should not be disparaged as much as they are. We already have a system in which some informal plea bargaining can take place before a defendant appears for trial in courts. Not infrequently, judges are known to say what range of sentence they might have in mind in the event of certain things happening at the trial.
The American system has a different aspect to it. American judges have been known to sentence big drugs pushers who send out £1 million of drugs to 600 years' imprisonment—an excellent sentence, because it then enables the law enforcement authorities in the United States of America to debrief a convicted and sentenced defendant about his or her activity.
If, after the sentence, the defendant gives substantial assistance to the prosecution authorities in a way that can be checked and assessed over a period, it is open to both the prosecution authorities and to the defendant to go back before the judge and to say, "Will you please now review the sentence as a consequence of the help that I have given and that has been proved?"
We need to build in to our system a greater incentive to secure the co-operation of convicted drugs barons in the elimination of a scourge that has grown only more serious with the passage of time.
§ Mr. Cynog Dafis (Ceredigion and Pembroke, North)
I should like to speak on the enormous importance of investment in renewable energy for sustainable economic 411 and social development on global and European levels in the United Kingdom context, but with particular reference to Wales. I have an interest to declare. I am secretary of Eurosolar UK, which is involved in lobbying on behalf of global energy, but I receive no pecuniary interest from that.
Through its endorsement of Agenda 21 in the Rio declaration, the Government have committed themselves to the principle that environmental sustainability should be a key consideration in all decisions, in all sectors of policy and, especially, in economic and industrial development, so I make no apology for starting with a key theme in environmental policy: global warming and climate change, which is essentially linked to consumption and energy generation.
The issue will hit the headlines again before the end of the year with the publication of a new report from the United Nations Intergovernmental Panel on Climate Change, which will confirm that climate change is occurring as a result of global warming and that the effects will be serious, including a likely sea level rise of between 1 ft and 1 yd in the 21st century, and a possible loss of one third of the world's forest cover. The possibility exists that, through feedback mechanisms, the whole thing could accelerate out of control.
The report will also confirm that this alarming phenomenon is a consequence of the emission of greenhouse gases that result from human activity. It will point out that, as we already know, 50 per cent. of greenhouse gases come from CO2 emissions, and that 75 per cent. of those result from the burning of fossil fuels in the generation of energy.
The report will also point out that the stabilisation of emissions at 1990 levels—that is both the United Kingdom and the Rio conference target—will be nowhere near sufficient to prevent the concentration of greenhouse gases in the atmosphere from increasing. Further, even if concentrations can be stabilised, global average temperature will continue to rise for centuries. All that points clearly to the need to reduce emissions sufficiently first to stabilise, and then to reduce, concentrations in order simply to minimise the extent of climate change and its ill effects.
In turn, that shows that the demands of the Association of Small Island States at the Berlin conference in April this year that there should be a target for reductions in CO2 emissions of 25 per cent. by the year 2005 is far from immoderate. However, it would present a very significant challenge. The pressure for increased use of energy seems to be unstoppable, in particular to allow a rise in the standard of living and the quality of life in what is called the third world.
Some 70 per cent. of the world's population—2 billion people—currently have no access to electricity. The developed world uses 10 times as much energy per person as the developing world. It is no wonder that, with an expanding population, global demand for electricity is predicted to increase by 265 per cent. by 2025.
Much can be achieved through reduced energy intensity, and that should be a policy priority. However, reduction through energy intensity will almost certainly not be fast enough to cancel out the effects of economic growth. According to the World Energy Council, even 412 with what is called an ecologically driven scenario—the most optimistic scenario possible—that will give a global growth rate of 3.3 per cent. per annum with energy intensity reductions of 2.4 per cent. per annum, which in turn would lead to a total energy demand of 11.3 billion tonnes of oil equivalent by the year 2020, compared with 8.8 billion tonnes of oil equivalent in 1990. As a result, the carbon emissions would amount to 6.3 billion tonnes, compared with 5.9 billion tonnes in 1990. That is so remote from what is needed to minimise climate change that, quite honestly, it is bizarre.
The conclusion must be that, if we are to enable development to occur, especially in the least developed countries, there must be no less than a transformation in our methods of generating energy. That should be a core element in global development policy. There are two options. One is the nuclear option, which is not only dangerous but, in the political and socio-economic context of much of the underdeveloped world, totally unrealistic.
The other option is the variety of resources that we refer to as renewables—sometimes called sustainable energy, sometimes called solar. Of course, all renewables, apart from the tide, come from solar sources. The unlocking of the potential of the solar source through the development of technology, and then the transfer of that technology to the third world—and therefore a dispersal of its availability—must be the key to sustainable development and the protection of the natural environment.
Renewables are a huge resource. Every year, the earth's surface receives about 10 times as much energy from sunlight as is contained in all the known resources of coal, oil, natural gas and Uranium combined. It equals 15,000 times the world's annual consumption by the human race.
Both the potential and the need have been recognised. The Rio conference led to what has become known as the solar summit process. The United Nations reckons that 60 per cent. of world electricity could be generated by renewables by the year 2050. The European Union has a range of strategies both for global development and for increasing its own capacity in renewables.
The "Power for the World" project, a photovoltaics action plan, estimates that providing solar electricity to 1 billion people in the third world would cost about $60 billion, or $3 billion a year for 20 years. That is under 0.3 per cent. of current military expenditure—a far better investment in global security than weapons of war. It is clear that this must loom much larger in global development policies, both in bilateral and multilateral aid programmes and in the lending regimes of the World bank.
The European Union adopted the Madrid declaration in March 1994, stating that renewables shouldsubstitute the equivalent of 15 per cent. of conventional primary energy demand in the EUby 2010. The Altener programme has been set a goal of an increase in renewables contribution to total energy demand from under 4 per cent. in 1991 to 8 per cent. in 2005, and a trebling in production of electricity from renewables, excluding large-scale hydro.
The EU's unequivocal commitment is in stark contrast to the virulent opposition of Transport Commissioner Neil Kinnock to wind energy. Wind is a major component in renewables, capable of providing up to 20 per cent. of world energy by 2050, and the technology is currently one 413 of the most advanced. There is no way in which the Madrid declaration or the Altener targets can become reality without developing wind, nor could the Department of Trade and Industry target of 1,500 MW declared net capacity in the UK by the year 2000 be achieved without wind.
However, Mr. Kinnock is patron to Country Guardian, the anti-wind farm group whose evidence was so thoroughly rejected and rubbished by the Welsh Affairs Select Committee and whose latest bulletin declaims:Our top priority must be to prevent the developers of 51 English and Welsh and 12 Scottish projects from obtaining planning approval.I do not want to over-emphasise wind, because it is only one of a diversity of sources. However, it is important to recognise the very low environmental impact—in the deepest sense of "environmental"—of developing wind power. A supply of 2,000 MW of electricity from wind would occupy 100,000 acres of land, 99 per cent. of which would still be available for other uses. That is a very light ecological footprint.
On the other hand, 2,000 MW of electricity from biomass, in the form of coppicing willow or poplar, harvested mechanically on a three-year cycle, would take up 2.5 million acres in their entirety. I want to make it clear that I favour the second as well as the first, but the comparison is instructive.
Neil Kinnock's position as Transport Commissioner is untenable because he is a member of a Commission that approves of the targets. It is possible that he agrees with Sir Bernard Ingham, the vice-president of Country Guardian, that nuclear is the way ahead and can fill the gap. If that is the case, Mr. Kinnock should come clean and make his position clear. I trust that it is not the position of his party, to which, no doubt, we shall shortly be looking to implement a serious policy for promoting renewables within the context that I have tried to outline. I wonder whether that policy could be made clear before the end of the debate.
I want briefly to refer to UK policy. The chosen instrument of UK policy in encouraging renewables is the non-fossil fuel obligation and the use of the fossil fuel levy. The Government's target is 1,500 MW declared net capacity by the year 2000. If we are to take the issue seriously—it seems inevitable that we must—that target is far too modest. It would constitute only a tiny proportion of the total energy, or total electricity, production. We should periodically be setting targets for percentages of electricity supply. A figure of 10 per cent. by the year 2000 would not be too high.
Secondly, there is no provision in United Kingdom policy or in the NFFO for photovoltaics, a key technology although the price is currently high. There is no demonstration programme in the United Kingdom, almost alone among European countries, yet it is taken seriously elsewhere. There is an American $150 million project for a 100 MW solar plant in the Nevada desert, which is enough to supply a city of 100,000 people with electricity. That is through grid connection. Photovoltaics has the advantage that it can be on grid or off grid; it can be very small and it can be substantial. It is the only truly urban source of electricity. We need a scheme in the United Kingdom to encourage photovoltaics.
The question now is whether there will be further NFFO rounds after the ones announced recently for 1997 and 1998. I believe that the NFFO should be retained as 414 long as necessary, but also that there should be a requirement on regional electricity companies to purchase a minimum percentage of electricity from renewables, with perhaps the option of clean electricity purchase schemes for customers.
I deal finally, and most importantly, with Wales. The Welsh renewable resource is sufficiently large to be significant in relation to achieving the Madrid and Altener targets. It is also crucial for the economic and environment future of Wales.
I invite members of the Government to read an article by Professor Phil Williams, the professor of physics at the university of Wales, Aberystwyth and Plaid Cymru's spokesperson on energy and the environment. The article is entitled "UK Energy Policy and the Welsh Environment." He points out that Wales would be the ideal location for a pilot scheme to prove what can be achieved by a combination of energy efficiency and renewable sources. He states:If God designed one spot on Earth that was perfect for that pilot scheme, it was Wales. Built on a foundation of coal, with a coastline exposed to the waves of the Atlantic and punctuated by estuaries that funnel the tides to record heights, and with windswept moorlands from which a fan of rivers flow to the sea, Wales is an ideal laboratory for comparing most forms of energy generation. And in this comparison, we can also include the longest experience of large-scale fission power.That article comes from Plaid Cymru's sustainable development strategy for Wales, which is a unique document in the current scene.
Professor Williams argues that energy efficiency in Wales could reduce electricity demand by 25 per cent. by the year 2010. That represents a reduction of 3.75 TWh on the 15 TWh that we presently consume. Four TWh could come from renewables by the year 2010. Ten per cent. of electricity supply could come from wind with a total of 2000 500-kW turbines. He believes that it would be feasible by the end of the next century for electricity in Wales to come entirely from renewable sources.
Many good things are already happening in Wales. Dulais Engineering in my constituency has European Union funding for the Aries project to study how renewables can be made to contribute to economic development in rural areas. There has been success in another direction in obtaining funding from the Altener project to encourage manufacturing and sourcing in Wales. Ford is incorporating photovoltaics in a major new industrial unit at Bridgend.
The manufacturing, servicing, construction and electronics sectors in Wales are already active, but much more is possible. In Denmark, 12,000 people are employed in manufacturing in the wind industry alone, and there is every reason to believe that Wales can emulate that example and become a major centre of an industry that will be crucial in the 21st century, just as it was a major centre for energy generation by coal in the 19th and early 20th centuries. For that, however, we need a strategy.
I am confident that a self-governing Wales would have a strategy in place now. It would certainly be a priority for a Welsh Parliament in 1999, which is when it will first sit. However, I am talking about the need for action now. There is every reason why the Welsh Office, development agencies and local authorities should now be constructing such a plan as part of a sustainable development strategy for Wales.
415 Much of the work is already being done. MANWEB and SWALEC will soon have a survey of the entire Welsh renewable resource, but a strategy would enable the people of Wales to understand the nature of the whole enterprise and see how the several elements fit together, recognising, of course, thatenergy demand will in future be met by an ever-broader range of energy sources and technologiesand recognising too how advantageous, economically as well as environmentally, it will be to have a proximate source of clean energy.
The electricity regulator announced last week that there should be a 5 per cent. differential in the price of electricity according to the distance that it is transmitted from source. We also need to recognise how significant for a country of small scattered communities is the fact that renewables are, by their very nature, a dispersed and decentralised resource.
As well as setting the scene, a strategy is essential to activate the various players—the development agencies in relation to inward investment, the various industrial sectors, planning authorities, universities, colleges of further education, training agencies and others—to match an educated and motivated work force to technological innovation.
If renewable energy is a crucial element in a sustainable economy of the 21st century—I say it is and everything indicates that that is so—the preparation and implementation of an all-Wales strategy now must be a matter of the highest priority. I appeal to the relevant agencies, people and organisations to undertake this task now with vigour and vision.
§ Sir Peter Fry (Wellingborough)
I hope that the hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) will not mind if I do not pick up on his comments; I should rather return to some of those made by the hon. Member for West Bromwich, East (Mr. Snape) with whom I have considerable sympathy. We are reaching the ridiculous situation in which we are trying to prevent hon. Members, of all parties, from speaking on a subject on which they have a valuable contribution to make. I say that with no party political intent.
The hon. Member for West Bromwich, East and I are old sparring partners in transport debates. If he has a fault, it is that, unlike some of his train drivers, he sometimes does not know when to stop. None the less, he always makes an interesting contribution. I would like, however, to refer to the main way in which people travel in this country: road. The hon. Gentleman briefly mentioned buses. I believe very strongly that much more can be done to encourage people to use public transport—but not without realising where the real problem lies.
The Royal Automobile Club—I am member of its public policy committee—recently sponsored a report on car dependency which was undertaken by a very learned body from Oxford university. It discovered—surprise, surprise—that 20 per cent. of journeys were considered essential by car users, 60 per cent. were considered almost essential and only 20 per cent. were analysed as being able to be undertaken using some other form of transport.
416 The interesting point was that that 20 per cent. of the journeys that could be replaced by another form of transport were almost entirely of less than a mile.
That is the danger of using statistics. Those of us who live in rural areas and small towns never use our cars for journeys of less than a mile. The great majority of those short journeys are undertaken in the urban and metropolitan areas. That is where there is difficulty. That is where there is excessive use of the motor vehicle. Outside those areas, people possibly have problems getting on to motorways, but there is nothing like the level of congestion in our city centres.
My immediate comment to my hon. Friends on the Government Front Bench is this: let us consider the priorities of transport expenditure. Much more can be done to encourage the motorist to use a bus, provided the bus is more comfortable, it can run on time and the maximum information is given about when the bus will arrive.
I take the point about investment in more technology. It should be possible to have notices that flash how many minutes there are until the next bus arrives at the bus stop. There should be better ways in which to protect someone waiting in the elements to catch a bus. Only by encouraging a greater use of technology will we entice people out of their cars in the urban context.
Outside the urban context, I still firmly believe that there is a place for road improvement and road widening. One of the reasons I say that is that, very soon, new speed limits will be applied to heavy goods vehicles on our motorways. Those speed limits will be comparatively low. Many of our roads—all-purpose roads—have two lanes. The prospect of a lorry travelling at 50 mph being overtaken by a lorry going at a maximum of 57 mph is potentially very dangerous, especially as many motorists assume that they can drive at 80 mph without being caught.
I therefore believe that we should not say that there is no need to spend much more money on roads, whether on widening or on improving them. Many towns and villages still desperately need their bypasses. I make a special plea, first, for the A6 bypass of Rushden and Higham Ferrers, which is a Highways Agency responsibility. I see that my hon. Friend the Minister for Railways and Roads has heard of that proposed road. Secondly, I make a plea for more money for some of the counties that are unable to build bypasses because of the level of the transport supplementary grant that they receive for new road building.
My message is that we have to accept that, in the foreseeable future, outside the metropolitan areas and outside our large towns, most people will move by using their own car or somebody else's car. It is therefore pointless to say that we should spend no more money on our road network, that we should not improve our road network and that we should not widen our motorways. If we do not spend more money on such projects, we will find that the problem being experienced in the urban context will start to affect more and more areas.
I would like investment to tackle the problem of urban congestion immediately by encouraging people to use public transport more and, at the same time, to prevent deterioration throughout the country through a sensible road improvement programme.
§ 9.2 pm
§ Mr. Thomas McAvoy (Glasgow, Rutherglen)
I endorse the comments of the hon. Member for Wellingborough (Sir P. Fry) about the efforts being made to divert debates from the true subject matter. I also pay tribute to his expertise in describing a sane approach to transport, especially in relation to the use of the car, to which I will return.
Despite your valiant efforts in trying to call all hon. Members who have wanted to speak, Mr. Deputy Speaker, I do not think that everyone will be able to catch your eye in time. That is certainly through no fault of your own. You have done your best to try to fit in all hon. Members who have wanted to speak.
This year's Queen's Speech is unique, as has been said already, since the chairman of the Conservative party has made it quite plain that it does not have any regard to the governing of the country or what is good for the country. Never mind all those points, it is about what is good for the Conservative party. It sets a new, low trend, which I know that many hon. and right hon. Conservative Members do not like but about which they are bound by party loyalty not to say anything.
It is also quite disgraceful that the Home Secretary is attempting to play the racist card with legislation. As for the expansion of nursery education for four-year-olds, the voucher system is not wanted anywhere in this country that I know of, and it is certainly not wanted in Scotland.
Today's debate has been about investment, trade and industry and transport. Lack of investment has been mentioned, especially by my right hon. Friend the Member for Derby, South (Mrs. Beckett). Many sources have been quoted as testimony to that point. I add to the list the CBI, which was mentioned by my right hon. Friend the Member for Derby, South.
The CBI especially mentions that there is a 20 to 40 per cent. shortfall in average levels of productivity and stock turnover compared with those of our principal competitor countries. There is historically sluggish investment, with capacity constraints threatening. There is a low level of skills compared with the levels of our main competitors and a persistent trade deficit in manufactured goods. This is not the view of the Trades Union Congress or the Labour party; it is the CBI describing how it sees British industry.
§ Mr. Michael Connarty (Falkirk, East)
Is my hon. Friend aware that the CBI's latest report, for September 1995, shows that the manufacturing trade order book in the UK is back to below the level it was in September 1992, before we were thrown out of the European monetary system? Basically, the Government have wasted a 16 per cent. devaluation over the past three years.
§ Mr. McAvoy
I am grateful to my hon. Friend for that comment. It is ironic that everyone in British industry and British politics, except the Conservative Government, recognises that point.
The travel and tourism industry is not usually regarded as an industry, but it is an extremely important one. A new report on the economic impact of travel and tourism in the United Kingdom was recently delivered in London by the Under-Secretary of State for National Heritage. The report showed that the UK travel and tourism industry's contribution to the economy was much larger and created more jobs than previously estimated.
418 In 1995, travel and tourism are expected to generate directly and indirectly £100 billion in gross output, employment for 3.2 million people and an £86.6 billion contribution to the gross domestic product—12.3 per cent. of the total. All that has been achieved without any incentive from or encouragement by the Government. The industry is poised to produce more than 300,000 new jobs and almost to double its output to £183 billion. That is the effort being put in by the industry, yet there has been no encouragement by the Government for it to expand.
It is significant that the Secretary of State for Trade and Industry, a former Secretary of State for Scotland, did not mention the valuable contribution by the Scotch whisky industry to the industrial, economic and commercial life of this country. After last year's Budget defeat, the Government, in panic, ran through a 4 per cent. increase in duty on spirits to make up for their misjudgment about VAT on fuel. That cavalier attitude towards the Scotch whisky industry is typical of how the Government regard the industry and its contribution to the United Kingdom. The Government's move did not work, because the receipts from sales of whisky to the Exchequer in 1995 dropped 26 per cent. compared with the level in 1994. The Government's reaction was cavalier and panicky; even worse, it did not work.
The recurrent theme of the speech by my right hon. Friend the Member for Derby, South was investment. Britain must raise the proportion of its wealth which is devoted to investment in our industries. If we are to maintain and improve our competitiveness, it is essential that we improve spending on research and development.
Other hon. Members have referred to the so-called cost to Britain of the social chapter and have mentioned the Asian economies. However, there is widespread recognition that the success of the Asian tigers is based on high investment rather than low wages. Firms in those countries have shown that, if one invests in people and trains people, one will get a return, as well as providing job security for the people employed in those industries.
Small businesses have been mentioned many times by the Government, but they receive little help from them. There is nothing in the Gracious Speech to encourage them. We hear lots of rhetoric, but we do not see anything. In contrast, Labour has a firm commitment to consider removing the financial incentives for late payment by introducing a statutory right to interest on late payment by companies above a minimum threshold. That is a proper and businesslike way in which to support small businesses.
The hon. Member for Wellingborough and other hon. Members have mentioned the need for roads. I take a pragmatic approach to road building. If it is necessary, I support it, but if it is not necessary, I suggest looking for alternatives. In a week's time, there will be a massive cut in the roads programme, and that will do nothing to address the environmental concerns aroused by too much use of motor cars. Like the hon. Member for Wellingborough, I have a copy of the RAC's excellent report. The RAC has put some thought into trying to reduce the use of cars, unlike the Government, who seem to stagger on with no approach to the problem.
I wish to make a special plea for my constituency, as the M74 motorway is planned to run through it. A 12-mile missing link in that motorway will result in traffic pouring into Cambuslang and Rutherglen in my constituency, and 419 even more pollution will be caused by cars ticking over in traffic jams. There are sensible ways to approach the problems caused by the use of cars, but a dogmatic cost-cutting approach to the roads programme designed to produce tax cuts is short-sightedness carried to the extreme.
I wish to spend some time on the subject of the railways, because it certainly deserves that. During the past decade—particularly in the run-up to privatisation— sharp cuts have been made in rail investment, and those can be correlated directly to increases in the number of failures and breakdowns on the network. We can compare British Rail's safety performance statistics to the figures for railway investment released by the Government in a parliamentary answer to the previous shadow Secretary of State for Transport.
The figures show that there has been a 17.8 per cent. drop in investment in the rail network in the 10 years since 1984–85 from £786 million to £663 million. There have been big percentage rises in the number of failures in rolling stock, tracks, tunnels and bridges, and there has been a 47 per cent. increase in the number of fires on trains from 168 to 247. The correlation is obvious and is well made.
Like my hon. Friend the Member for West Bromwich, East (Mr. Snape), I wish to spend some time on the subject of the west coast main line. A previous estimate of the cost of modernising that line—since increased, I would imagine—was £800 million, with some £450 million going to infrastructure and £350 million going to trains. Everybody accepts that there is a need for the west coast main line, which is a key link serving the west coast of England, Strathclyde and Glasgow, but we have had prevarication, avoidance and a dogmatic refusal by the Government to invest in the railway.
The Secretary of State for Transport issued a press release on the future of the west coast main line, in which he stated:This modernisation process will bring clear benefits to passengers and operators alike. This year, the Government has been able to secure EU funding of almost £7 million for WCML.Can the Secretary of State assure us that that money will be used on the west coast main line or for funding towards research projects for the line? I cannot find any press release or statement on how that money will be spent.
I hear rumours like everyone else, and there is a story that the bulk of that £7 million will not be spent on any new research projects relating to signalling or train control but will pay for last year's feasibility study. If that is true, where is the investment for the future? Bearing in mind the content of the Secretary of State's press release, I respectfully suggest that he owes the House an explanation of where that £7 million will go.
The clear view of most people within the rail industry—with the exception of Railtrack—is that the upgrading project has lost its impetus. When the franchising director announced in August a suspension of the franchising timetable for the west coast main line, he stated that a "lack of project definition" was one of the main reasons for his decision. There is a perceived and genuine reluctance on the part of Railtrack and the Department of Transport to commit themselves to a 420 minimum upgrade commensurate with the west coast main line's status as a priority project within the trans-European railway network.
When the upgrading of the west coast main line was announced in the 1993 Budget speech—that is how long ago it was announced—it was envisaged that upgrading work would begin in 1995. In November 1994, the Department of Transport published its official document, in which reference was made to the planned upgrading. It said:the intention is to launch a competition in early 1995 for the design and build, and to let a contract in mid-1995. Work would start as soon as possible after that.Yet we have had prevarication, avoidance and straightforward refusal from the Government to live up even to their own promises on how the work would go. I stress again that the Secretary of State owes us an explanation as to where that £7 million will be spent and what has happened to the west coast main line.
My hon. Friend the Member for Cunninghame, North (Mr. Wilson) has featured in an article in The Guardian today. The headline is "Railtrack accused of £1 billion sting". The article states:The Stock Exchange was last night called in to investigate a claim by Labour that Railtrack has put aside over £1 billion of taxpayers' money to boost its profits artificially after privatisation.It goes on to quote my hon. Friend. It then says:following an independent analysis of Railtrack's accounts published in September it was possible to identify benefits of £1.14 billion to the new owners if privatisation went ahead.Calculations are given to show how the figure was arrived at; but surely the main question is, if the money has been set aside in Railtrack's account, has the Secretary of State ever been informed? If he has not been officially informed by Railtrack, does he have any knowledge of that set-aside? I wish to cover all eventualities. I wish to make sure that the Secretary of State informs us tonight whether he is aware of the situation and whether he has been informed from any source. What does he intend to do about it?
The article states that Railtrack said later in response to my hon. Friend the Member for Cunninghame, North thatit could not go to the market without meeting all the Stock Exchange's rules and it had done this in full measure. It described the £1 billion-plus set aside as 'known future obligations' which had to be met, and said it was good accounting practice.So it is no surprise to Railtrack that it has been accused of setting aside £1 billion.
What is the obligation here? Is it an obligation to the public, who still own Railtrack? Is it an obligation to the Government? Is it an obligation to the privatised company to make sure that in a general election year the privatised Railtrack will be made to seem profitable and will not blow up in the Government's face, as everyone else thinks it will? I particularly ask the Secretary of State to respond to that point. Does he know anything of the £1 billion set-aside?
§ Ms Clare Short (Birmingham, Ladywood)
We have had an interesting debate. The interest on the Government Benches in questions of investment in our economy and transport appears to be limited. There has been thin attendance and many of the speeches from Conservative 421 Members have failed to address that subject matter. That is a little surprising. Perhaps it tells us something about the values of the Conservative party.
The description of Britain and the British economy that the Secretary of State for Trade and Industry gave us at the beginning of the debate was completely unrecognisable to me. I do not know what country Conservative Members live in, but it is certainly not the country that I live in.
As I go round Britain, talking to people of all classes and backgrounds, I find a deep sense of worry, fear and unease about the continuing decline of Britain. The worry about what is to become of future generations is genuine and widespread. Indeed, as I prepared the notes for this debate I had on my desk a letter from Mr. Nunn, who lives in Stanmore, Middlesex. He wrote it on 12 November, saying that that is the day on which we commemorate the dead of his generation who did not survive the war. He uses very strong language and those on the Government Bench should face up to how angry people in Britain are feeling about what they are doing to our country. He says:We faced the enemy in the 1940s knowing where he was and what we had to do to defeat him. Today the enemy is within and speaks in our own tongue. To prove the magnitude of this betrayal look around you at the decay of this British Isles where once proud men are now reduced to scavenging to bring food to the family table while their morale and living standards sink to ever lower levels.Strong stuff, but that is the mood of the country, and the Secretary of State simply misjudges how worried people are about the problems of the British economy.
There is no doubt that the major reason for Britain's continuing decline and poor economic performance is the very low level of investment in our economy. The figures are frightening. We start from a base that is lower than that of comparable competitor countries. For example, investment per head is £1,600 in Britain, whereas in France it is £2,250, in Germany it is £2,600 and in Japan it is £3,900, but the trend is for it to get ever worse.
Even Italy invests 19 per cent. more than the United Kingdom as a share of national income. Germany invests 60 per cent. more, Hong Kong 92 per cent. and Singapore 128 per cent. So we are worse off, our investment is lower and the trend is for it to get worse. The British economy is in decline, and the people of Britain are deeply worried about it.
Clearly, to respond to the fears of the British people and the needs of the economy, we must work together to mobilise more investment, particularly long-term investment in our economy and infrastructure. Otherwise, Britain's continuing decline is inevitable.
The tragedy for the country is that we have a Government who are driven by an ideological obsession with a deregulated and privatised free-for-all, which means that they cannot mobilise what the nation needs. We also have a Government who are convinced that the only way to compete internationally is through low wages, which go with low skills and low investment. That depressingly clear Government ideology prevents us from taking the action that we need to take to improve the performance of our economy.
If we compare our transport system with that of other countries, we see a clear example of Britain's comparative failure. The consensus is growing throughout the country, 422 among everyone involved with the provision of transport, that the Government's policies are disastrous for the economy.
In a recent Automobile Association press release on 27 September, Mr. John Dawson, group public affairs director, said:Much of the dissatisfaction with the state of our transport policy and system in this country stems from our inability to plan and finance capital programmes. Our investment is at the bottom of the European league. This is bringing ever increasing competitive disadvantage as the CBI have strongly argued.So there we have it. Everyone, including organisations such as the AA, agrees that there has been a serious failure to mobilise investment from public-private partnerships. Essentially, that is what we need—the Government working with the private sector to mobilise investment throughout our system, but particularly in our transport systems.
A modern economy needs an efficient and sustainable transport system, in the interests of economic efficiency and the quality of life. We have growing congestion and pollution. The CBI has estimated that congestion is costing the economy £15 billion a year. It is taking a growing toll of the environment, and people are deeply concerned. Asthma levels among children and elderly, frail people and the decline in the centres of our cities and towns because of the problems of transport pollution and congestion, are causing deep worry about the quality of life in the future.
There is a growing understanding and consensus that existing transport policy is on an unsustainable trajectory. The Government estimate a doubling of car ownership in 30 years. We cannot go on carving up the countryside, building more and more roads, and commuting by car in ever greater numbers. The congestion and pollution would become unbearable. Most towns and cities would be gridlocked.
Neighbouring countries show the way forward. Other European Union member states have higher car ownership than the UK but their cars are used to travel many fewer miles and tend not to be used for commuting. That is the way forward. Of course we all value the freedom that the car gives us in leisure pursuits and when making family visits, but we cannot assume that we can continue to drive our cars in commuting to town centres. If we do that in ever-increasing numbers, traffic will grind to a halt.
The public transport system must be developed to provide attractive alternatives to the car in commuting to town for work and leisure. There is clear evidence that where there is investment in high-quality public transport, use of it increases and people leave their cars at home.
The tragedy for Britain is that the Government have spent their time dismantling the tools necessary to build a modern transport system. Bus deregulation has had some very negative effects. Since deregulation outside London in 1986, the number of bus passenger journeys in Wales, Scotland and the rest of England has fallen by more than one quarter. That means a drop of more than 1 million bus passenger journeys every year.
In Tyne and Wear, bus passenger use fell by 23 per cent. between 1986 and 1994, while over the same period, bus-operated mileage rose by 23 per cent. In some major cities, there have been bus wars, with all the congestion and danger to which they give rise. In addition, nearly half the larger buses in service today are more than 12 423 years old, which is double the number before deregulation. Worse service, more congestion, older buses and more pollution are exactly what we do not need.
The privatisation plans for British Rail led to a disastrous drop in investment. Our rail system needs above all a big increase in investment. Anyone who has taken the wonderful Eurostar through the channel tunnel knows that, to our shame, Eurostar can travel massively fast on the French side but travels much more slowly on the British side, which demonstrates bad under-investment in our rail system.
The Government's plans for rail privatisation offer exactly the opposite of what is needed. The preparations for privatisation have led to the Government's subsidy doubling but terrible under-investment in all parts of the system. If the Government ever complete that privatisation—which we think is unlikely—the structure of 90-plus operating units will make investment almost impossible. Serious people who have worked on the railways all their lives believe that, because so many different agents will have to co-operate, it will lead to a further drop in investment and require a bigger public subsidy—the opposite of all that is needed to modernise, strengthen and improve the rail system.
The road programme picture is just as bleak. More intensive use needs to be made of the existing road system as investment is made in public transport options and other alternatives. Although the Government claim to be committed to a road building programme, they have disastrously cut maintenance levels. A briefing from the British Road Federation dated 12 June points out:The maintenance quality of Britain's roads has declined over the past decade in 8 out of 10 regions in England and Wales … Nearly 5,000 miles of major road is in need of urgent structural repair and a further 3,000 miles will wear out in the next four years. Nationally there has been a 10% decline in the maintenance quality of the road network since 1984 with considerable deterioration in five out of the seven classes of road.So even in the part of the transport system to which the Government claim to be the most committed there is disorganisation and mess. Now it has been heavily trailed that there are to be massive cuts in the Budget for the road building programme. We shall soon see; if there are, they will endanger the future of some of this country's few remaining construction companies. The construction industry is in very bad shape, partly because of the poor state of the housing market. Consequently, it is fearful of the consequences of this sudden chopping and changing of Government policy.
Labour, by contrast, is committed to a review of the roads programme, to try to redirect money from road to rail in a systematic, managed way, as part of a national transport strategy. In that way, everyone can work in co-operation with the strategy to deliver the sort of results that the country needs.
The picture of our transport system is a sad one. It is declining, it is polluting and it takes people ever longer to make their journeys. That is both wasteful and degrading to the environment. Labour is committed to the development of a national transport strategy so that we, as a nation, can agree on the changes necessary to improve the system for the future. We shall want to work in partnership with the private sector, greatly to increase investment in the buses and trains so that people switch 424 from the car to public transport. We shall work to get more freight on to the railways. We are conscious that the opening of the channel tunnel gives us an opportunity to make great gains in moving freight from road to rail, to the benefit of all.
The result of Labour's approach will be more investment and better integration between various modes of transport, so that people can switch easily from trains to buses, or back again. The hon. Member for Wellingborough (Sir P. Fry), who made one of the few serious speeches on the Government Benches today, firmly and clearly stated that it is perfectly within the bounds of modern technology to provide information about the interchanges between the railways and the buses, and about the timetables for both. That must certainly be done to encourage the people of our towns and cities to make the change.
§ Mr. Barry Field
I should just like to point out that Southern Vectis on the Isle of Wight has launched, in conjunction with, and with a grant from, the Department of Transport, a bus, train and coach timetable service. It is a national dialling service which people can phone from any part of the country to learn how to plan their routes.
§ Ms Short
That sounds enormously attractive. I am surprised that the hon. Gentleman did not tell us about it during his speech—perhaps because he was so busy telling us about subjects not covered by the Queen's Speech. We should like such a system for the whole country, giving people access to public transport options wherever they live. They need to be able to travel by rail or bus on reliable services with reliable information.
Given the necessity to make these changes, and the growing consensus that they need to be effected, it is fairly amazing that the Government are taking no action to create a national transport strategy. The truth, I fear, is that they have fallen into the hands of right-wing zealots who believe fanatically in deregulation and privatisation even when they damage the national interest. It is a sign of how strong those forces in the Tory party are that someone like the Secretary of State for Transport can be captured by their ideas. The right hon. Gentleman is aware of my respect for him; it is my conviction that he does not believe in the policies that he has to defend to the House and the nation—that is my compliment to him.
The Government's strategy is against the national interest and goes against the views of all who are concerned for the future of our transport system. What this country needs is a general election that will bring in a new Government dedicated to mobilising greater investment throughout our economy and our infrastructure, so as to bring about a halt to their continuing decline. Instead, we have had this mouse of a Queen's Speech, designed for cheap political advantage. The Government have nothing to say to the people throughout this country who are desperately worried that Britain is in continuing decline and that nothing is being done to stop it.
§ The Secretary of State for Transport (Sir George Young)
Much of the debate has been about competition. Rising to speak at nearly 9.40 pm, as "Panorama" is about to be beamed into the nation's homes is real competition.
425 It has been a reflective debate. There has been a contrast between the rather bleak picture of the nation's economy painted by the right hon. Member for Derby, South (Mrs. Beckett) and the hon. Member for Birmingham, Ladywood (Ms Short) and that painted by my hon. Friends. The right hon. Lady and the hon. Lady have ignored the impact of inward investment over the past few years. We have attracted mobile international capital not into Disneyland and service industries but into industries with good productivity and growth prospects, such as the pharmaceutical industry, information technology, motor car manufacture and telecommunications.
The United Kingdom is competing in a competitive world for capital from overseas. Companies from other countries want to locate here because the conditions are right: low inflation, low interest rates, good industrial relations and low corporation taxes. That is good news for those we all care about—the people who are looking for work.
The prescription of the right hon. Member for Derby, South did not meet the analysis. It amounted to enhanced business links—building on something that we have successfully pioneered—and a national on-line database. That was her solution. She called for a national appraisal and national renewal based on a new consensus. That is typical of the bland generalities that we get from new Labour. It sounds good, but when we analyse what is said and ask what it means, we find that it means nothing.
My right hon. Friend the Member for Selby (Mr. Alison) injected a philosophical note into what has been an industrial debate by talking about divorce law and family law reforms. It was like suddenly coming across "Thought for the Day" in a rather turbulent "Today" programme, but it was a welcome contribution. I shall forward my right hon. Friend's comments to the Lord Chancellor.
I hope that I do not embarrass the right hon. Member for Llanelli (Mr. Davies) if I say that he made an honest, provocative and thoughtful speech. I cannot think who he was talking about when he criticised politicians who made generous use of the word "tough". Could it have been the Leader of the Opposition? The right hon. Member for Llanelli spoke with great derision about those who set up think tanks, which are then asked to think the unthinkable about social welfare reform. What, I ask myself, was the purpose of the Social Justice Commission, which the Leader of the Opposition set up?
My right hon. Friend the Member for Conwy (Sir W. Roberts) spoke rightly about the importance of regional strength and its impact on technology. I shall pass on to my right hon. Friend the Secretary of State for National Heritage what my right hon. Friend said about technology and the proposed Bill on media ownership.
My right hon. Friend the Member of Conwy also spoke of Welsh devolution. If there is one subject on which an English Secretary of State for Transport knows he should not talk, it is Welsh devolution. That is a road with no-entry signs all along it.
I am sure that the hon. Member for Christchurch (Mrs. Maddock) knows that, with the reform of the homeless persons legislation, the safety net will remain. We believe genuinely that reform will lead to fairer allocation. It seems that the Liberal Democrats believe that housing is a priority. We know that they regard education as a 426 priority. They have been honest enough to say that they would consider increasing income tax by lp in the pound to fund education. If housing is a priority, how will they fund it? Will we have another lp on income tax for housing? Would the hon. Lady fund it in another way? How many priorities can the Liberal Democrats have? If they have more than one priority, we are entitled to ask how they will fund them.
My hon. Friend the Member for Waveney (Mr. Porter) rightly reminded us of the success of Felixstowe under the regime introduced by the Government. He made an impassioned plea for road investment. He will understand that he may have to wait until next week for the position to become clearer.
At one point in his speech, the hon. Member for Huddersfield (Mr. Sheerman) uttered the words, "if manufacturing industry continued to fail". If he had listened to my right hon. Friend the President of the Board of Trade, he would have heard that investment in manufacturing has increased by 11 per cent. this year, is forecast to go on increasing and that output is at an all-time high. That does not sound like failure to me.
My hon. Friend the Member for North-West Surrey (Sir M. Grylls) rightly reminded us of the importance of small businesses, and I pay tribute to his work in promoting an unfashionable subject and making it one that is now almost politically correct. He rightly pointed out that success in attracting multinational investment is of interest to small businesses, because the investment filters through and helps small businesses in the areas where they are established.
The hon. Member for Norwich, South (Mr. Garrett) spoke about the railways, and I hope to return to that in a moment.
My hon. Friend the Member for the Isle of Wight (Mr. Field) rightly pointed out that large-scale voluntary transfer is in effect the injection of private finance into housing, which has been pioneered by Conservative local authorities. Indeed, the Isle of Wight was one of the first to pursue that approach. He always campaigns on behalf of his constituents, and did so today. On direct payments to landlords, I remember from my time as Housing Minister that local authorities have discretion to make direct payments to landlords where that is the right thing to do, and I hope that that discretion will be exercised sensibly by his local authority.
The hon. Member for West Bromwich, East (Mr. Snape) invited me to travel on the west coast main line. I do so regularly. He will be pleased to hear that I travelled in the cab of a train from Birmingham to Coventry only last week. I visited a signal box where the technology was more modern than the one that he mentioned. I was allowed to make a station announcement at the signal box, and I understand that it was widely commended for its clarity, but the absence of a Birmingham accent may have confused some of the passengers.
My hon. Friend the Member for Corby (Mr. Powell) rightly reminded the House what can be done for a declining industry such as steel. With good partnership between local government and central Government, and with help from an enterprise zone, his area was turned around, and as a bonus it has returned a Conservative Member of Parliament, whereas previously one might not have expected that.
427 The hon. Member for Ceredigion and Pembroke, North (Mr. Dafis) rightly spoke about environmental pollution, in which transport has a key role to play. We have set challenging targets on exhaust emissions and have introduced a number of measures to reduce vehicle pollution; more such measures are on the way.
My hon. Friend the Member for Wellingborough (Sir P. Fry) referred to the Royal Automobile Club report. I was at the report's launch and commend the way in which the RAC and the Automobile Association are making broad-based realistic proposals that do not simply focus on the need of motorists but recognise that motorists need access to good public transport and that there is a role for alternative forms in the transport strategy of the future.
I now return to the theme of transport, about which a number of hon. Members have spoken. It is not true that investment in transport has been neglected by the Government. More than 700 miles of railway have been electrified. Electric trains now run on more than 30 per cent. of the network. Some 224 stations have been opened or reopened. More than a quarter of the rolling stock has been replaced in the past 10 years. Almost 90 per cent. of the former regional railways stock is less than 10 years old. More than £3 billion has been invested in continuing track renewal.
In recent years, we have funded projects such as the east coast main line modernisation, where £550 million has been spent on resignalling and electrification and on new rolling stock. In 1978, the fastest journey time between London and Newcastle on that line was three hours and four minutes. Between London and Edinburgh, the fastest timetable journey was four hours and 52 minutes. Today, those journeys would take two hours and 40 minutes and four hours and five minutes—savings of 24 and 47 minutes respectively.
I can give no better illustration—
§ Sir George Young
I am coming to that.
I can give no better illustration of the healthy pattern of investment in our railways than to mention three projects that I have launched in the past 10 days. On the morning of 4 November, I opened a new high-speed rail freight facility for Buxton Lime Industries. The Government had contributed £2.6 million to the project, which will potentially relieve the village of Buxton of up to 125 lorry trips each day. On the afternoon of the same day, I had the pleasure of inaugurating stage 2 of the Robin Hood line—a £20 million scheme that included the restoration of rail passenger services through the town of Mansfield. On 13 November, in the presence of the hon. Member for West Bromwich, East, I cut the first turf in the construction of the £145 million Midland metro light rail scheme, which promises to bring major benefits to travellers in the west midlands and to play a key role in the regeneration of the black country.
The long list of essential investments undertaken at public expense since 1979 records only a part of the Government's success in the transport sector. Massive private investment has also been possible in transport industries, especially in those that have been privatised in 428 the past 16 years. Hon. Members with long memories may recall that British Airways used to be a nationalised industry, dependent for its investment plans on the availability of Government funds. [Interruption.] The successes achieved by British Airways in recent years show vividly how businesses can flourish in the private sector, meeting their passengers' needs and investing to attract new custom. [Interruption.]
§ Madam Deputy Speaker
Order. There seems to be an increasing tendency for both Front and Back Benchers to make seated interventions.
§ Sir George Young
We can also point to similar patterns in other industries that have been freed from the straitjacket of public-sector controls. The National Freight Corporation, National Express, most of the bus industry— now including London Buses—the BAA, Associated British Ports and the trust ports Clyde, Forth, Medway, Tilbury and Tees and Hartlepool are now all private-sector operations, free to invest as their customers demand and without constant reference to Whitehall.
We are making good progress both with the competition to select the private sector promoter of the high-speed channel tunnel rail link and with the hybrid Bill. The European Community has designated the project one of the 14 top-priority trans-European network projects, and I welcome the Commission's decision to give it £13.6 million worth of support in 1995.
The scope for attracting private-sector investment to transport projects is not limited to industries that are already in the private sector. We have sought new ways of developing partnerships between public and private sector, and have already made great progress. Some £100 million of private-sector money was invested in the railways last year; on the road network, the Queen Elizabeth II bridge between Dartford and Thurrock was built entirely by the private sector at a cost of £150 million.
The success that we have achieved through greater involvement of the private sector in transport encourages and inspires us to further progress in that direction. In 1996–97, the radical transformation of the railway resulting from the Government's privatisation plans means that responsibility for the bulk of investment will lie within the private sector: Railtrack, the rolling stock leasing companies and projects such as the channel tunnel rail link will all be in private hands. Railway businesses will be freed from direct public-sector expenditure controls and will be able to focus on providing services that are more in line with customers' needs.
Our arrangements for franchising passenger services are consistent with our aim of delivering a high-investment railway for the future. Franchisees will have a clear interest in new investment that will bring them the opportunity to improve services, attract more passengers on to the railway and increase revenue. They will be able to work with the rolling stock leasing companies and Railtrack to develop proposals for new investment. Early signs are already promising. I am particularly encouraged that the bids that the franchising director has received for the first three franchises include some constructive and imaginative proposals for investment and service improvements.
§ Mr. Wilson
The Secretary of State knows as well as we do that he is whistling in the dark. Virtually the only bids that he has had for the first three franchises are from 429 management buy-outs in which people have been compelled to compete for their own jobs. Would the Secretary of State care to comment on the views of James Sherwood, president of Sea Containers, who has consistently said that a seven-year franchise period would not allow for investment, and that—as the Government insist on that period—he wants nothing to do with a deteriorating railway? It is difficult to portray James Sherwood as a mad-eyed Trot.
§ Sir George Young
It is the hon. Gentleman who is whistling in the wind. Sea Containers was not successful because there were better bids. That is good news for the passenger and the taxpayer but it is bad news for the hon. Gentleman.
§ Sir George Young
No, because I should like to make some progress.
Last week I announced the sale of the former British Rail passenger train fleet, the rolling stock leasing companies—ROSCOs. That was Britain's largest ever privatisation by direct sale. The new owners are demonstrating a strong commitment to the development of a competitive market for passenger rolling stock. In addition to taking over the existing train fleet and the networker express fleet that is currently on order, the new owners bring access to additional funds to finance new trains and refurbish existing rolling stock. Their position in the industry, each company having a nationwide customer base and a spread of newer and older trains, should stand them in good stead to invest in renewal and to seek new growth opportunities. I am delighted, and I hope that the hon. Member for Cunninghame, North (Mr. Wilson) is also delighted, that ROSCOs have already begun discussions with potential franchisees on the need for future co-operation.
We set up Railtrack to own most of the track, signalling and associated infrastructure, including the stations and to operate 14 of the major stations. Railtrack will be floated on the stock market next spring. The company will no longer be competing with, for example, hospitals and schools for limited public sector funds. It will receive regular income through access charges and will be able to tap new sources of private funding to carry out its investment plans. Railtrack has been established with a level of funding and a regulatory regime sufficient to allow it to fund its investment programme, which includes necessary maintenance and renewal of the infrastructure.
I shall now deal with the matter raised by the hon. Member for Glasgow, Rutherglen (Mr. McAvoy). I was surprised to read in this morning's press suggestions that Railtrack may be holding back £1 billion that might otherwise be used for investment in the current year. That article was based on a profound misunderstanding of the difference between real cash flow and the accounting treatment of Railtrack's investment budget.
Railtrack is spending more than £1 billion this year on infrastructure renewal and maintenance. As a result of surveying its assets, Railtrack has drawn up long-term plans for developing that infrastructure over five years for stations and over 10 years for tracks and signalling. That longer-term approach to investment planning is a key advantage of privatisation and represents the liberation of industry from the straitjacket of public expenditure controls. Yet again, the truth about rail privatisation is 430 being obscured by unfounded reports that attracted comment in the morning before disappearing into oblivion by lunchtime.
We have restructured the industry in such a way that the financial regime that is in place will allow Railtrack to fund the necessary maintenance and renewal of the network. The regime of the rolling stock leasing companies has clear incentives for them or others to invest in new rolling stock. I am confident that, as a result of these new financial and regulatory regimes, investment will increase, as with all other privatisations. Overall funding in future years will, I am sure, enable the industry to meet its objectives of developing and improving the network and improving services to users.
In addition to the benefits of privatisation, we can expect further benefits to the railways from the private finance initiative. One beneficiary will be the west coast main line, the strategic arterial railway route connecting London, Birmingham, Manchester, Liverpool and Glasgow. The last comprehensive re-equipping of the line was in the 1960s and 1970s, and that investment is coming to the end of its economic life. At the end of 1993, we announced that private finance would be used to modernise the line. A feasibility study analysing performance standards and investment options for the line was completed at the end of last year. It recommended an investment programme of modernisation works involving complete resignalling and comprehensive renewal of the track and the electric power supply and other infrastructure work.
In March, we approved the development of a new state-of-the-art signalling system for the line. Development work for that signalling system will take place while Railtrack is in the public sector and will form part of the private finance initiative. The project has generated considerable interest, and Railtrack received a good response to its tender invitation. It expects to award the contract early next year.
It is hard to overestimate the economic importance of the channel tunnel rail link and the west coast main line—[Interruption.]
§ Madam Deputy Speaker
Order. I have warned Front-Benchers before. I am getting tired of seated interventions. If the hon. Member for Cunninghame, North (Mr. Wilson) or any hon. Member wishes to intervene, they must do so in the time-honoured fashion.
§ Sir George Young
The figure will be announced when the contract is awarded. The hon. Member for Cunninghame, North cannot expect the Government to give away their negotiating hand by revealing, while discussions are still taking place, how much they are prepared to pay.
It is hard to overestimate the economic importance of the channel tunnel rail link and the west coast main line. Along with the channel tunnel, those two lines will form an industrial artery running through the heart of Britain to the continent—a wonderful boost for British industry. In recognition of the line's importance, almost £7 million has been allocated to the improvement programme as part of the European Union trans-European networks programme.
Privatisation will deliver a railway for the 21st century. Increased flexibility and investment will encourage people and freight to move from the roads to rail.
431 On roads, we are making progress.
§ Sir George Young
I must answer many of the points that have been made by hon. Members who have been in the Chamber for slightly longer than the hon. Gentleman.
We are also making progress with the design, build, finance, operate initiative for the highways. Earlier this evening, my right hon. Friend the Prime Minister announced the preferred bidder for the first of those projects, the A69 between Carlisle and Newcastle. That status has been given to a company called Roadlink, with which we expect to sign contracts shortly. Because of the first tranche's success, we have already followed that up with competitions for four more. Bids for those have just been received. In all, eight projects will provide capital investment of more than £500 million.
There has been criticism of the private finance initiative from sectors of the industry that say that it causes delay. I sympathise with that, because deals can take time, but the PFI provides funding for projects that would not otherwise take place, and substantial delay is not a charge that can be laid against the DBFO initiative. We have made progress with the competitions in a short period.
What the industry really wants is what it calls "deal flow" so that it can spread risk. We are seriously contemplating another tranche. One attractive possibility would be to extend the DBFO technique to a chain of improvements, allowing companies wider scope to operate efficiently.
It is worth reminding the House that the last two Labour Governments closed 655 stations and lines, whereas we have opened 244. On 26 October, I wrote to the hon. Member for Ladywood, asking her to set out clearly Labour's policies for the railways. I have not received the courtesy of a reply. I hope that she will reply to that letter, answering all the questions that I put to her in it.
§ Sir George Young
I understand that and I look forward to receiving that reply. The hon. Lady says that 432 she has been very busy in the past few days, but, in that time, most of the press releases seem to have come from the hon. Member for Cunninghame, North rather than from her.
Old Labour is alive and well. We had an astonishing threat from the hon. Member for Cunninghame, North not to renew franchises, even if that means a worse deal for passengers and for taxpayers. What an absurd, unpopular and dogmatic policy to insist on returning control to the railways, even if that costs more for the taxpayer and produces less for the passenger.
It is a bit rich of the Labour party to criticise the Government for lack of rail investment when the hon. Member for Oldham, West (Mr. Meacher) has said:There can be no guarantee from any Government that such a subsidy will continue indefinitely at that level.How much would the Opposition spend on the railways? When are we going to hear a figure on that to back up some of their commitments? It is misleading of the Opposition to claim that they would invest more than the Government on the railways without giving any idea of their figures.
We all know that the hon. Member for Ladywood is an honest socialist politician. It is precisely because of her honesty that she has already resigned twice from her Front-Bench team. How long will it be before, as an honest socialist, she will have to resign again because the shadow Chancellor of the Exchequer will not let her make the commitments that everyone in this Chamber knows she would like to make?
It is also ridiculous of the Opposition to criticise us for a lack of investment when they want to deny others the opportunity to invest in the railways. No sooner do we have the private finance backing for ROSCOs, Red Star and the other old parts of British Rail that we have sold, than the Opposition leap on their left-wing bandwagon of renationalisation. That shows how little they want private investment in our railways.
If investment in the railways is not to come from the private sector, where would it be found under the Opposition if they were in government? It would have to come from the public purse. Are the Opposition really saying that, when investment is called for in the railways, they will stump up the cash rather than giving it to hospitals, to schools or to pensioners—because that is what keeping the railways in public ownership would mean. It will be a continuing struggle, and their policy on the railways will get them nowhere—
§ It being Ten o 'clock, the debate stood adjourned.
§ Debate to be resumed tomorrow.