Factory Closures

HC Deb 10 November 1998 vol 319 cc148-205

Madam Speaker

I must inform the House that I have selected the amendment standing in the name of the Prime Minister.

3.40 pm

Mr. John Redwood (Wokingham)

I beg to move, That this House is concerned about the continued spate of factory closures and job losses; condemns the Government's failure to take urgent action to give manufacturing a chance; believes that this Government's actions in increasing business taxes and regulation have made the position worse; asks the Government to explain how far they will go in implementing the McKinsey Report on productivity; and urges the Government to change policy before more jobs are lost.

We urge the House to use this opportunity today to have a serious discussion on the current problems in manufacturing business. I would be surprised if Labour Members felt so strongly that they would wish to break their word to the Whips and vote for our motion, although it is framed in a way that they should find entirely acceptable—it is about the present and the future, and it urges the Government to do something to help all those manufacturing companies that are now in trouble.

I am a realist—I do not see many brave souls on the Labour Benches who are about to vote for our motion. However, I hope that they will use this opportunity in the debate to speak for their constituents and the companies in their constituencies. We know that they are suffering and that they need a strong voice in Parliament. We will be that voice from the Opposition Benches, but we think that it is time for some voices from the Government Benches to tell the Government the truth about the factory closures and job losses.

Mr. Gerry Sutcliffe (Bradford, South)

If we are to have a sensible debate about the future, we must remember the past. Why was manufacturing standing at 30 per cent. of gross domestic product in 1979 and down to less than 20 per cent. when the Conservative party left office?

Mr. Redwood

Gross domestic product went up massively and the service sector grew even more rapidly, therefore increasing its share of the action. However, I know the argument that will come from the Government. We have heard it many times, so let us do the routine quickly so we do not waste too much time on it. Yes, we got it wrong in the early 1990s. Yes, the Labour party fully supported the actions we then took. Yes, we have apologised. That is not the point of today's debate. There has been a general election since then, and many things have changed.

The new leadership of the Conservative party wants to look to the future and offer heartfelt advice, based on our successes and our mistakes during our period in office. I hope that that means that the Secretary of State can now ditch most of his speech and tell us about the present situation—in which manufacturing is suffering—and the actions that he may take with his right hon. Friends to make things better for manufacturing.

Yesterday was just another day in the sorry progress of manufacturing under the Government. ICI closed a works in Billingham. Cooper's tools transferred its manufacturing to Germany and to Mexico from that important plant in Washington new town in the north-east. I hope that the Secretary of State understood that—the company closed the plant down not because of a worldwide shortage in demand but because it thought that it was cheaper to make things in Germany.

Mr. Ronnie Campbell (Blyth Valley)

The right hon. Gentleman mentioned the north-east. In my constituency, Wilkinson Sword, the razor blade manufacturer—an American company—closed down entirely and invested in a company in Germany. When I asked the company why, I was told that it had nothing to do with the pound or with interest rates. The company said that it was cheaper to sack British workers than German workers.

Mr. Redwood

I would be surprised if that were the only explanation of the company's actions. Why would it want to sack the British workers? A company does not sack workers because it is cheaper to sack them here than somewhere else; it does so because it can no longer make money in the market concerned and in this country and thinks that it can benefit its business by transferring the work elsewhere.

If the hon. Gentleman is so worried about that factor, he should urge his right hon. Friend the Secretary of State to do something about it. I do not agree with him about why Wilkinson Sword decided to pull out. It decided to pull out of the north-east, like many other firms that have done exactly the same in recent weeks and months, because the Government have made it too dear for manufacturers to make things in Britain and that area is suffering as a result—[Interruption.] Labour Members seem to deny that. Are they forgetting that Siemens has reduced its work force by 1,100 and cancelled a major plant and investment in the north-east? Three hundred and fifty jobs have gone from Wilkinson Sword, 600 at the Vickers tank factory, 2,000 at Claremont Garments, 500 at the British Oxygen Company, 730 at BASF and 660 at Grove Cranes. I have here a long list of job losses in the north-east since June, which I will not bore the House by reading. However, every one represents an industrial tragedy and a series of family tragedies for the people tied up in it. It is about time that the Government woke up to what is going on in the backyard of the Secretary of State for Trade and Industry, in his constituency of Hartlepool.

Helen Jones (Warrington, North)

If, as the right hon. Gentleman says, every job lost is a tragedy, will he explain why, when he was in the previous Government, he allowed 8,000 manufacturing jobs to go from my area and never said one word about it?

Mr. Redwood

I never thought that the loss of manufacturing jobs was a good thing. The hon. Lady does not know what I was saying within the Government when we were facing those problems. We were governed by collective responsibility and, as I have said, my right hon. Friend the Leader of the Opposition has acknowledged on behalf of the party that mistakes were made in the early 1990s. The fact that such mistakes have been made should be a reason for the Government to learn from them, not to crow about them and then make exactly the same mistakes or worse.

Mr. Ian Bruce (South Dorset)

We need to start looking forward, but let us try to strike a balance. The last two factories in which I worked have now been closed. The first closed in 1975, when I had the painful job of working with the people who were being made redundant to help them find other jobs. Before then, I had worked at a factory in the borders of Scotland that produced printed circuits. The Government have now ensured that that factory has to make all its workers in Selkirk and Galashiels redundant, but the Government' s only comment is that we need more productivity. They do not understand, so they should stop sneering.

Mr. Redwood

My hon. Friend makes a powerful point. Our sadness is that fine jobs are going and fine factories are closing—factories that we fought to get in this country or that decided to locate and grow here because they liked the economic policies that were being pursued. So much of that good legacy has been dissipated in 18 short months under this Administration.

Meanwhile, the Secretary of State for Trade and Industry strolls on the Copacabana in Rio, plays courtier to the Prince of Wales, opens a motor show early to suit his personal and social convenience and turns a blind eye to the true problems of British business. We hear him in blunder after blunder, saying that he is no fan of greasy overalls or of horny-handed toilers in industry. As one who has never worked in industry, he obviously finds it difficult to understand how one makes things and the sort of background that one needs to do so profitably and to sell them abroad.

The right hon. Gentleman has become the Minister for manufacturing recession and the Minister for factory closures. He still thinks that he can spin enough to spin business out of trouble, but the more he spins with the odd piece of good news, the more ridiculous he looks and the more interest there is throughout the country in gloomy survey after gloomy survey and closure after closure.

Ms Helen Southworth (Warrington, South)

Has the right hon. Gentleman spoken recently to the Chemical Industries Association Ltd? Three of its members are located in my constituency. When I spoke to the chief executive last night, he expressed serious concern that the Opposition were talking down the economy and the industry. He said that he was having to make considerable efforts to counteract the effects of that talking down, which is damaging his markets.

Mr. Redwood

It is a case of the Government doing down the chemical industry, not of the Opposition talking it down. My colleagues and 1 have been scrupulously careful never to talk us into a recession. Whenever I have been invited by broadcasters to go that bit further and predict an overall recession here, I have said that I do not wish to do so because I have no wish to make things worse than they already are.

It defies both logic and evidence, however, to say that there are no problems in manufacturing industry. I hope that the hon. Lady reads the surveys. I hope that she has read the profit and loss figures being reported. I hope that she has read all the news of closures and redundancies. If she has read and understood any of that, she will realise that we are not talking industry into problems. The problems are real, and they are immediate. It is up to the Government to change their policies before they do even more damage.

Mr. John Randall (Uxbridge)

Does my right hon. Friend agree that not just manufacturing is affected? The retail trade, in which I have an interest, is also being hit. We do not want to talk down the economy, but one of the first things that one learns in business is to identify a problem, admit to it and deal with it. The Government singularly fail to do that.

Mr. Redwood

My hon. Friend is absolutely right. I hope that the debate will persuade the Government to recognise, even at this late hour, that there is a problem. We are not making it up. The Confederation of British Industry, the other big business institutes and companies up and down the country share that view. One need only read Ceefax or the financial pages day after day to see how serious the problems are.

Mr. Christopher Gill (Ludlow)

It may help my right hon. Friend to know of some headlines in the Shropshire Star: in September, "County dole figures show a sharp rise" and, in October, "300 workers take pay cut". The latter story noted: More than 300 workers at a Shropshire company are to take a pay cut to save their jobs. A week later, the front-page headline was "Rover crisis hits county". The difficulties are real. There is no use the Government pretending that there is no crisis. The crisis is here, and it is affecting people's jobs in Shropshire.

Mr. Redwood

Many of my hon. Friends could make equally powerful points about their constituencies. The problems are real, and the Government must listen to us.

Meanwhile, the Secretary of State likens himself to John the Baptist. I think that John the Baptist was closer to being an atheist than the Secretary of State is to understanding British manufacturers. He has invited us all not to a baptism, but to a funeral for British industry. He will discover that his enthusiasm to drive the story of factory closures out of newspapers and off the media will backfire terribly. There is so much worry in the country that the media will have to pick up that concern despite the right hon. Gentleman's guidance to the contrary that it is of no interest to people outside the House.

I trust that, when the Secretary of State speaks, he will not play too heavily on the welcome news of new jobs in construction announced by British Petroleum yesterday. We need lots of such announcements, because, by its nature, construction work expires every time a contract finishes. New contracts are always needed to keep construction workers in employment. The Secretary of State should not be confused into thinking that those jobs are new jobs in manufacturing or chemicals. The jobs tally for BP's investment is plus 225 new jobs for the new plant when it is up and running, but minus 150 jobs at Baglan, where there will be a compensating closure. The sum of the good news for the chemical industry is a gain of 75 jobs, but that small, though welcome, announcement was more than swamped by yesterday's other announcements of losses elsewhere in manufacturing.

Mr. John Bercow (Buckingham)

My right hon. Friend is advancing a powerful case. In support of it, will he recall the simple, salient fact that there have been 19,000 job losses since the Secretary of State assumed his post?

Mr. Redwood

I am most grateful to my hon. Friend for that intelligence. I had not counted the figures up in that way, but his figure sounds entirely possible. Perhaps the total is even more. I have noted announcement after announcement in the press, on television and on the radio since the Secretary of State took up his responsibilities.

The Secretary of State recently made a trip to the United States of America. I welcome the fact that he is learning from businesses there; they have things to teach us. However, I hope that he will not ignore successes at home. Far from wishing to talk down British business, I spend much of my time talking it up, to counter the awful words of the Secretary of State. He blames everyone but the Government for what is going wrong in fine, productive, successful companies that are in deep trouble because of the Government's policies.

The Secretary of State claims to have had a flash of inspiration and light, to the effect that clusters work. If lots of large and small investors can be placed side by side, he claims, that will generate more jobs, more companies and more success. I wonder whether he has ever thought about the fact that, just a few miles from here, a little east of Westminster, is one of the oldest and most successful clusters of business in the world. It is called the City of London. The City of London was a successful cluster of inward investors and home-grown businesses before Columbus even sailed to America. But what does the Secretary of State do? He does not go to the City of London to congratulate it and see what he can do to help it; he, with his colleagues in Brussels, threatens it with a withholding tax and with dire consequences if it does not follow his political agenda. He will have to learn that even great success stories such as the City of London need care and attention from Ministers when economies are in troubled times.

Does the Secretary of State ever pause to think that Hatton garden and Harley street are also examples of successful clusters developed by the United Kingdom a long time ago? He is right to think that Silicon valley in the United States of America is a great success story, but is he aware that, if he travelled 40 miles to the west of London, he would be in the heart of a great British success story—another silicon valley called the Thames valley? He may not want to come to my constituency, where there is an enormous amount of enterprise and where unemployment is 0.9 per cent., but he may like to go to the constituencies of his hon. Friends the Members for Reading, East (Jane Griffiths) and for Reading, West (Mr. Salter), where he will see great success. Why does he not go there and learn from those experiences? Why does he not then take an interest in Hartlepool, where unemployment is 10 per cent. and where male unemployment is 13.5 per cent., and why can he not apply some of the success stories from the Thames valley to Hartlepool, which is what I would want him to do if I were one of his constituents?

Mrs. Claire Curtis-Thomas (Crosby)

I am sure that my right hon. and hon. Friends will agree with me on the right hon. Gentleman's record on clusters. I am pleased that he acknowledges that clusters are vital to our economy, but, having admitted that, will he reflect on the Conservative Government's performance after 1992? I offer some statistics. In 1992, under the Tory Administration, 62,767 businesses failed—such a glowing acknowledgement then of clusters and their effectiveness in the economy. In 1993, there was a rapid improvement, with 55,000 failures. Why do we not go to the year before the Conservative Government were unceremoniously ousted, when their glorious achievement in recognition of the significance of clusters throughout the nation resulted in only 36,000 business losses?

Madam Speaker

Order. I hope to call the hon. Lady during the debate.

Mr. Redwood

The hon. Lady has probably made her speech already; she clearly has not been listening, because I dealt at the beginning of the debate with the point that she has rather tardily made.

The truth is that the Government have transformed the United Kingdom from being the number one place for new investment for multinational companies to the number one place for closures. Now that there are some problems in the world economy, where do such companies turn to to dismiss their staff and close their factories first but the United Kingdom, because they know that it is in the United Kingdom that the climate has deteriorated most dramatically.

Mr. Michael Clapham (Barnsley, West and Penistone)

The right hon. Gentleman refers to investment, but he must be well aware from the figures shown, for example, in the McKinsey studies for the Treasury that, because for 18 years the Conservative Government failed to invest at the rate of our competitors, we are now in a situation where the Germans invest 67 per cent. more per worker than we do, the Americans invest 52 per cent. more, the Japanese 55 per cent. more and the French 46 per cent. more. Moreover, it is a little rich of him to talk about clusters when he was part of a Government who, in one fell swoop, put 32,000 miners on the dole.

Mr. Redwood

The hon. Gentleman has not realised that the McKinsey report is based on entirely arbitrary exchange rates—purchasing power parity rates—considerably below recent market exchange rates. That is why it shows output per head in the United Kingdom as lower than output per head in west Germany. Incidentally, it compares us not with the whole of Germany, just with west Germany. Were we to make the comparison at recent high market exchange rates, we would have a very different picture of Britain's relative success.

Mr. Desmond Swayne (New Forest, West)

Johnson and Johnson, which makes orthopaedic parts, is closing its plant in my constituency and moving to Cork. It is doing so not because it is unwilling to invest—it will invest a great deal in Cork—but because the Government have made the climate for investment so hostile.

Mr. Redwood

That is another good example of the point that I am making. The danger—indeed, the reality— is that investment intentions will be transferred from the UK, which is now regarded as a hostile climate for investment, to countries such as Ireland and Germany, also within the EU. Although costs in those countries used to be much higher, the relative advantage is now rather different because the Labour Government have made it so dear to make things in Britain.

Mr. Edward Leigh (Gainsborough)

The hon. Member for Barnsley, West and Penistone (Mr. Clapham) has clearly read not the original McKinsey report but only a briefing supplied to him by the Labour party. Had he read the report, he would have seen that it makes it clear that we should compare ourselves with America, and that our economy and that of Europe generally are becoming increasingly less competitive because of over-regulation of the type imposed by the Labour Government on British industry.

Mr. Redwood

My hon. Friend is right. The exchange rate differential is less important in the case of America because McKinsey believes that its rate is closer to the true rate and because, in recent months under this Administration, it has not been as high, relatively, as the Deutschmark rate. Thus there is a technical as well as a sound reason, based on the relative performance of economies. I agree with my hon. Friend that labour productivity in this country is not as high as it is in the US. Later in my speech, I shall discuss what the Government should do about that.

The House may like to remember what some large overseas investors were saying about this country just a little while ago when they decided to set up business here. For example, when Siemens decided to build an important plant in Britain in 1995—quite recently—it said: Our decision to build the new semiconductor plant here in the UK is a recognition of the pro-business environment which exists and the skills and commitment of the British workforce.… we have not invested here because we see the UK as a low-wage economy. Siemens recently decided to close that plant because none of those conditions remains true, as the Government have decided to make it too dear to make things in Britain. [HON. MEMBERS: "That is not true."' Hon. Members say that that it is not true. What other explanation is there? Siemens has not closed its factories elsewhere in the world, but it has decided to close the British factory, despite the fact that, a short while ago, it felt that Britain was the best place to invest.

If business taxes are increased by £25 billion and business regulation is increased by …14 billion over the lifetime of this Parliament, Britain will become very uncompetitive. The productivity problem is not of industry's making; it is of the Government's making. It is they who are bleeding industry dry by taking money out of its tills and coffers and putting it into the Treasury or administration.

Maria Eagle (Liverpool, Garston)

Would the right hon. Gentleman care to quote Siemens's reasons for closing its factory as carefully as he quoted its reasons for coming here in the first place? As I recall, it spoke about the worldwide recession and the collapse in its market. Is it not easy to see why it would choose to make redundancies here? One legacy that the previous Government left this country is that it is now much easier to sack people here than it is in other countries.

Mr. Redwood

Of course there are problems in the microprocessor market worldwide. We have always accepted that. [Interruption.] The hon. Lady has not been listening. I have always said that on the Siemens issue. The question that I have always posed is why, given that there are problems, Siemens closed the British factory and not the others. Why has it chosen to close a modern, state-of-the-art factory, having made such a huge investment in Britain so recently, and why has it changed its view of Britain dramatically since 1995? Rather than close factories in Portugal or Germany, it chose to close the most modern plant—in Britain—because it had become too costly.

The Secretary of State for Trade and Industry (Mr. Peter Mandelson)

The right hon. Gentleman cannot get away with this. The Siemens management, from the chairman and chief executive downwards, have made it consistently clear in all public statements and all discussions with me that the closure of the plant on north Tyneside had nothing whatever to do with domestic economic considerations. The reason that they cited was the collapse of the world market in semiconductor products. If the right hon. Gentleman is to be taken seriously in the rest of this debate, he would do well to withdraw his ridiculous claim.

Mr. Redwood

The Secretary of State must explain why Siemens closed in Britain and not elsewhere. That is the important question.

Mr. Mandelson

What is more, the right hon. Gentleman should be aware that that was not the only plant that Siemens closed. It even closed down lines in those products in its home city, Munich, as well as elsewhere. He needs to think again and get his facts right.

Mr. Redwood

Britain was the place where Siemens chose to close a complete factory of a most modern kind because the numbers no longer looked nearly as good as they did in 1995, when it was praising the United Kingdom and the policies being followed.

Mr. David Borrow (South Ribble)

Will the right hon. Gentleman accept that things are rather more complicated than he suggests, and that currents of investment between Europe and the United Kingdom go each way? Leyland Trucks, in my constituency, will next year produce an extra 4,500 trucks—which means more than 300 jobs—as a result of a transfer of production from Holland and Belgium. That current is going in the opposite direction to that suggested by the shadow Secretary of State. Perhaps he will accept that things are a little bit more complicated than the black and white picture that he paints.

Mr. Redwood

I am not arguing that all the industry will close, but a significant number of factories will close because the Government have made it so much more difficult for business to survive. Of course, there will be some success stories—we shall welcome every one, because they are good news—but they are a drop in the ocean compared with the massive attrition that is going on in manufacturing.

I remind the Secretary of State of the case of Rover. In 1994, when BMW purchased it, Rover was working at full capacity. A BMW spokesman said: Plants at Rover are operating at the limits of capacity, and in some instances special shifts were worked. In 1995—as late as October—the chairman of BMW said: Great Britain is currently the most attractive country among all European locations for producing cars. This results from the structural reforms initiated by Margaret Thatcher in the early 1980s, the most significant factor being the rearrangement of industrial relations between companies and trade unions". That was said by the company that is now talking about the possible closure of all or most of Longbridge, which is one of our most important car plants.

It is obvious that something has gone horribly wrong. In respect of the particular factor singled out by the chairman of BMW, we know that the Government are about to throw a spanner in the works of our successful industrial relations reform, but we also know that Rover has moved from reasonable profits to heavy losses and has had to issue a warning that it will not be making profits for the rest of this century.

Why is Rover making those losses? The reason is quite obvious. Rover has some good cars—they are not the problem, and the Secretary of State will share our pride in the marvellous new models that it launched at the motor show that he and I visited. The problem is the numbers: the high tax bill, the exchange rate and the high regulatory cost are wrecking the numbers at Rover.

Mr. Lindsay Hoyle (Chorley)

Is the right hon. Gentleman not aware of the price fixing that is taking place in this country? Surely there would be many more benefits to Rover if that were taken away, because it would be able to sell cars much more easily, and surely he must be blaming BMW management in what he is saying.

Mr. Redwood

I look forward to the Secretary of State's answer to that question, and I should like from him replies to a series of questions that I sent him yesterday in the hope that he would get advice and give us the answers in the House today.

I asked the Secretary of State a series of questions about how he intended to respond to the detail of the McKinsey report. Although I disagree with the McKinsey methodology, the report concludes that the reason for the apparent or actual productivity shortfall that it identifies is, largely, Government policy. McKinsey says that it is a series of mistaken restrictions imposed by Brussels and London Governments on various product markets.

I hope that the Secretary of State will answer my questions, building on the point made by the hon. Member for Chorley (Mr. Hoyle) about the car market. Is it correct that the right hon. Gentleman is to lift all restrictions on car imports into the United Kingdom? Why did he not know about that last week, when it was announced by the Chancellor of the Exchequer? The Secretary of State seemed to be completely unaware of the policy, although it should fall in his bailiwick.

Is it correct that the Government think that we have insufficient milk quota from Brussels, and what will they do about it? Would we not have a much more successful dairy industry if we had more milk quota here in the United Kingdom, so that we had more raw milk to process in this country for higher value-added uses by the food industry? Will the Secretary of State and his colleagues fight in Brussels to get us the milk quota that we need to deal with the problems identified in the McKinsey report?

Will the Secretary of State and his right hon. Friends remove the restrictions on the building of large out-of-town retail developments? The McKinsey report says that that is the main reason why our productivity in food and non-food retailing is lower than that of the United States of America, where out-of-town hypermarkets with large, free car parks are common. How does that square with the Government's much-vaunted policy of restricting out-of-town developments—the very policy that McKinsey says lies at the heart of the productivity difficulty?

Do the Government intend to remove the restriction on building new hotels? That policy is based on arguments similar to those used about hypermarkets, and is also identified in the McKinsey report as the main reason why hotel productivity is lower than in the United States of America.

Does the Secretary of State, as the ultimate regulator of our telephone system, intend to switch our system to that used in America, where local calls are free or very cheap, but where it is more expensive to get access to a phone? I thought that that was against the whole thrust of Labour's policy of opening up access to a phone. The McKinsey report says that, without such a system, our productivity in telephones will never match that of the United States of America.

Does the Secretary of State intend to remove planning restrictions on high-tech developments? The McKinsey reports says that we do not have bigger and better high-tech clusters, like Silicon valley in the United States, because of planning restrictions.

Will the right hon. Gentleman lift the restriction on the licensing of pharmacies, because McKinsey says that the main constraint on higher pharmacy productivity is the restriction on the number, size and type of development?

Will the right hon. Gentleman lift the wholesale exclusive distribution franchise arrangements in the automotive industry? Of course, car prices could be lower if there were car hypermarkets without franchises, but does he think that this is the right time to make that change, given that all manufacturers in the United Kingdom are struggling for profits because of the terrible problem of costs that they face as a result of the Government's policy?

Will the right hon. Gentleman give us more detail on the competition policy that he wants to follow in other sectors? Let us take the newspaper industry. The right hon. Gentleman said that the Competition Act 1998 will provide a more competitive system. Does that mean that he will get rid of the recommended cover price for newspapers? Will he abolish all protected price systems in the newspaper industry? Will he open up distribution to anyone who wants to distribute, thus breaking the current exclusive distribution arrangements?

Those are serious questions, and I gave the Secretary of State full notice of them so that he could prepare serious answers. We shall give him scope to answer, even though he has not yet published his competitiveness White Paper. Many of the answers have been leaked or have already been given to the country: many of them were supplied by the Chancellor of the Exchequer in the green Budget papers. I hope that the Secretary of State has now read them, and has caught up with what the Chancellor has already announced.

This is the day when we need to know. British industry needs to know and will read the Secretary of State's words. Those in motor manufacturing who are struggling to make a profit or avoid a loss need to know whether their prices will be cut soon or immediately and, if so, by how much, and which of these arrangements the right hon. Gentleman intends to change. Those struggling to make a living in the food manufacturing industry would like a Secretary of State for Trade and Industry or a Minister of Agriculture, Fisheries and Food who will fight for them in Brussels and get more, desperately needed quota.

The whole nation will be fascinated to know how far the right hon. Gentleman intends to go on the licensing of large, out-of-town superstores and different types of big hotel. I suspect that he will get into trouble with his colleagues in the Government if he backs that aspect of the McKinsey report.

Mr. Gerald Bermingham (St. Helens, South)

Does the right hon. Gentleman agree that there is a difference in infrastructure, design, work and social patterns as between the American and the British way of life? They are totally different. Is he suggesting that we should adopt the American system for our way of life by supporting the McKinsey recommendations? Many of us disagree with McKinsey.

Mr. Redwood

I have much sympathy with the hon. Gentleman's view. I favour the British way of life, as hon. Members may know. There are obvious differences between the United States of America—a country which I admire greatly—and the United Kingdom, which has a long history and a much smaller geographical area. Some planning policies that may work in the USA would be offensive in the UK. The Secretary of State will walk all over that difficult balance if he tries both to defend McKinsey and to say that he will not implement quite a few of the report's important recommendations.

I should be very happy to give the Opposition's view on all these matters, but 1 think that I should hear the Government's view first. I have made it clear in my exchanges with the Secretary of State that I fully support the demand for more milk quota from Brussels. That would be a welcome removal of an important block on the food industry. I would want to hear more about the impact on the motor manufacturing industry if precipitate action were to be taken, because I am conscious of the great weakness of that industry at the moment, although I like the idea of a better deal for customers. I hope that the Secretary of State will have something useful to say about the balance of those problems, given that I trust that he, like me, wants a strong motor manufacturing industry, as well as strong distribution.

Mr. Michael Jack (Fylde)

Before my right hon. Friend leaves the topic of agriculture and food, will he tell me whether he agrees that the Government's agriculture policy has been a major contributor to the downturn of the agriculture engineering industry, and to the current failures in the agricultural business industry? The effects of the Government's bad policies are not restricted to one part of manufacturing.

Mr. Redwood

My right hon. Friend is correct, but I must not stray too far from the DTI brief. I raised the subject of milk quotas because I assumed that the Secretary of State was still technically responsible for the productivity agenda, and, to some extent, for the food manufacturing industry. The recommendation that I mentioned is an important part of the McKinsey report, which in other contexts the right hon. Gentleman praises considerably.

The Secretary of State must tell us what he will do about the textile industry. Is he aware that Marks and Spencer is about to decide to obtain many fewer of its products from the United Kingdom? Has he seen the predictions of trade unions, and of other independent forecasting bodies, that at least 60,000 jobs will go? Is he aware of the dangers facing the motor car industry? When he was having discussions with the management at Rover and trying to blame the work force, did he appreciate that there was a serious threat to jobs at Rover, and that production could be moved outside the country unless he and his colleagues did something about the current situation?

Will the Secretary of State take advantage of today's debate to put the Post Office out of its misery, and tell us whether he will let it expand abroad? How will he square the difficulties with Treasury rules, if he is now ruling out a privatisation—which we would be happy to support, if it would be of any assistance to him?

The Secretary of State and his colleagues are in a fix. They know that everything that they are doing in regard to working time, the minimum wage and the social chapter is deeply regulatory, and is imposing more and more cost burdens on British business. Because they do not wish to admit that, they are trying to close down the whole subject of manufacturing, to tell people that it does not matter, and to suggest that the creation of more jobs in supermarkets is a fair exchange for the factory closures and job losses that they are now recording.

Mrs. Louise Ellman (Liverpool, Riverside)

Does the right hon. Gentleman intend to explain to the House why his Government left a legacy allowing only one region in the country to achieve gross domestic product per head that was at or above the average achieved by European regions? Will he also explain why he opposes the establishment of regional development agencies whose remit is to work with the private sector to invest in manufacturing and other industry, paying heed to local sensitivities and opportunities?

Mr. Redwood

I seem to remember that we left this country in extremely robust economic health. If the hon. Lady cared to look at the comparisons in regard to recent exchange rates, she would see that we are a relatively rich country, in the world and within Europe. She and her right hon. and hon. Friends would discover that if they examined the euro scheme in a little more detail—a scheme that would entail our paying higher taxes to send massive transfers to the 100 million or more people elsewhere in euro-land who are not nearly as well off as the average person in this country.

Mr. Christopher Leslie (Shipley)

While we are talking about the euro, which has many implications for manufacturing, will the right hon. Gentleman take this opportunity to agree with Michael Portillo, who says that the Conservative party should rule out joining the euro for ever?

Mr. Redwood

I entirely agree with the leader of the Conservative party, who has made a series of superb speeches about the euro, saying that it is far too hazardous a project for this or the next Parliament, and who will lead our strong opposition to this dangerous notion. The hon. Gentleman is rather inexpert at tempting people further; he will have to learn a little more about the ways of the House.

The true plight of British manufacturing is made much worse by a Government who meddle, send bills, interfere and cost far too much. I have here a small selection of the documents that a business man must read before he is even allowed to practise in this country: "Insurance Contributions", "Statutory Sick Pay", "Statutory Maternity Pay", "The Rules Governing Cars", "Manual for Employers on National Insurance", "Small Firms Employing Staff' and "Employers' Further Guide to PAYE and NICs". A small business man would have to read, understand and comply with all that before being allowed to trade. On top of that, and I freely concede that we left quite a lot of burdens on business at the end of our period of government, we have £14 billion more in regulatory costs as a direct result of this Government's actions.

If the Secretary of State wants to know why British industry is suffering, he should just look around him and see what the Government are doing. If he wants to know where the true productivity problem is in Britain, it is in the Government. If he wants to know why British companies are dipping into loss and experiencing very hard times, it is because of the tax bill, the regulation bill, the interest rate bill and the sterling bill with which the Government have saddled them.

British manufacturing needs a break from this Government's wild ideas. It needs a lower cost base. The Government can deliver the lower cost base if they wish to. The fact that they do not wish to shows that they do not care about all those job losses already recorded and are going to do nothing to stop job losses to come.

The Government should heed the advice of the trade unions, which say that several hundred thousand manufacturing jobs are going to go. They should heed the business surveys that show confidence at a new low for this decade. They should heed the advice of all those business people who say that they cannot make things and sell them at a profit from a British base. They should heed the advice of all those foreign companies which, two or three years ago, thought that Britain was the best place in which to do business but which are now closing here first as world economic conditions deteriorate.

The Chancellor may live in fantasy forecast land and the Secretary of State may rather spend time in Rio than in Hartlepool, but we want some answers. We want to know what the Secretary of State will do, how he will respond to the McKinsey productivity challenge and how any of that would make it easier for British business.

4.20 pm

The Secretary of State for Trade and Industry (Mr. Peter Mandelson)

I beg to move, To leave out from "House" to the end of the Question, and to add instead thereof: recognises that the last thing business wants is a return to the boom and bust policies of the past, with interest rates of 15 per cent., inflation above 10 per cent. and a budget deficit averaging £41 billion a year from 1992 to 1996; welcomes the Government's decisive action in taking politics out of interest rate decisions, a move which the Opposition clearly does not support; notes that employment is currently 400,000 higher than it was when the Government came into office, and that long-term interest rates are at their lowest for 35 years; welcomes the measures that the Government has taken to encourage enterprise, investment and innovation, and to help unemployed people into jobs; welcomes the McKinsey Report as an important contribution to the productivity debate and notes that, unlike its predecessor, this Government acted to increase competitive conditions through a new Competition Act; and condemns the Opposition for its own record in government, when manufacturing employment declined by 2¾ million and Britain went into deficit on manufacturing trade for the first time ever in peacetime.

Despite the fine words of the right hon. Member for Wokingham (Mr. Redwood), the Opposition have not chosen their timing well for this debate. It follows the announcement of the decision of the Bank of England to reduce interest rates further by 0.5 per cent., which was welcome news for British business, including those in manufacturing—a decision that came too late for the Opposition to decide on a different topic for their Opposition day today. It comes the day after BP announced the creation of thousands of jobs—however hard the right hon. Gentleman tries to discount those jobs—with its investment in Scotland and in Humberside, and it comes on the day when the Confederation of British Industry president, Sir Clive Thompson, buried—or should I say filled in—the Conservatives' so-called black hole in the public finances.

As we all know, Sir Clive is a first-rate business man and an excellent CBI chief, but he is not especially well known for his pro-Labour sympathies, so let me quote him in full: I do not believe we have a government that is slack on public spending or cavalier with our money, whatever Francis Maude may claim about black holes. Despite that discouragement from his erstwhile friends, the right hon. Gentleman is not to be held back in his mission to spread doom and disinformation about the economy. His speech contained more negatives than a photographer's studio. In his world, there are grey skies just around the corner, and every silver lining has a cloud. One almost expects his dispirited colleagues on the Back Benches to start swaying from side to side before breaking into a rendition of "Always Look On The Dark Side Of Life."

Why are we being treated to all this pessimism and alarmism? Presumably the answer lies in a carefully researched electoral strategy by Conservative central office, as it is only if the British people were to feel complete despair, utter self-loathing and a total loss of self-respect that they might start to identify with the Conservative party again.

Lest I be accused of being unfair, I must recognise that there are some industries which are promoted by the Opposition. The manufacturers of myth, the peddlers of half-truth and the merchants of doom will all find a good market for their goods in Smith square.

Mr. Redwood

I am delighted that the Secretary of State has given way. He is obviously enjoying himself, but he is replying to a speech that I did not deliver. Will he recognise that, in my speech, I was full of praise for many manufacturing and industrial achievements in this country? However, it is time that the Government were held to account for their many mistakes, which have made things worse. Will the right hon. Gentleman now answer my points?

Mr. Mandelson

As Sir Clive Thompson might say, "When you're in a hole, stop digging".

The right hon. Member for Wokingham dwelt on the McKinsey report, and I want to deal with that straight away. The report is undoubtedly a valuable contribution to the national debate on productivity, and I agree with much of its thrust. However, let us be clear about the thrust of the report, which is that our productivity, relative to that of our main competitors, did not improve during the Tory years, and that that remains a serious challenge for the whole country.

The right hon. Gentleman does not accept that. He rejects the findings of the McKinsey report, and wants to pretend that there is no such challenge for British business and the British economy. He does not even accept that a productivity problem exists. In his speech to the CBI last week, he referred to McKinsey's findings as a stream of "fiddled figures". If there is no productivity problem, how else does he explain the fact that our national income per head is still lower than those of the United States, Germany and France, much as it was 25 years ago?

The fundamental point to emerge from the McKinsey report is the paramount importance of competition. On that score, the Government have already taken major and decisive action by introducing the Competition Act 1998. That is a belated and much-needed piece of legislation, which the previous Administration failed to deliver and which the right hon. Gentleman refused to have anything to do with when he was in the Department of Trade and Industry. So much for the right hon. Gentleman's clarion call for more competition and greater competitiveness. When he had the opportunity to act, he did absolutely nothing; he did not lift a finger.

Mr. Bercow

Will the Secretary of State give way?

Mr. Mandelson

I will come to the hon. Gentleman later. I want to save him up. It would be wrong to squander him too early in the debate.

I do not want to dwell on the McKinsey analysis. However, all the important questions raised in the long letter that I received from the right hon. Member for Wokingham—milk quotas, new hotels and price systems in the newspaper industry—will receive an answer from me in writing in due course.

Mr. Gill

Will the Secretary of State give way?

Mr. Mandelson

I will give way presently. As the right hon. Member for Wokingham demanded of me, I want to address seriously what I think are the basic issues for debate today. I want to discuss what is happening to the global economy—the real world, if Opposition Members can remember what that is—and what we are doing to help British businesses and individuals throughout the economy, not just in manufacturing, in what we recognise are difficult times. Also, I want to lift our sights a little and look beyond the immediate questions to the future and the challenges facing the British economy.

Mr. Bermingham

I hope that my right hon. Friend understands my question far better than the right hon. Member for Wokingham understood my intervention during his speech. The right hon. Gentleman clearly did not understand a word of what I was saying. All I was saying—perhaps the Secretary of State agrees—is that the McKinsey report must be read in the context of our infrastructure and our social patterns. If it is read in that context, our competition policy a propos hotels and so on will be built to the way in which we work as a nation. I assume that that is what the Government intend to do.

Mr. Mandelson

I did not read any argument or analysis in McKinsey contradicting my hon. Friend's comments. Moreover, I did not read any argument in McKinsey on social standards or on the way in which the United Kingdom—in many respects, fortunately, unlike the United States—seeks to combine competitiveness and fairness in a modern economy. That is what McKinsey is all about, and that is what we shall be pursuing.

Mr. Gill

rose—

Mr. Bercow

Will the right hon. Gentleman give way?

Mr. Mandelson

I give way to the hon. Member for Ludlow (Mr. Gill).

Mr. Gill

Before the Secretary of State takes us on a tour d'horizon of events in the rest of the world, may I bring him back home—to what is happening in this country? Does he realise that what matters in competitiveness is the unit cost of producing a product, and that there are many components to that cost—not only the factor that he has already mentioned, productivity, but also overheads?

The one factor that is within the Government's gift—that it is within their power to do something about—is the one that we call "overheads". Last week, the House debated the working time directive regulations, which, over a full year, will add £2.3 billion to costs to industry. The Government now propose to lift the cap on compensation in industrial tribunals. May I put to the right hon. Gentleman the not-so-hypothetical case of a west midlands engineering company—possibly employing 50 people, and possibly with a turnover of about £3 million—that, if it had an award against—

Mr. Deputy Speaker

Order. The hon. Gentleman should probably now come fairly quickly to his question.

Mr. Gill

Does the Secretary of State realise that the consequence of proposals now in train could be that half the profit of many typical companies could go in just one award in one industrial tribunal case? Is that the way to encourage British industry?

Mr. Mandelson

I was impressed by the hon. Gentleman's diatribe against the working time directive—although I have not heard Opposition Front Benchers state that they will ensure that the United Kingdom does not have statutory three-week per year holidays for every employee. I do not know whether that is the Opposition's policy. Nevertheless, the hon. Gentleman's diatribe might have been delivered more appropriately during the time of the previous, Conservative Government. They signed up to the working time directive, not us. We are simply implementing something that the previous Government agreed to.

Mr. Bercow

I am most grateful to the Secretary of State for giving way at last. Given his unwise invocation—in his own support—of the comments of the president of the Confederation of British Industry, has he noticed that, as recently as 3 November, the CBI president said that, since Labour took power, the business horizon had darkened because of the "creeping paralysis" of regulation introduced by the Government? The president added that, unless Ministers did something to stop and reverse that trend, the only growth industry in Britain—with the right hon. Gentleman as Secretary of State—would be regulation. Is the right hon. Gentleman proud of that record?

Mr. Mandelson

Sir Clive and many others would have been recalling that, although the previous Administration did indeed repeal 3,000 such regulations—on which I congratulate them—they introduced 10,000 more. Such a record does not allow the hon. Gentleman to give any lectures on business regulation. If the hon. Gentleman will allow me, I should like now to deal with the real world and events in the global economy. Those events are serious, affect us all and have to inform this debate.

As the right hon. Member for Wokingham barely recognised in his remarks—coming as they did from his own rather extra-planetary world—all is not well in the global economy. Asia caught a very serious bout of flu, with repercussions reverberating around the world. No one is immune to the contagion. A quarter of the world is now in recession, which is a fact of life with which we have to live.

Mr. David Chidgey (Eastleigh)

Is the right hon. Gentleman aware that, although it is predicted that there will be a 7 per cent. growth year on year in world manufacturing export markets over the next four years, it is also predicted that our exports will increase by only 4 per cent? Markets are growing, but we are not taking advantage of them.

Mr. Mandelson

That is exactly the point that I made at the outset, and I shall return to it later. The markets are there—what we need is the competitiveness to make sure that our share of those world markets is keeping up, and, indeed, expanding. That is exactly what our policies are focused on. No one disputes the fact that there is a very serious downturn in the world economy. There will be inevitable job losses as a result. The question is how much Britain will suffer. Can we withstand the worst?

Mr. Barry Jones (Alyn and Deeside)

I support my right hon. Friend's rational and robust defence of the Government's policies. I know that his Department aims to help British manufacturing, but yesterday, because of the conditions that he is outlining, major redundancies were announced in my constituency by Umbro, the sports manufacturer.

I wonder how my right hon. Friend and his Department might assist my constituents who are to lose their jobs. I hope that he will accept the memorandum that I have sent to him, which deals with why my constituency should retain assisted area status. Finally, I remind him of my invitation to him to visit Deeside, and specifically the European Airbus factory, which is a great success.

Mr. Mandelson

I am grateful to my hon. Friend. I hope that such a visit will be possible before long. As he will realise, I am extremely concerned about the effect of the decision to which he refers on the employees and their families. I shall deal a little later with the action that the Government are taking to help precisely the individuals and localities that are being hit. As for the assisted area map, my hon. Friend will know that we are currently reviewing it. We have consulted many local authorities, and will consult Members of Parliament. My hon. Friend the Minister for Small Firms, Trade and Industry will be doing that.

I was talking about the world recession. No one disputes the fact that there is a serious downturn and that there will be job losses. The question is how much we will suffer from it.

Mr. John Hayes (South Holland and The Deepings)

Will the Secretary of State give way?

Mr. Mandelson

No.

It is important to understand the weaknesses in the domestic economy—weaknesses that we inherited, and with which the world downturn is making it more complicated to deal. The fact is that we needed to slow down the economy because it was in danger of overheating. It was expanding at an unsustainable rate. Everyone knows that we could not carry on like that if we wanted a platform of economic stability on which we could build sustainable jobs and wealth.

If people are in any doubt about that, they have only to remember where Tory policies landed us in the early 1990s. Of course, the right hon. Member for Wokingham does not like to be reminded of that. He is currently in denial mode, disowning the Tories' record in government as he continues to nurse his rather lukewarm leadership ambitions.

Let us go back to the early 1990s. Before then, the Tory Government had cheerfully and irresponsibly let go of the reins, sidestepping necessary decisions on interest rates, public spending and taxation. We all know the result—an unsustainable boom—but only the Tories have failed to learn the lesson.

The Tories then had to slam on the brakes, plunging the economy into recession. Interest rates jumped to 15 per cent., business cash balances were drained, and many businesses went to the wall. Manufacturing output collapsed, and, in total, 1.8 million jobs were lost. In other words, we went from boom to bust as a result of the policies pursued by the very people who now have the audacity to lecture us about our management of the British economy.

We cannot afford to make such mistakes again. That is why since coming to office we have taken decisive action to get inflation under control, to reduce Government borrowing and to put the public finances on a sound footing, and that is why we are now in a strong position to withstand the worst of this difficult time in the world economy.

No one can be sure that we have seen the end of the crisis in Asia and elsewhere, but the best judgment that the Government can make is that we can and will avoid recession in the United Kingdom.

I have no doubt that the Opposition will find that very disappointing because they are never known to put national interest above party interest. They are absolutely crying out for recession. It is clear from their every utterance that they pray for it, they revel in it and they see it as their only route to political salvation. They care not a jot about the consequences for people's work and people's jobs. It is all propaganda to them.

Thankfully, independent economic forecasters do not wish to play that game. Almost all forecasts show modest growth next year. The International Monetary Fund forecast is close to that of the pre-Budget report. [Interruption.] It is an important matter. I suggest that Opposition Members listen to the economic argument that I am making, as I might be able to tell them something that they did not know or refused to acknowledge.

Mr. Hayes

rose—

Mr. Graham Brady (Altrincham and Sale, West)

rose

Mr. Mandelson

I shall give way in a moment.

I know that no politician should place excessive weight on one set of economic forecasts, but equally I am determined that the Tories' wilful pessimism on the economy should not translate into wish fulfilment in its implications for the rest of us and for the British economy.

We should be giving British businesses the benefit of the best and most informed judgment that we can make. We should be talking up the efforts of British businesses and giving them support to ride out the storm, not making the waves rise higher and fall even harder as the Opposition are doing, wantonly and irresponsibly. Perhaps the hon. Gentleman will correct the impression that his right hon. Friend gave.

Mr. Hayes

Rather than this diatribe, would not the right hon. Gentleman do better to emulate the Minister of Agriculture, Fisheries and Food who a few days ago addressed the House in a mood of contrition and humility? Would not a degree of humility and contrition go some way towards satisfying people who have lost their jobs in Alyn and Deeside and elsewhere that the Government do indeed care about them? If the Secretary of State must have an iron fist, he should at least use a velvet glove.

Mr. Mandelson

The hon. Gentleman, in speaking about humility and contrition, might address the record of the previous Government and the loss of 1.8 million jobs in the British economy as a result of their policies. As for what we are doing about it, I am trying to explain that.

To the extent that it is possible to make any sense of the analysis by the right hon. Member for Wokingham this afternoon—if his outpouring of false assertion, contradiction and lack of logic could be dignified by such a word—and in his previous speeches and statements, all of which I have taken seriously and read carefully, including his article in The Times today, he was trying to make two arguments.

The right hon. Gentleman argued first that the Government's public spending policy is keeping interest rates high, and, secondly, that our policies on taxes and social costs have worsened the business environment—we heard a little more about that this afternoon. He is wrong on both counts.

First, let me deal with public spending. I was glad to hear the right hon. Gentleman give the Government credit for sticking to our predecessors' spending limits for the first two years. However, generous acknowledgement of our prudence is rather difficult to square with his simultaneous charge that our new three-year spending plans explain why interest rates have risen under Labour. I find that difficult to follow.

One has only to look at the connection that the right hon. Gentleman is trying to make between interest rates and what he calls our extravagant investment in the health service and education and our extravagant expenditure to help children in need and pensioners. Without exception, all the increases in interest rates that the Bank has announced took place well before the Chancellor's announcement in the summer. So what is the connection? Where is the link between our spending plans and the increases in interest rates, which, as the right hon. Gentleman will acknowledge, are now coming down?

Mr. Redwood

The Secretary of State will have to try to read a little better than that. I made it clear in my article that the extent to which the Government deviated from our plans in their first two years in office was damaging. For example, welfare to work, which we opposed, was an expensive, failed programme, and was one of the reasons why expenditure was higher than under the Conservatives. The Bank explicitly mentioned in its recent comments on the economy both the minimum wage, which was known to be coming in from the early days of the Government, and the expenditure plans. Will the Secretary of State now read those minutes, and understand their influence on the Bank of England?

Mr. Mandelson

I have read the minutes, I have talked to the Governor of the Bank of England, and I have met members of the Monetary Policy Committee; and not one of them has once criticised the Government's setting of the national minimum wage. They have made no argument at all that it will have the adverse impact that the right hon. Gentleman describes. However, he has not told me in his intervention about the connection that he claims between the level of interest rates and our public spending plans.

Nor is it clear to me what alternative interest rate policy the right hon. Gentleman believes Britain should have followed. Would he have interest rates lower and take risks with inflation? Is that his policy? Is he saying that we should keep interest rates down to keep the exchange rate down? That was Nigel Lawson's policy in the late 1980s. Does he want a re-run of that? I really do not think so.

The right hon. Gentleman's second line of argument is that the Government's policies are worsening the business environment in the United Kingdom. He quotes a very big number for the increases in business taxes. I have looked carefully at that figure. I take very seriously any claim that we are unreasonably and inappropriately increasing the burden on British business and increasing costs unnecessarily, so I looked very carefully at how he reached such a gargantuan figure. I discovered that he mixed together the windfall tax, which was one off and restricted to the privatised utilities, with various other measures which either affect pension funds rather than companies or are measures to tackle tax avoidance, which I assume he would not wish to condone.

In fact, under the Labour Government, British business enjoys one of the most favourable tax regimes in the European Union. We have lowered corporation tax from 33 to 30 per cent. from April next year, and small business taxation from 23 to 20 per cent. That compares with tax rates of 41.6 per cent. in France, 37 per cent. in Italy and 35 per cent. in Spain. So the right hon. Gentleman's charge falls.

Our action on corporate tax rates and small firms' allowances will reduce companies' tax bills by about £4.5 billion over the lifetime of this Parliament. We have introduced a long-term capital gains tax rate of lop in the pound. All those measures, without exception, have been welcomed by business, because the reality is that new Labour means low business taxes—and long may that remain so.

Mr. Brian Cotter (Weston-super-Mare)

The Secretary of State mentioned small businesses. I hear what he is saying about regulation. Would he be prepared to commit the Government to producing an annual report assessing the impact of regulation on small businesses? That would enable us to see whether what he says is true.

Mr. Mandelson

I take the hon. Gentleman's point seriously. I am glad to say that the Government's better regulation task force is about to embark on a close examination of the impact of regulation on small and medium enterprises—and not before time.

The right hon. Member for Wokingham misunderstands the thrust of the Government's policy on the application of social policy to business. It is to combine flexibility with decency. I am sorry that that is an alien concept to him. All seriously concerned and committed business people in this country support the idea.

The right hon. Gentleman ignored the offsetting benefits of the working time directive, which include higher productivity, reduced absenteeism and improved employment relations. What is more, it was agreed under the Tories. Would they campaign in Brussels—not that it would do them any good—for the repeal of the statutory three weeks holiday a year for people in work in this country? Is that the policy of the Conservatives? Their silence is very telling.

Mr. Ian Bruce

rose

Mr. Mandelson

No, I am sorry. I want the official line from the official Conservative spokesman, not the provisional wing of the Conservative party.

Mr. Redwood

rose—

Mr. Mandelson

And here it is.

Mr. Redwood

The Secretary of State should remember that we asked for a debate on the issue. Unfortunately, he was obviously not interested enough to listen to what I said. I set out our position at great length, and produced a number of helpful suggestions to make it cheaper for businesses to implement the directive. Our criticism was directed particularly at the massive administrative cost. We do not think that it will help people on low incomes as much as it will create a massive bureaucracy. That is what the right hon. Gentleman should be addressing. I am sorry that he did not bother to read my remarks.

Mr. Mandelson

The right hon. Gentleman asked for a debate, and he got it. I want an answer to my question: would he repeal the directive? Does he believe that it would be right to deny people in this country a statutory three-week holiday a year? Is that so wrong? Is that so unacceptable?

Mr. Ian Bruce

rose—

Mr. Mandelson

No, I am sorry. I want the official Conservative party policy.

The welfare-to-work programme, which the Conservatives also attack, makes the labour market more flexible. [Interruption.] Hon. Members should just listen for a moment, and I shall explain. It creates greater flexibility by breaking down the barriers that trap people in long-term unemployment. It increases the supply of labour in the economy, its quality and its employability. That is the point of the new deal and other welfare-to-work measures. I am very sorry that the Conservatives are so short-sighted and narrow-minded that they cannot understand that our measures are helpful to flexibility and employability, and therefore helpful to the competitiveness and success of the British economy.

Mr. Brady

I am fascinated by the right hon. Gentleman's rather odd definition of flexibility. Which European economy does he consider to have the most flexible labour market?

Mr. Mandelson

Britain compares with the best in the European Union. Indeed, we exceed the flexibility of many other member states. We are determined to protect that, and build on it. The Conservatives refuse to accept that flexibility can be combined with decency and minimum standards for working people.

The Government's actions are designed to steer a stable course through the world's turbulence, and to offset the immediate repercussions. I have already said that I am saddened by any job loss, every family hit by unemployment, and every locality hit by closure. That is why we have taken steps to reduce the hurt, not by bailing out firms—of course not—but by providing training and employment opportunities for those affected by closures; by working with the companies concerned, such as Fujitsu and Siemens, to try to save jobs by finding new owners for the plants; and by targeting the areas most in need through the single regeneration budget, European funds and assistance to companies.

The Government have introduced a package of measures to provide immediate help for those affected by major redundancies. It includes rapid response teams to provide counselling, careers guidance and advice on retraining opportunities.

For example, in response to the closure in September of the Fujitsu plant near my town in County Durham, the Government are providing £625,000 from the rapid response fund for additional training resources. Already, 123 people have found new jobs, and 377 are engaged in training. That is action that could be expected of a Labour Government in the face of an economic downturn. We shall strengthen our programme of measures in the coming months wherever necessary.

Mr. Colin Breed (South-East Cornwall)

Siemens and Fujitsu received considerable grant assistance for setting up. Will some of that be repaid to go towards the retraining costs, the redundancy costs and all the costs involved in encouraging people and helping them back into work? Surely those companies should provide at least some contribution to those costs.

Mr. Mandelson

The hon. Gentleman touches on an important issue, which we need to keep under review as we assist Siemens to find a future buyer for that plant. If those efforts are not successful, the issue of repayment of the grant will arise. Siemens did not receive all the money, and the management has told the Government that the initial grant will be repaid, as is right.

We are doing a great deal. In each region, the single regeneration budget will provide support for areas affected by closures. Following the Chancellor's comprehensive spending review, the Government are allocating new funding to regional development agencies across the country over the next three years. In the context of the RDAs' regeneration activity, projects helping areas worst affected by closure will be treated as a priority.

That is important work. I ask all hon. Members to keep a sense of perspective in their understandable and real concerns about job losses. There is certainly no comparison between the conditions we face today and those during the recession which was manufactured by the Tories in 1990.

The right hon. Member for Wokingham called this debate to paint a picture of doom and gloom across the country. I know that the CBI regional trends survey talks of falling optimism, but let us look at just some of the facts and the picture across the country. In the eastern region, there has been a net gain of nearly 11,000 jobs over the past four weeks.

Mr. Bob Russell (Colchester)

Will the right hon. Gentleman give way?

Mr. Mandelson

I should like to develop this passage of my speech.

In the east midlands, there has been a net gain of more than 1,600 jobs over the past four weeks. In the north-west, there has been a net gain of nearly 2,500 jobs over the past four weeks–300 new jobs at Zeneca Pharmaceuticals in Cheshire, and 1,000 new jobs at the Vauxhall car plant in Ellesmere Port.

In the north-east as well, there has been a net gain of nearly 500 jobs over the past four weeks–200 new jobs in ship repair at A and P Appledore in Wallsend only last week. In Scotland, there has been a net gain of nearly 4,000 jobs over the past four weeks–270 new jobs at Seagate microelectronics, and 1,000 new jobs in new Virgin Trains call centres. In London, almost 1,900 new jobs have been created since the beginning of the financial year.

I am not saying that the picture is not mixed: of course it is. [HON. MEMBERS: "Ah."] Only a Tory Member of Parliament, trying to make political capital, could ignore the simple fact that the British economy is still creating more jobs than it is losing: more than 400,000 since May 1997. Indeed, it is still growing, albeit modestly.

Mr. Redwood

Before the Secretary of State concludes his remarks, will he answer the questions that I have asked him in the motion, which I worded, and in the letter that I sent him in advance so that he had plenty of warning to research his answers? The House and industry needs to know which of the many public policy recommendations in the McKinsey report he and his colleagues will implement; otherwise, business will be mired in uncertainty, making its task even more difficult.

Mr. Mandelson

I have already responded to the right hon. Gentleman about his letter on milk quotas, new hotels and the like—questions on all of which are perfectly important and serious. They will, of course, receive a serious and considered reply in due course. That is exactly what he would expect.

I have not yet finished my speech—the right hon. Gentleman will be disappointed to hear—because I want to make the point that not only do this Government have a good record in job creation, but we continue to attract record levels of inward investment. We are still, this year, leading the way in Europe. If the Tory analysis were right, surely investors would be turning their backs on us. The facts show otherwise.

A report from the United Nations, which will be out tomorrow, will show that the UK received substantially increased inward investment flows last year. Our share of EU investment rose to 34 per cent., compared with 28 per cent. in 1996. Over recent months—this is very important—the case load of the Invest in Britain Bureau has risen by 10 per cent. compared with the same period last year. That is a significant and reassuring development. I notice that it has not been cheered by the Opposition—it is, of course, bad news for them. What is good for the British economy is obviously bad news for the Conservative party.

Mr. Leigh

rose—

Mr. Mandelson

No, I am afraid that the hon. Gentleman is too late. He had his chance to cheer.

In the concluding part of my speech, I want to talk about the future. To emerge with strength from what is without doubt a very difficult period for the British economy, we need to continue to attract high-quality overseas investment. We are far from complacent; there is a always a great deal more for us to do to attract high-quality inward investment. In addition to inward investment, we must bolster Britain's supply of home-grown productive capacity and competitiveness. That task is certainly equal to coping with the short-term problems brought about by the global downturn.

Our predecessors had no such ambition or creative vision. They specialised only in destruction—of industries, jobs, regions. Of course things needed to change in British industry and the economy. The problem was that their policies failed to support the creation of successful British businesses, with expanding numbers of jobs rooted firmly in the UK. They failed to bring Britain into the fresh industrial revolution—the revolution of the new knowledge age. That is the challenge that I have set for my Department.

Mr. Redwood

Claptrap.

Mr. Mandelson

The right hon. Gentleman says, "Claptrap." What world is he living in?

Mr. Redwood

Will the Secretary of State give way?

Mr. Mandelson

No. The right hon. Gentleman does not realise that the generation, harnessing and application of knowledge is the sole source of comparative advantage in our economy.

Mr. Redwood

indicated dissent.

Mr. Mandelson

He says that that is rubbish. We do not want any more of his rubbish. We need knowledge applied throughout the British economy. The theme of the White Paper that I shall publish next month will be to equip Britain to succeed in the knowledge-driven economy.

We are already world leaders in some of the most advanced sectors of the economy, such as computer games and biotechnology. [HON. MEMBERS: "Ah."] That is not a result of what your Government did—

Mr. Deputy Speaker

Order. It is not my Government.

Mr. Mandelson

That is as a result not of the Conservative Government, but of what entrepreneurs and business people did for themselves. They are the ones to be credited with the success of the computer games and biotechnology industries—not the Tories. The problem is that no big British business has grown out of those sectors—no Microsoft, no C1SCO, and not even a software house such as SAP in Germany. Once upon a time, we grew such companies—and not just through mergers. I want this country to do so again.

We shall see, too, firms in traditional sectors innovating constantly—not just sunrise and new technology companies. Mature industries and companies must apply knowledge, innovation and imagination to what they do just as much as everyone else, in order to improve production and processes, and to keep and grow their market share.

There are some important success stories in Britain in our pharmaceutical and aerospace industries, but too many firms are just not innovative enough. They do not spend enough on research and development to generate knowledge. They do not put enough into skills. I want innovation to be the watchword of all business in Britain. How we achieve that has already been touched on in the pre-Budget report, and will be addressed further in the White Paper, although I can say that we shall succeed only if we create open, competitive markets in which British companies can compete, thrive and achieve rising market shares.

We shall succeed only if we create and exploit knowledge, including our science base, upgrade skills, spread knowledge of best practice—to help businesses learn from other British businesses so that best practice can flow throughout the economy and there can be lasting improvement is as important a job for the Department of Trade and Industry and the Government as any—and, above all, help entrepreneurship to thrive once again, harnessing through enterprise the best of Britain's brilliant record in scientific discovery.

That is why the Government will invest to give our entrepreneurs the knowledge with which to work, why we are putting £1 billion into British science, and why we shall forge better links between our universities and businesses, so that new enterprises and businesses spin off, and we excel not just in scientific discovery but in scientific enterprise and business. That is the challenge facing us.

Amid all the undoubted pressures on British business, it is vital to realise that it is possible to talk ourselves into a greater slowdown than is necessary. That is what we have heard from the Conservatives this afternoon. They must understand that, for perfectly understandable reasons, confidence in many British businesses is fragile. [HON. MEMBERS: "Ah."] That is a lesson for us all to heed, not only those of us in government.

However, I am afraid that today's Tories do not have the guts or the integrity, when they start talking about the British economy and the prospects for British business, and as they indulge themselves in their doom-laden language, to act on the recognition that they, too, have a responsibility. That is why their motion is unworthy, self-serving and a discredit to them. It deserves to be rejected by the whole House.

5.10 pm

Mr. David Chidgey (Eastleigh)

At least until the last couple of minutes, I was beginning to agree with the Secretary of State in his aspirations for the future of our economy—including our manufacturing industry, which is the subject of the motion. However, I am afraid that some of what he said much earlier I also did not find convincing.

The right hon. Gentleman made great play of the need to avoid talking down the British economy, and I agree that we should have confidence in our economy and in our work force. However, when he commented on the forecasts that he had seen concerning whether we were going into recession, he was careful to speak in terms of "the economy". I agree that the economy is not going into recession—but the debate is about manufacturing industry, and that is a different story.

I am not here to talk down manufacturing industry for any political advantage. I am talking about it because I am concerned about it, and I have to say that an incredible degree of complacency has been shown towards the crisis that it faces. If we do not recognise that crisis, how can we start to help?

Why are the Secretary of State and the Chancellor of the Exchequer so confident that manufacturing industry can avoid recession next year, when almost every other analyst forecasts such a sharp fall in output? I am sure that the Secretary of State knows that every month the Treasury contacts 29 City analysts and forecasters to find a private sector consensus on the economic forecast for the following month.

Is the Secretary of State aware that, after last week's pre-Budget report, my colleagues contacted all 29 of those analysts to establish their latest consensus on GDP growth and manufacturing output growth? The consensus forecast for manufacturing output growth next year was minus 1.2 per cent. Whether we like it or not, and whether we are trying to boost our manufacturers or not, the forecast is for a manufacturing recession. We should be aware of that, and take measures to try to ameliorate or even avoid it.

The Treasury uses the same forecasters—the ones who are forecasting minus 1.2 per cent. growth—so where did the Treasury dream up its forecast of zero growth next year, which carefully avoids slipping into the negative? That is not good enough.

It is interesting to note the response of the private sector and the City analysts. The Hong Kong and Shanghai bank says that the Chancellor's expectation that output will dip only to zero in 1999 is so far out of line with the survey evidence on the sector that it is barely credible".

I heard what the Secretary of State said about the latest CBI survey, but we should still listen to what the CBI says, because its survey takes place across industry as a whole; it is not made to prove any particular debating point. The latest CBI survey underlines the crisis. According to the Deutsche bank, the results of that survey were "truly awful".

No wonder the survey is truly awful if exports are falling at the fastest rate since measurement in volume terms began. No wonder, if output is falling so much more rapidly than expected, at the sharpest rate for more than seven years—

Mr. Ian Bruce

Will the hon. Gentleman give way?

Mr. Chidgey

I shall make a few more points first. Even more worryingly, the fall in domestic orders has been the greatest on record since 1992. We used to worry about skill shortages, but with manufacturing heading for recession, restraints on output due to shortage of skilled labour are at their lowest level for four and a half years.

Mr. Bruce

The Government misunderstand why we are so passionate in trying to tell them that they have got their statistics wrong. I do not know whether the hon. Gentleman was in the House when we last went into recession, but many of us will remember going as Back-Bench Members to see Ministers and tell them that businesses knew that business was going into recession, even when the Treasury statistics said that it was not and that everything was fine. The position is not exactly the same now, because there has been a change of Government, but the Treasury and its statisticians are still the same.

Mr. Chidgey

The hon. Gentleman may be interested to hear that I was, I believe, employed in the construction industry at the time to which he refers. I won a by-election, which, as he will know, is not a recipe for continued employment in this place. None the less, I remember saying when I won my seat in Parliament, during that recession, that as a by-election winner I was glad to have a safer job than before. That made the point to my colleagues in the construction industry.

The last time that the CBI quarterly industrial trends survey was as negative as it is now was in 1981, when manufacturing output was falling at 5 per cent. per annum.

I am not trying to talk down British industry. I am proud of what my colleagues in industry have managed to achieve over the centuries and will continue to achieve in the future. However, if we do not recognise the problem we cannot start to provide solutions.

The net result of the slump, and of the Government's failure to act decisively to stabilise the economy and to improve the climate for business, is the forecast of minus 1.2 per cent. growth. If that trend goes further, we could see 400,000 job losses in the next two years.

I would not wish that on any Government, let alone on the individuals who will suffer from it—but that is what we face, and that prospect is what we must address if we are to improve conditions for British industry. Manufacturing industry is now in a life-and-death struggle. Over the past 20 years, employment in manufacturing industry has dropped from 7 million to about 4 million. If that goes on, as the forecast trend suggests, it will drop to 3.5 million in two years.

The Government have to ask themselves how close, if that happens, Britain's manufacturing industry will be to falling below the critical mass that we need to maintain ourselves as an international manufacturing base. How long would it be before Britain no longer had the manufacturing capacity, the resources or the skills to compete with the major players in the global market?

It is a long time since this country was a major manufacturer of machine tools. I am sure that other hon. Members too, get frustrated when they go round factories and see that every machine tool is manufactured in Germany, Switzerland or anywhere else but in Great Britain. We led the world in industrialisation.

Mr. Tim Boswell (Daventry)

rose—

Mr. Chidgey

May I finish my point?

I could name a host of manufacturing products which have disappeared from the list of products made in this country. Wind farms are one of the greatest ideas for capturing energy resources and developing sustainable energy, yet people who try to buy equipment to build a wind farm in this country find that it is all made elsewhere. We do not even manufacture windmills to augment our energy resources.

Mr. Boswell

The hon. Gentleman is making a characteristically thoughtful speech. Does he acknowledge that at least half the machine tool use in this country is still represented by home production, and that major machine tool manufacturers such as Germany and Japan also have a lively import trade because there is much exchange of technology and specialisation in that sector?

Mr. Chidgey

I am heartened to hear that; at least all is not lost. My concern, however, is that we are on the verge of losing all that.

The Secretary of State was quick to follow the Government line of blaming the global economic downturn for the problems that our manufacturing industry faces. The collapse of the Asian markets was mentioned, and the right hon. Gentleman was quick to blame low productivity and poor management for our problems.

The reality is that the collapse of the economies of south-east Asia, Latin America and Russia has had little effect on UK exports. We export more to the Netherlands than we do to south-east Asia, Latin America and Russia put together. In reality, UK manufacturing export markets are predicted to grow. Tables A2 and A5 of the Chancellor's pre-Budget report show that, over the next four years, UK manufacturing export markets should grow at an average rate of 7 per cent. a year. That is our export markets—not the global economy. My concern is that Britain's exports to those markets will grow by only 4 per cent. Why are we taking up only half the opportunities that exist in those growing markets? I ask the Secretary of State to accept the Chancellor's figures.

The reason why we are not capturing those markets or penetrating them as much as we should is the overvalued pound. That is an old cry, and Government Back Benchers will try to drown out that point of view. However, the Secretary of State must agree with his Treasury colleagues that since the Government came into office, sterling has lost more than 10 per cent. of its competitiveness. That has had a direct bearing on how well we can succeed in our export markets for manufactured goods.

Will the Secretary of State accept the acknowledgement in the pre-Budget report that, over the next year or so, the effects of the pound's overvaluation will work its way through into our manufacturing economy in the form of lost orders and lost jobs? Both the high pound and high interest rates are a direct result of the Government's failure to rebalance economic policy.

While businesses are calling for a clear statement on where the Government stand on the single currency, the Government seem content to kick the matter into the long grass—to use a phrase which has become fairly current recently. [Interruption.] Government Back Benchers may criticise, but this matter is very important to manufacturing industry. Businesses need clear guidelines. The Cabinet seem to be engaged in a curious dance around the issue. The Secretary of State is reported to have said, "When we join the single currency." Then, quick as a flash, the Government enforcer said, "If we join the single currency." Some Ministers say "in", others say "out". It is, "In, out, in, out, shake it all about"—new Labour, new hokey-cokey.

Industry needs a decision. Firms want clear guidance. It is not good enough to stand on the sidelines, watching the game, saying, "If the play is going our way, we might join in." By that time, the game will have moved on, and we will be left for ever on the sidelines in the reserve team. That is not good enough. If the Government are serious about helping manufacturing industry overcome the approaching crisis, they must make a statement of intent. They must set out a clear programme for a referendum and clear proposals for what they intend to do about the joining date for the single currency.

Even if the Government made a statement of intent—and that would be weak enough—it is generally accepted that the process would still take three years. No one in British industry will start to make the preparations and investment that will be needed unless they have clear guidelines.

The Government need not only to try to avert the immediate crisis facing manufacturing industry—and the forecast of hundreds of thousands of job losses—but to address long-term practices. I was interested to hear the remarks of the Secretary of State about how he intends to set up some initiatives to try to improve the skills base of the country, and his response to the suggestions in the McKinsey report. Chapter 3 of the pre-Budget report, on productivity, sets out the problems clearly, and I agree with most of the analysis. However, I find trouble with the proposed solutions. The Government show clear signs of tinkering around the edges and covering the whole lot up with a large dollop of waffle. I want some clear ideas.

The Government are proposing tax breaks for research and development. The Secretary of State may, however, be aware that the Institute of Fiscal Studies has said that such broad tax initiatives are rarely, if ever, able to achieve their objectives. Does the Secretary of State agree that targeting assistance to small, start-up firms—the sort of firms that he was describing—would be far more effective than a broad-brush approach across the whole sector?

Does the Secretary of State agree that the proposed broad-brush tax breaks are a drop in the ocean compared to the extra taxes imposed on business? I do not wish to follow the Conservative party's line of claiming that every measure to try to improve conditions in the workplace should by definition be abandoned. The Secretary of State knows that I do not believe that. Let us be fair and honest, however. When we talk about taxes and tax relief on business, the right hon. Gentleman should know that the money that business is saving through cuts in corporation tax amounts to only about half the additional direct taxes that the Government have placed on business since they have been in office.

Does the Secretary of State accept the view in the McKinsey report that the major causes of poor productivity are not necessarily poor skills and low investment? The report suggests that those factors could be effects rather than the root cause. I should be interested to know the Government's response. If the Secretary of State accepts that the root cause of industry's problems is the need for modern commercial regulations which remove from businesses all the barriers that prevent them from adopting best practice—of which he is in favour—he has a responsibility to make sure that the Government strip away the bureaucracy that is stopping British companies performing at their best.

Combining the pre-Budget report with the McKinsey report produces some interesting concepts of what could be done, and of what is not being done. The pre-Budget report put great emphasis on education and training. Who would argue with that? Liberal Democrats have long argued for the need for long-term investment in high-quality education and training for all those under 19.

Mr. Bercow

And for themselves.

Mr. Chidgey

From a sedentary position, the hon. Member for Buckingham (Mr. Bercow) clearly demonstrates that he has need of further training himself.

The pre-Budget report sets out plans for the long term. However, even if the Government provided the funds for those plans to work, it would take a generation before we started to reap the benefits in manufacturing industry. The crisis is now. The interesting thing is that we have a pool of skilled labour facing unemployment—up to perhaps 400,000 people in the next two years. Surely those people should be first in the queue for investment in up-skilling and retraining.

I was pleased to hear the Secretary of State refer to the work that he is overseeing on the rapid response fund and the single regeneration grants—and I think he said that the regional development agencies would get extra money. However, the infrastructure, the bureaucracy, the training and enterprise councils and the training budgets should be much more sharply focused, so that high-quality training can be provided to those people who are losing their jobs now. If the Government take the action that they should, and there is an upturn in manufacturing industry, those people—with a proven record as good employees—will get back into work and will be ready to do their jobs, putting British industry back on the map, where it belongs.

5.28 pm

Mr. David Borrow (South Ribble)

This has been an interesting debate.

On a general point, we must judge the Opposition's motion against their record in government and their policies for the future to decide whether the two match and whether they could improve on the policies that the present Government advocate.

British manufacturing industry faces three difficulties. First, we are in the downturn of the business cycle. We cannot do away with that cycle, but the art and trick of economic management is to ensure that the peaks are not too high and that the troughs are not too low, so giving businesses the long-term confidence and stability to invest in the future.

The second problem, which is peculiar to British manufacturing, is that, although we have many first-class manufacturing companies which can compete with the best in the world in terms of productivity, performance and quality, we also have a long tail of companies that have not yet reached world class. Part of the job of government is to assist in the preparation and development of those companies to make them world-class performers. In the past few years, the difficult exchange rate has exposed such companies' weaknesses and it has been more difficult for them to compete internationally.

Thirdly, we must not forget the extent to which specific sectors of the economy have been hit by the recession in the far east—they have lost both markets and competitiveness. Many job losses in the north-east have little to do with the first two factors but a great deal to do with the downturn and recession in the far east, and we must be realistic about that.

I am not an expert on manufacturing industry, but during my time as a Member of Parliament I have tried to get in touch with businesses in my constituency. I can compare the performance of the previous Government with that of the present Government by dealing with a number of local companies and with what is happening in my part of central Lancashire. I mentioned earlier the problems of Leyland Trucks. In the early 1990s, the company, which was then owned by DAF, went into receivership. Leyland's 100-year history of truck manufacture nearly went down the pan.

According to the local papers, my predecessor as Member of Parliament seemed more concerned about the performance of England's cricket team than about retaining those jobs in Leyland. The company was preserved, largely owing to assistance from Lancashire county council—which was then led by my hon. Friend the Member for Liverpool, Riverside (Mrs. Ellman)— through Lancashire Enterprise, which put together a package. The company brought in new production methods. It has now been taken over by Paccar—an American company which also owns DAF—and production of 4,500 trucks a year has been transferred from Holland and Belgium to my constituency. At the time of the crash in the early 1990s, the company employed 500, but it now provides about 750 jobs, and the figure will increase to more than 1,000 with new truck production. Those jobs have been clawed back and transferred because the company has developed a world-class competitive base and has been able to compete with Europe.

The aerospace industry, with its factories in Warton and Salmesbury, is the major employer in my constituency, even though the factories are not based there. I visited Farnborough this year and am a member of the parliamentary forum of the Society of British Aerospace Companies Ltd., which develops close links with parliamentarians. Clearly, our aerospace industry is enjoying a period of great success. The Department of Trade and Industry and the Government are playing a key role in forging the consolidation of that industry throughout Europe, which is crucial if the industry in Britain is to provide jobs for future generations. That is one way in which our Government can be and are being proactive.

More jobs are also being created in my constituency as a result. A few weeks ago, British Aerospace announced that it would transfer the production of Airbus parts from the Salmesbury plant to Scotland to make room for the increased production of military aircraft at Salmesbury—in particular, Eurofighter, which is soon to go into production.

There are clear signs, however, of a skills shortage in the skilled engineering industry in central Lancashire. The local authorities and the training and enterprise council need to put in place packages to ensure that the skills base is there for the future to support the aerospace industry and the chain of small and medium enterprises that supply it.

On a different tack, Schwan's pizzas—an American company—is one of the major employers in my constituency, with 700 employees. I presented awards to members of staff at one of its gatherings earlier this year. At the time, the company was talking about changes in production and the possible closure of a plant in the south-west. I bumped into the managing director at a business awards ceremony a few weeks ago at the University of Central Lancashire and asked how things were going, expecting that if all the tales we were hearing about recession were true, he would be talking about laying people off. In fact, the factory in the south-west had not closed because demand was so high, and he had taken on additional staff in Leyland to meet production targets. Those may only be straws in the wind, but the picture of universal recession in manufacturing is not justified for all locations.

Since the general election, I have met South Ribble business leaders every three months at business breakfasts. I also have regular meetings with the Central and West Lancashire chamber of commerce. Indeed, I attended a meeting there last Friday. Again and again at those meetings, people have expressed concern about interest rates—the reduction last week was welcome—and exchange rates. We recognise that the exchange rate against European currencies is lower than it was at the time of the general election, but there are still problems in markets in the far east. Businesses in my constituency want stability. People have pointed out to me that interest rates increased from 5 per cent. at the general election to a peak of 7.5 per cent., but they are now down to 6.75 per cent., which is a favourable rate compared with the 15 per cent. that we had for a year in the early 1990s. We have not seen the big swings that took place under the previous Administration.

Business men are concerned about bureaucracy and the amount of paperwork facing small businesses. Some movement and change is necessary there. The important thing is that this Government will listen. The figures that the Secretary of State outlined at the beginning of the debate show that even though the Conservative party talks about doing away with regulation, they introduced more than they got rid of. Small businesses appreciate that fact.

Mr. Bercow

The hon. Gentleman is making a considered speech and we are all listening with interest and courtesy, but I must pick him up on the point about regulation. Will he at least acknowledge the factual position, which is that in the last two and a half years of the previous Government—after enactment of the Deregulation and Contracting Out Act 1994—there were 37 deregulation orders, whereas in the first 18 months of this Government, there have been only five?

Mr. Borrow

I shall not argue with the hon. Gentleman's statistics, but the business leaders to whom I have spoken did not see the previous Administration as being supportive in getting rid of regulation. I can only give the House my own impression.

As regards regional development policy, it is important to recognise that the economies of different parts of the United Kingdom operate differently. I have been greatly encouraged to see the communities of Preston, South Ribble and Chorley come together in a public-private sector partnership to develop the Central Lancashire development agency, with a view to working with the regional development agency for the north-west when it is established next year to develop an economic policy for central Lancashire. I am a CLDA board member, and I was encouraged at last Friday's meeting to see the way in which the business community and the private sector are working together to bring jobs to the area.

Two major sites in central Lancashire are primed for economic development. One—the former Royal Ordnance site—sits largely in the constituency of my hon. Friend the Member for Chorley (Mr. Hoyle). The second is in my own constituency, at Bamber Bridge. Both sites could provide thousands of jobs, and the community wants them to be developed to provide well-paid and highly skilled jobs. One benefit of having a development agency is that the community can have its say and play its role in the development of economic policy. Matters are not then driven entirely by market forces and by whoever buys the land for ad hoc development.

Problems exist for manufacturing industry. In speaking with members of the business community, I have heard that companies are looking through their order books and considering what is going into their banks. The feeling that there may be a huge recession round the corner is causing companies with good order books and sound businesses to fall into the danger of putting off investment and spending decisions. That feeling that conditions may turn down rapidly is not justified by the facts, but we must recognise the scale of the problem if we are to handle the downturn and the problems that have resulted from the collapse of the far east economies, the business cycle and the competitiveness of UK manufacturing industry, particularly in relation to our European competitors. We must be carried away neither by complacency nor by pessimism.

I shall conclude with a comment on Conservative policies, particularly the Conservative policy on Europe. I have yet to attend a meeting with business leaders at which there has been a groundswell of opinion in favour of our not joining the European single currency. The message that comes to me frequently, particularly from manufacturing industry, is that single currency membership should come sooner rather than later. That would make it easier for our businesses to operate, and to compete.

5.43 pm

Miss Julie Kirkbride (Bromsgrove)

I am glad to be able to speak in an important debate, and I congratulate my colleagues on the Front Bench on obtaining a debate on manufacturing industry and factory closures. I was extremely disappointed by the arrogant—some might say sneering—response of the Secretary of State to the legitimate concerns that have been raised. Manufacturing and factory closures are particularly important to the west midlands. I am disappointed not to see a single Labour Member from my part of the world listening to the debate. Nor has any Member from Birmingham been here to make a point about the grave concerns facing manufacturing industry in the west midlands.

A small part of Rover's Longbridge plant is situated in Bromsgrove, and the rest of it is in the constituency of the hon. Member for Birmingham, Northfield (Mr. Burden), which borders mine. Some 14,000 people are employed at Longbridge, and 40,000 further jobs across the west midlands would be at risk if the plant were to close. Sadly, difficulties at Longbridge mean that 50 supply industry jobs in Bromsgrove—at UEF, which hon. Members may remember under its former and more famous name of Garringtons—have already gone because of the problems created for manufacturing industry by the Government's economic policy.

Some 1,500 jobs were cut at Longbridge in the summer when people on short-term contracts were told that the contracts would not be renewed. It will be a miserable Christmas for many of my constituents, because they have been put on short-time working, and their so-called Christmas holiday will be extended to keep them away from work. BMW management say that 25 per cent. of components for Longbridge should in future be outsourced abroad rather than in the west midlands, at an estimated saving of £250 million.

On top of that, there is the Mini. We were all looking forward to the relaunch of the Mini at its historic home at Longbridge, but the relaunch is in jeopardy as the car may be made at Rover's Cowley plant instead. The bottom line is that the Government have been told by BMW's management that they have until the end of November to come up with a scheme to ensure that Longbridge is not run down or discontinued. They have until then to ensure that the plant has a safe long-term future, a future that is in the interests of all of us, but particularly in the interests of my constituents.

It is legitimate to ask how we came to that position. How did our great flagship plant come to face such difficulties? It is a shame that the Chancellor is not obliged to appear this evening, for it was he who blamed the Longbridge workers for their situation, telling them that they were not productive enough. He said that it was their fault that the plant faced the terrible prospect of closure. The Chancellor's remarks were deeply offensive and hurtful following the great strides taken by workers at the Longbridge Rover plant. The days of Red Robbo under an old Labour Government in the 1970s have been left far behind. The work force have vastly improved their working practices, showing great willingness to protect their jobs by working in a modern market.

It is not true to say, as the Government do, that the workers are to blame and that productivity is the problem. It is not comparing like with like to say that Nissan workers in Sunderland have created the most efficient car plant in the country, with 98 cars per worker, while Rover's productivity is much lower, at 33 cars per worker. Nissan has a purpose-built plant on a green-field site with the most efficient and modern equipment, which produces the most efficient output possible. The Longbridge plant has existed for many decades. It is a distinctive brown-field site, situated on three little hills. Therefore, the two cannot possibly be compared and it cannot be said that it is purely the workers' fault that productivity is so low.

Mr. Ian Bruce

My hon. Friend may not know that the all-party motor group visited Land Rover at Solihull. I think that both sides of the House acknowledge—certainly the previous Secretary of State opened it—that that is probably among the most modern plants in Europe, if not the world. I wrote privately to the then Secretary of State about that plant's concern at the way in which the economy was being managed. The pound and interest rates were much too high and its German owners had said that it would not continue with the expansion and would have to start cutting back. That shows that it is nonsense to blame the lack of productivity at Longbridge for its problems.

Miss Kirkbride

My hon. Friend makes the point to which I wanted to come. The problem is not one of productivity alone. Workers and management understand that productivity must be addressed. The Government acknowledge that, but, most unfairly, blame productivity for the problems at Longbridge. The crisis in the Longbridge car plant is the result of the Government's management of the economy. The high pound and the high exchange rate created the present difficulties.

Maria Eagle

I have the front gate of a car plant, although not the plant itself, in my constituency—Ford at Halewood—and Vauxhall is at Ellesmere Port in the north-west. Both are old car plants which are now expanding vastly. How does the hon. Lady explain the difference between what is happening at Longbridge and what is happening at Halewood and Ellesmere Port?

Miss Kirkbride

I am glad that the hon. Lady has raised those issues. If she will forgive me, rather than give a direct answer now I shall address those points in my speech; the House will understand my speech better if I am allowed to deal with those points in the order that I see fit.

The Longbridge plant suffered particularly from the high exchange rate resulting from the Government's decision to make an independent Bank of England which misjudged the rate at which interest rates should be set because it was not capable of knowing the Government's wider economic policy. Interest rates were kept too high for too long with the result that the pound shot through the DM3 ceiling, which I cannot remember its reaching before. For some time the pound reached a completely unacceptable level for manufacturing industry.

Earlier this spring the Longbridge plant was able to hedge its currency transactions. It had bought forward at an exchange rate of DM2.40 to the pound. Sadly, that arrangement came to an end just when the Government's exchange rate policy meant that there were over DM3 to the pound. The effect of that was that the price of the Rover 400 made at Longbridge shot up in Germany from DM29,000 to DM39,000, vastly overpricing that car in the German market, with the result that Rover exports completely collapsed.

At the same time, Rover faced difficulties in its home market. Because the pound was so high, resulting in cars coming from abroad at a much cheaper rate than had previously been experienced, the British car market was flooded with Italian, French and German cars, which, because of aggressive marketing, could be sold more cheaply in Britain. Other European companies were looking for somewhere to sell their cars because, as a result of the collapse in Asia, they were not able to sell their cars in the same volume in that market. They looked to our market which provided easy pickings because of the Government's exchange rate policy. As a result, by the end of this year, BMW will face a £600 million loss at the Longbridge plant.

Mr. Hoyle

What the hon. Lady says does not quite add up, because Rover cars are 30 per cent. cheaper in Europe than in the United Kingdom, and, in fairness, French cars coming to Britain are up to 40 per cent. dearer than in their own market. Therefore, I cannot see the logic of what she is saying. Is she looking for a cash investment for Longbridge from the Government? Is that what is needed?

Miss Kirkbride

I am sure that the hon. Gentleman is only making a debating point and that he really does know that every home market has its own considerations and, sadly, the price of cars on the continent does not necessarily impact on the price of cars here. Like must be compared with like, and a DM10,000 increase on Rover cars in the German market would clearly cause a major problem for BMW when it tried to sell the Rover 400 in that market.

The hon. Gentleman rightly asks what should be done. The first point, which I hope will not be lost on the Minister, is that the Government's economic policy has some bearing on the situation. I notice that, for all the protestations that the Bank of England is independent, Treasury Ministers at least have recently asked it to listen to their pleas for a reduction in interest rates which, to the satisfaction of the House, is what we had last week.

Mr. Leslie

Would the hon. Lady suggest that independence for the Bank of England be scrapped?

Miss Kirkbride

It is difficult to say that the Bank of England is truly independent when members of the Monetary Policy Committee are appointed by the Government on relatively short-term contracts. Independence is not as clear cut as it might be in America and Germany. However, that is something of a red herring when we are discussing the real issue of my constituents' jobs at the Longbridge car plant.

The biggest problem facing Longbridge is where to go from here. It is clear that the unions have shown their willingness to co-operate in any way that they can to make those jobs as secure as possible, and I congratulate them on that. Although criticisms have been made of the BMW management they are rather unfair. BMW has invested £2.5 billion in the Rover car industry in the United Kingdom since it took it over. Land Rover has been a great success. The Cowley car plant is clearly doing better than Longbridge. BMW has shown itself willing to invest in the production of the new Rover 75, which had a fabulous reception at the motor show until the management acknowledged the difficulties at Longbridge. That clearly has put rather a damper on things.

The success of the Rover 75 needs to be reflected in other new models that can be built alongside the Mini at the Longbridge plant if the jobs of my constituents are to be secure. To that extent, I come back to the point made by the hon. Member for Liverpool, Garston (Maria Eagle). I think that I am right in saying that, earlier this year, £43 million was given to the Ford plant at Halewood. Similarly, Vauxhall has had money through restructuring grants in order to improve its productivity and its production plant. Conservative Members, and, I hope, Labour Members, do not want to go back to the situation whereby good money was poured after bad into plants that would never be productive and which could never be a success story for British industry.

Where there is willingness to invest in new models and new plant, DTI grants are available which could help BMW to restructure and to provide jobs and security at Longbridge. When will the Government talk to the BMW management in order to secure those jobs? When will the amount of money that is available within the framework of DTI grants be negotiated with the BMW management so that we can all feel that there is not just a more secure Christmas ahead of us but a secure new year and a secure 2000 and beyond for the Longbridge Rover car plant? I should be grateful if the Minister would respond to the concerns that I have raised, and if her boss would respond to them before the 30 November deadline.

5.59 pm

Maria Eagle (Liverpool, Garston)

I am grateful for the opportunity to contribute to this important debate. The Opposition motion before the House condemns the Government's failure to take urgent action to give manufacturing a chance".

It is interesting that the Opposition now want to give manufacturing a chance. I believe in judging people by what they do as well as by what they say. In that context, it is important to look at the record. The right hon. Member for Wokingham (Mr. Redwood) made clear his view that mistakes were made at the time of the recession in the early 1990s. Although he was in government at the time, he hinted that he had not agreed with the then policies and had taken action behind the scenes—to the extent that a Minister can while retaining collective responsibility—to try to change them.

My memory of the previous Administration goes back a little further than 1990, to 1979. There was not just one major world recession which the previous Government's policies made worse than it need have been; there were two. The first was between 1979 and the early 1980s, and I shall concentrate on the period between 1979 and 1981. The Opposition motion condemns the continued spate of factory closures".

The previous Administration were not content with closing factories; they shut down entire industries. They were not concerned with a factory here or there, but closed most of our shipbuilding and steel industries and almost all of our mining industry.

Within 18 months of coming to power, the Conservatives had managed to close more than 20 per cent. of our manufacturing industry. It did not happen uniformly across Britain but affected some constituencies more than others. Although I did not represent my constituency at the time, I was watching closely what happened in my city of Liverpool. The previous Government closed most of the automotive factories in my constituency, including Dunlop and Triumph—Ford managed to survive the shock, thank goodness—and the matchmaking factories. They closed 25 per cent. of Liverpool's manufacturing industry within 18 months of coming to office. Is that what the motion means by giving manufacturing a chance? It is not my definition.

When studying a Government's record, one must also look at their general election manifestos. Given the absolute devastation that had been visited on Liverpool, particularly on its manufacturing capacity, I looked at the 1983 Conservative election manifesto and at what they claimed they had done. I noticed with interest that the years 1979–81 were missing from the statistics. One would have thought that the Conservatives had first been elected in 1981. The result was that all the lines on the graph went up instead of down.

The Opposition have been working at collective amnesia for years. It is not new to them. They have got it down to a fine art in the motion before us. They appear to forget that they gave manufacturing no chance when they were in power, when they had the opportunity to do so.

Mr. Hayes

It is most interesting to hear a history lesson, but if the hon. Lady is so interested in manifestos, I refer her to the Labour party manifesto, which talks about improving chances for businesses, boosting employment and giving business more support. How does she reconcile that with recent job losses, closures and ever greater regulation on businesses of all sizes?

Maria Eagle

I shall go on to answer those points. I am aware that the hon. Gentleman does not want Labour Members to deal with history. Indeed, the right hon. Member for Wokingham made that very point in his speech and tried to pre-empt any reference to history by Labour Members. The previous Government's 18-year record needs to be looked at, given what they are calling on the Government to do. The hon. Gentleman will admit that 18 months is not as long as 18 years. The time will come—at the next general election—when the people of this country can judge this Government on their record. There are already welcome signs that the Government are taking more heed of the needs of manufacturing and employment—of individuals seeking employment and those who need to shift from job to job and industry to industry—than the previous Government did during 18 years in office.

The Government's amendment recognises the fact that it was not just in my constituency that manufacturing jobs were destroyed under the previous Administration: 2.75 million manufacturing jobs were destroyed during that period. The Opposition may not want to be reminded of that record, but it is relevant to the debate.

Mr. Brady

The hon. Lady has laboured the point that Conservative Members do not want to discuss history. Is it not more important to discuss what our constituents and people throughout the north of England want to hear about—what the Government will do to stop factory closures and job losses? She is perfectly entitled to raise issues of history, but she would be well advised to focus on what people outside want to hear.

Maria Eagle

My hon. Friend the Minister for Small Firms, Trade and Industry will deal with those points when she winds up the debate. I have only about 10 minutes, which is not enough time to go into much detail.

Mr. Bercow

The hon. Lady is subcontracting.

Maria Eagle

Back Benchers cannot subcontract to Ministers. I have less time than my hon. Friend the Minister to answer the point raised by the hon. Member for Altrincham and Sale, West (Mr. Brady). I simply seek to discuss the Opposition motion, which finally urges the Government to change policy before more jobs are lost. I was listening carefully to the initial remarks by the right hon. Member for Wokingham, which were extensive, to hear precisely what the Opposition's policy prescriptions were, but I heard not one suggestion. We should be told in a little more detail what policy changes the Opposition would suggest to put the problems right. Given their extensive experience of the destruction of manufacturing jobs, they might just have a helpful suggestion. Perhaps in the winding-up speeches, the Opposition Front Bench will say what we should do.

The House will probably be glad to hear that, as other hon. Members wish to speak, I shall discard about half my speech.

There are now 400,000 more jobs than when the Government came to office, although they are not in manufacturing and we must look closely at that. However, it is a sign of improvement. We have low long-term interest rates to encourage manufacturing investment, which will help in the medium and long term. Hopefully, the new deal for the long-term unemployed and people who were excluded from the labour market during the previous Administration will help people to get the jobs which they are currently unable to access. In the medium term, that will make a big difference to individuals, manufacturing and employment creation.

6.8 pm

Mr. Ian Bruce (South Dorset)

I am grateful to the hon. Member for Liverpool, Garston (Maria Eagle) for being brief, and I shall be brief so that other hon. Members can speak. I am rather sad, however, because the hon. Lady had an opportunity to tell Government Front Benchers what her constituents want. Of course it is good fun to knock the previous Government, but Conservative Front Benchers cannot, for the next few years, give her constituents what she is looking for.

I listened with care to the Secretary of State. One never wants to insult or attack someone who has decided to leave the Chamber and not listen to the speeches, and we are told that he is a man of great ability, a great wit and a great spinner, but what he was spinning today was great nonsense. I understand that his grandfather, Herbert Morrison, was asked what socialism was. He replied, "Whatever a Labour Government do." That makes him the grandfather of all spin doctors.

The Secretary of State tried to pretend that the 400,000 jobs that have been created since the Labour party came into power were not created because of Conservative party policies, and tried to pretend that the fact that unemployment has been coming down in the United Kingdom for a long time, under Conservative and Labour Governments, was also not due to Conservative party policies. I think that I have been consistent in my advice to Conservative and Labour Governments about listening to what is happening out in the real world, and the Government are foolish in the way that they treat advice from Conservative Members.

I can speak about factory closures. I was made redundant in 1975 because of the closure of the Edwards Scientific Instruments factory, which operated on behalf of Sinclair in producing calculators. That was a growth market and one of the areas that should have been thriving, even though the then Labour Government were creating unemployment in all directions. The company listened to the blandishments of the Labour Government to take people on—through one of the schemes that they introduced to try to prevent unemployment—in subsidised employment.

The scheme was so complicated that it took the Government a year to come back to the company and say, "For some technical reasons, we have decided that you will not be allowed to get the money." The plug was pulled on the £500,000 that it thought it would receive through that wonderful scheme to employ hundreds of people to make electronic calculators in Yorkshire. The company was so extended by expanding its work force that, once the plug was pulled by the Government, the bankers said, "Oops, sorry, we'll pull the plug as well." The company went down and hundreds of people lost their jobs.

I tell that tale not because I want to bash the previous Labour Government—although, clearly, as a Tory I would love to do that—but because it reminds us of what is happening today with the Government. When the Labour party came into power, it rightly identified long-term unemployment as the part of the unemployment figures on which it should concentrate. The figures had been coming down rapidly under the Conservatives, and the momentum continued when the Labour party kept to most Conservative spending limits.

The Government keep telling us about the new deal, however. I asked the Library to find the figures showing long-term unemployment coming down, using statistics for the past 10 years.

Maria Eagle

The new deal has only just started.

Mr. Bruce

The new deal has only just started, but let me give the figures. When the Government were operating under Conservative party policies—in the April to July 1997 quarter–27,000 young people, and 37,000 over-25s, came off the long-term unemployed list. In those days, we had fresh start interviews, job clubs and an economy that was working well. Obviously it is early days, but what happened for young people between April and July this year, after the new deal came in and we had all those pilot schemes? Not 27,000 off the list, and not hundreds of thousands of people going on to the new deal, as we have been told, but 2,500 people off the list—a tenth of the number—and that under the same Labour Government.

What about older people? The new deal has not come in quite so quickly for them, so the figure has gone down from 37,000 off the long-term unemployed list to 10,000 off it.

Maria Eagle

Will the hon. Gentleman give way?

Mr. Bruce

Perhaps the hon. Lady thinks I am being unfair, but let me finish the statistics, or she may dig herself a hole. I have not mentioned the worst quarter—January to April 1998—when the Government were telling everyone how much they would do under the new deal. The number of long-term unemployed went up by 1,200. We shout at Ministers to allow us to intervene in their speeches and say that the new deal is not working. No wonder they do not allow me to intervene, because I have the statistics—all the deal.

New deal was a new deal, but it contained four jokers, I reckon: the Government stopped the fresh start interviews, which were working so well; they closed the job clubs; they took all sorts of money out of the jobcentres; and £5 billion in extra taxes was put on the utilities. Those companies could have reduced their prices to consumers by £5 billion, or they could have been told to spend the £5 billion creating new jobs, but no: the £5 billion was taken out and used for this so-called new deal—the four jokers.

What happened in the rest of the economy? We were warned that boom and bust would come again. We were getting up to growth rates of almost 3 per cent.—the boom—so we had to jam on the anchors. Interest rates had to go up, exchange rates were pushed up and we had all these extra regulations. That was completely wrong. When we were in office, I argued with my own Front Benchers that interest rates were too high. I experienced the charm offensive years ago, when people told us, "If only we had an independent bank, interest rates would come down automatically—overnight—by at least 1 per cent."

Real interest rates are the ones that people talk about. Remember, German inflation is about 1.5 per cent. and real money is borrowed at 4 per cent. The real interest rate is about 2 per cent. or 2.5 per cent. What is it here? Our interest rate for borrowing money is 9 or 10 per cent.—not the bank rate—because there has to be 1 per cent. or so on top. That is more than three times the rate of inflation, which is why we have great problems with investment in this country. If independence for the Bank of England gives us that, I for one would say, "It is proven; we were right not to give it independence." By the next general election, we will be able to judge whether we should bring the Bank back into political control.

If people do not believe my arguments, they should page the parliamentary data and video network and look up Peter Shore. He made the same speech on the Bank of England almost all the time, and his speeches would persuade Labour Members, as well as Conservative Members, that independence for the Bank of England was no panacea.

What about this unsustainable growth of 3 per cent. on which we had to slam the brakes, to prevent us from reaching such a level? What is the Chancellor telling us? He is saying, "We will have terrible growth this year and next year, but we will get back up to 3.1 per cent." Why did we put the brakes on? Come on: if it was right to put the brakes on and to put on high interest rates because of whatever legacy the Conservatives were supposed to have left, it certainly was not right when all the disasters in Japan, the far east, the middle east and south America happened. That world recession was certainly enough to put the brakes on.

Mr. Hayes

I am most interested in my hon. Friend's analysis. Is not the truth that the Bank of England was remarkably insensitive to that change? It was slow; a politician would have been more reactive and more sensitive to opinion and circumstances and would have been able to react more quickly. The Bank of England has done too little, too late.

Mr. Bruce

My hon. Friend makes a telling point. The Government trust in bankers and their good sense, so why have they appointed Mr. Don Cruikshank to persuade the bankers to lend money to industry in a more sensible way, even though we rely on bankers to tell us what interest rates should be for our industry? That is completely wrong.

I want to mention the working time directive, because there is an issue of bad drafting. How many people realise that someone who starts working for a company on 1 July, in a couple of years will get four weeks' paid holiday, as he has always done, but each year he will have to take all his summer holiday by the end of June? Do Labour Members realise that? People will not be allowed to save any of those four weeks forward.

Every company for which I have worked had a policy of allowing a week or so to be transferred forward. That could be agreed, but there are absolutely no derogations in the working time directive on holiday pay. That will affect all our constituents, because hon. Members did not bother to consider the regulations closely.

What about the position locally? I am fortunate enough to have in Weymouth an economy that is working well. Unemployment is still going down, and we have not yet had any disasters. I do not talk the economy down or try to destroy jobs. When the Royal Navy was leaving Portland in my constituency, the previous Government had policies that amazed me. Every Department seemed to know that there was a problem in Weymouth and Portland and was able to do something about it, whether it was building a new land registry or building new roads.

What do we have now? We have First Portland and Portland Port Ltd., and an enterprise centre is being set up using the single regeneration budget grant. We are facing hard times, however, because the single regeneration budget and assisted area status are under threat from the Labour Government. We were promised a relief road, but that has been delayed. The South Dorset economic partnership was established with little Government money. The money came from the training and enterprise council, but TECs have had money taken away from them and given to the regional development areas, so the South Dorset economic partnership has had to close. We are now to lose the last bit of the Navy base. The Government have it in their power to release this land for productive use. At least three people want to bid for it, but the Government will not release it until next year.

The Government must look at the lessons that we learned during our last recession and accept that it is not Conservative Members who are talking down the economy: they have done that for themselves.

6.21 pm

Mrs. Claire Curtis-Thomas (Crosby)

Thank you, Mr. Deputy Speaker, for allowing me to speak on this important occasion.

Under the Tory Administration, which this nation endured for 18 years, a business went bust, on average, every three minutes of every working day. That is not a record of which to be proud. One in five households with someone of working age had no one in work, and at the end of their period in office there were more than 1 million fewer jobs than when the right hon. Member for Huntingdon (Mr. Major) became Prime Minister. Moreover, 800,000 people earned less than £2.50 an hour, and in-work benefits cost every taxpayer £160 a year. Britain slumped0 from 13th to 18th in the world prosperity league, and our investment level was one of the lowest of the 24 countries of the Organisation for Economic Co-operation and Development. Total manufacturing investment was lower in real terms in 1996 than in 1979. That is fact.

By contrast, we believe that industry and small and medium businesses are vital to Britain's economy because of the wealth that they create, the jobs that they provide and the ideas and technology that many of them develop. The Tories claimed that they were the friends of small businesses, but their actions told a very different story. In 1992, 65,000 businesses closed. The Tories were responsible for record business failures, with all the misery that that brings, more red tape and total inaction on late payment, crippling many small businesses. Taxes went up for small businesses and petty regulations multiplied.

Since the Labour party was elected, what have we been doing? We have been asked what we intend to do, but what have we already done? We have introduced a statutory right to interest on late payments, we are providing SMEs with better information and support and we are committed to cutting unnecessary bureaucracy and compliance costs. That is action: we are trying to do something, because something is better than nothing, which is what the Tories delivered in 18 years.

Mr. Bercow

Will the hon. Lady give way?

Mrs. Curtis-Thomas

No.

We are intent on giving British industry what it needs to thrive. We have set tough rules on spending and borrowing to ensure low inflation and to strengthen the economy, so that interest rates can be kept as low as possible. We are putting in place a medium-growth strategy, which encourages long-term investment and sustainable growth—not short-term growth, but sustainable growth for the long term.

We have rightly transferred the task of setting interest rates to the Bank of England. The Tories used interest rates as a cosmetic tool to hide their failure. We are making a major monetary activity more effective, open and accountable, and free from short-term Tory manipulation. Even the suggestion that the Tories may take back ownership of that important monetary policy dismays me, and would probably dismay most of British industry.

The Labour Government recognise that investment in training and in a skilled, flexible work force is crucial to Britain's future competitiveness. The Tories abandoned the young and those people with considerable skills who were forced into redundancy. The previous Administration had an abysmal record. I had the unfortunate pleasure of working in the docks, and I echo the sentiments of my hon. Friends. You were responsible for the wholesale closing of industries, and you did not give a damn what happened to those communities as a consequence.

Mr. Deputy Speaker

Order. The hon. Lady must use the correct parliamentary language.

Mrs. Curtis-Thomas

My apologies, Mr. Deputy Speaker.

Mr. Brady

Will the hon. Lady give way?

Mrs. Curtis-Thomas

No.

Britain's work force have fewer skills than those of our major competitors. You may not like—my apologies, Mr. Deputy Speaker.

Mr. Deputy Speaker

Order. I repeat that the hon. Lady must use the correct parliamentary language.

Mrs. Curtis-Thomas

The Opposition may not like to hear these facts, but they are true. Britain's work force have fewer skills than those of our major competitors. Less than half our work force are qualified to NVQ level 2 or above. According to the 1996 world competitiveness report, Britain has fallen from 42nd to 48th in the international education league. Youth training has failed more than half its trainees, many of whom have left within a few weeks of starting their training schemes.

Mr. Hayes

Will the hon. Lady give way?

Mrs. Curtis-Thomas

When I have finished these points.

What has the Labour party done to address those issues? Contrary to what Opposition Members have said, the new deal is giving young people the first chance they have had to participate in the workplace. I am delighted that that programme is now being extended to older workers and to lone parents, who are vital contributors to the economy and were ignored by Tory Administrations.

Improvements to and extension of the Investors in People programme has encouraged more employers, especially smaller firms, to train their work force. We have seen the biggest ever investment in the research budget, which is vital for investors and for the academic infrastructure.

Mr. Bercow

Will the hon. Lady give way?

Mrs. Curtis-Thomas

After I have finished this point.

That investment of £1.4 billion over three years includes a substantial contribution from Wellcome, and is one of the most significant private-public sector partnerships that this country has ever seen.

Mr. Hayes

Will the hon. Lady give way?

Mrs. Curtis-Thomas

When I have finished.

A radical numeracy and literacy drive has ensured that children in primary schools today will have the skills and ability to be the wealth generators of tomorrow. Industry and manufacturing were totally neglected by the Tories, but they are embraced by the Labour Government. We are not merely paying them lip service; we are introducing practical measures to enable them to survive and thrive.

Mr. Hayes

I am extremely grateful to the hon. Lady for giving way. I do not want to interrupt her flow, although perhaps that is not quite the right word to describe it. Before coming to the House, she spent most of her time in higher education.

Mrs. Curtis-Thomas

indicated dissent.

Mr. Hayes

The record suggests that she spent more time in higher education than in business.

Mrs. Curtis-Thomas

No.

Mr. Hayes

Perhaps the record is wrong. The hon. Lady may acknowledge that those of us who have spent some time in business understand the importance of overheads. What estimate has she made of the damaging effect of overheads as a result of the increasing bureaucracy and regulation imposed by the Government? Drawing on her enormous business experience, what estimate has she made of the effect that that will have on employment and jobs?

Mrs. Curtis-Thomas

I have spent most of my working life in industry, in both the private and the public sectors. A small part of my working life was in the academic environment.

On overheads, I enjoyed—if "enjoyed" is the right word—the over-zealous activity of the Tory Administration, who produced the largest set of overheads that industry has ever seen.

Mr. Bercow

Will the hon. Lady tell the House why the definition of a small firm that the Government use for the purposes of the late payment of commercial debt differs from the definition that they deploy for trade union recognition?

Mrs. Curtis-Thomas

I shall allow the Minister to answer that interesting question on my behalf.

6.28 pm

Mr. Tim Boswell (Daventry)

It has been useful for the House to debate these serious matters, which bear on the future of Britain as an industrial nation. They directly influence the mechanisms by which wealth is created before it can be spent on the social agenda of any of us. We need to create the wealth before we can spend it.

I shall make a few points clear at the start. First, Opposition Members want Britain to succeed as a modern industrial country. We have no intention of selling British industry short. Given my experience, and given the fact that my constituency contains Silverstone and the greater part, or a significant part, of the Grand Prix and formula one industry, I know what engineering excellence can amount to, and I realise how vital it is to the preservation and, indeed, creation of jobs. I recognise the central importance of manufacturing industry, alongside the service industries.

Equally—as long as there is proper consultation, along with correct and sensitive treatment of any redundancies derived from those closures—there need be no suggestion from Opposition Members that factory closures are always and ipso facto wrong. It might be entirely proper to close a factory in order to rationalise production and to increase productivity, which is the objective—albeit not always perfectly expressed—of the McKinsey report and, I think, of all who have spoken today. It may even be sensible to replace one factory with another, on the same site or elsewhere, to expand production or the product range. I am fond of saying, as a throwaway line, that any Member of Parliament can go along and open a factory; the really interesting task is opening a factory extension, or a new facility replacing an old one.

Decisions such as those are the daily responsibility of boards of management and business people. Given the Secretary of State's sneering responses to the reasonable comments of my right hon. Friend the Member for Wokingham (Mr. Redwood) about productivity, it is possible that he is not the one who has experience of making such decisions; it may even be that he is the one who should be sharpening up his act. In view of the stress that he and others put on inward investment, however—rightly so, and we have a good record in that respect—let us not forget that there is no law of nature requiring foreign investors and their boards to come to this country. There is worrying evidence that that welcome tendency of recent years may be turning down. Nevertheless, we want boards based abroad, and overseas investors, to see Britain as a continuing base for their investment.

Secondly, we recognise that overseas economic conditions, disturbing as they are at present, are a vital part of the scene. They cannot be wished away, however much any of us would like that. I still find it strange that the Government can entertain the thesis that they have abolished boom and bust, while at the same time expressing worry about economic conditions. Perhaps they can explain how the two parts of that conundrum can be reconciled.

Mr. Bercow

In his characteristically polite and understated fashion, my hon. Friend suggested that it might be the Secretary of State who needed to sharpen up his act. Is his view not reinforced by the fact that, only last week, the Secretary of State said that the Government had no plans or proposals to lift restrictions on Japanese car imports? Two days earlier, in his pre-Budget statement, the Chancellor had announced precisely that.

Mr. Boswell

I was given a report to that effect, and I did not think much of the Secretary of State's reported contribution; but, if we are educating the right hon. Gentleman, that is an important part of our function.

Opposition Members do not feel that a one-sided caricature of our record in office over 18 years is a sufficient response from the Secretary of State and Her Majesty's Government to serious, current, pressing issues. Government Back Benchers made interesting comments. In one contribution in particular, there was clear evidence—given the vehemence of the attack on the outgoing Government—of real concern about the Government's ability to deliver their objectives, however commendable those objectives were considered to be. Let me put something on the record. I was particularly interested by a comment from the head of McKinsey, Mr. Bill Lewis, which was reported in The Birmingham Post on 30 October. He conceded that Britain had made great advances in the 1980s and early 1990s in deregulating its labour and capital markets and these were now every bit as competitive as those in the US. I wonder who did that. The challenge now", said Mr. Lewis, was to carry through the same sort of structural reforms in product markets". That is a reasonable objective, and it is right that we should consider it.

It is clear to us, as we open our newspapers, that the industrial casualty list is lengthening day by day, with news of further closures and job losses that were well set out by my right hon. Friend the Member for Wokingham and others. My constituency is poised between the—already known—major cuts at Barclaycard in Northampton, and the possibility of up to 5,000 job losses at Rover in the west midlands, referred to by my hon. Friend the Member for Bromsgrove (Miss Kirkbride) in a worthy contribution. There is also the likely spin-off affecting components suppliers and the service industries. Only today, someone mentioned a "multiplier estimate" that, for every job lost in manufacturing industry, 3.5 jobs could be lost in the economy as a whole.

The examples that I have cited make the interesting point that not all job losses are in manufacturing industry. The financial services industry is also haemorrhaging, and it is of equivalent importance. We are concerned about both sectors.

Notwithstanding the reported remarks of the Governor of the Bank of England, this is not solely a question of one hard-hit region, although the problem is concentrated in the north-east. In towns on the south coast, losses are reported at Guardian Royal Exchange in Eastbourne and Folkestone, and Philips is to close its kettle factory at Hastings. I believe that, at its peak, it employed only 800 people, but now there are to be 160 job losses.

I do not wish to make Cookson a target of my criticism, but it provides another example of what has been happening to mainstream industrial materials groups. A weekend report of its results was described as offering a more gloomy than expected trading statement, with a share price fall of nearly 10 per cent. Profits had fallen sharply in the third quarter of the year. Cookson is a company that is central to the local economy.

Nor are prospects more encouraging. My right hon. Friend mentioned, in the context of the trading difficulties of Marks and Spencer, a report that the textile industry faces an estimated loss of 60,000 jobs. PricewaterhouseCoopers predicts a 40 per cent. increase in the number of insolvencies by the end of the millennium, only about 14 months from now. The Machine Tool Technologies Association's survey on demand, which I have before me, reveals some dreadful trend figures. We do not need to run down industry, because there is already an acknowledged problem.

Mr. Bob Russell (Colchester)

During the debate, news was faxed to me that the Colchester-based Spottiswoode Ballantyne and Ipswich-based Cowells printing firms have gone under, with a loss of 228 full-time employees.

Mr. Boswell

That makes the point eloquently. I am only sorry for those who have lost their jobs.

It is not terribly surprising that the Secretary of State should extend his new Labour initiatives to taking a close interest in the insolvency laws. That reflects the current equivocation in his Department. On the one hand, it is all right to introduce measures to enforce statutory late payment of debt; on the other hand, those who want to get their money back may not get it back from their creditors.

We now come to the Government's own role in this. They, of course, are programmed to deny: it is anyone's fault but theirs. Yet it is they who have increased business taxation through their acceleration of corporation tax payments, their raid on pension funds and a number of other measures—such as fuel duties—that have directly affected industrial costs. On top of that, they have piled on regulatory burdens to the tune of an estimated £14 billion over this Parliament, figures derived from their own compliance cost estimates. That is, of course, where we have those estimates. Only this week, I was told that we are not to have a compliance cost assessment for the "Fairness at Work" White Paper until the legislation comes forward. That is also before we aim off for what I might call a certain insouciance in calculating the figures, for example, for the Competition Act 1998 compliance costs.

Ministers never understand the sheer gut-wrenching effort that is required by a small business, for example, to comply with the requirements of record keeping, with a 17-week reference period for the working time directive and a separate four-week period for the national minimum wage. Only today, a medium firm employing 100 people told me that it would be taking on an employee. That employee was required for record keeping for those two functions, and so was not a productive employee, but that is the only type of employment that the Government can encourage. Of course, those figures are all on present labour costs, not on future ones.

The effect of all that is to load some £1,500 on to the cost of each British job. It is not surprising that there will be fewer of them. The effects have been damped by economic buoyancy—the golden legacy that the Government inherited from us—and the ability of firms to take out a year's foreign exchange cover, but, just as those are running out, we shall find the industrial consequences of last year's hike in interest rates and the escalation of the pound coming through.

The euro could make matters even worse if it is now going to work to a left-wing political agenda. If it softens and the pound stays high, that would be another blow to British industry.

My first advice to Government is simply to acknowledge the problem that they have. The second is to take some practical action to tackle it. Investment is not helped by the extra taxes on savings that they have introduced. Employment is not helped by the extra cost burdens that have been imposed on employers.

Just as the Government go around saying that industrial management should sharpen its cost cutting—and so it should—so Government can do some practical things to cut burdens on business: call a stop to extra regulatory burdens; freeze "Fairness at Work" until other burdens that they have already imposed have been assimilated; not impose green taxes on business unless other burdens on business are reduced at least commensurately; remember that other Government Departments have the capacity to do collateral damage to business unless the Government practise the joined-up thinking that they always talk about; remember that excess government spending is inevitably feeding through into interest rates; and put some downward pressure on both.

Maria Eagle

Just as we thought, the hon. Gentleman's prescription appears to be: pay lousy wages and cancel investment in the health service and education.

Mr. Boswell

If the hon. Lady believes that, she is providing a prescription for the destruction of jobs that has always accompanied past Labour Governments and will, I fear, accompany this one.

Somehow, I doubt whether the Government could do those things. I think that they will use the McKinsey report not to improve productivity but as an opportunity for grandstanding and showing off at the expense of business. They will not give credit to business and the unions for the achievements of the past 10 years in making at least a large part of British manufacturing internationally competitive. Rather, they will use it as a platform for windy exhortation.

It is the Government, not the others, who should be sharpening up their act. It is not kind to someone who is sweating their guts out to get orders to tell them they should do, yet any minor douceurs offered by the Secretary of State and the Government, for example, to small and medium enterprises or high-tech companies will pale into insignificance alongside their matching increases in business costs. For all Ministers' proud rhetoric, they still do not understand the simple fact that a 1 per cent. uplift in costs, although apparently minor in itself, translates itself into a much higher percentage effect on the bottom line, which is the basis of all business success and new investment.

British manufacturing industry, then, is in a serious situation, but that situation is not terminal if the Government help. Ministers have claimed that they have put an end to boom and bust, yet their real concern is to pass the buck. Their attitude to British industry is four soundbites and a funeral.

If the Secretary of State finds sweat, scurf and dirty overalls too distressing for his fastidious tastes, perhaps he should remember Oscar Wilde: "To lose one parent"—or perhaps to lose one factory—"may be regarded as a misfortune; to lose more than one looks like carelessness."

Ministers have already done great damage. Their amendment stinks of complacency. Our motion, which I commend to the House, tells them that, if they do not mend their ways and sharpen up—or, if they cannot do that, show even a little human compassion for the casualties of their folly—this will return to haunt them.

6.45 pm

The Minister for Small Firms, Trade and Industry (Mrs. Barbara Roche)

Today's debate has shown a cynical and desperate Opposition talking down the economy. Conservative Members are desperate for a recession for their own political ends and for nothing else, and what do they do to bring that about? They fly in the face of reality. They ignore the facts. They ignore the real job gains, and the fact that it is this Labour Government who are creating the economic conditions for long-term economic growth.

Mr. Brady

Will the Minister give way?

Mrs. Roche

Let me make a little progress first.

Unlike the Opposition, the Government are in touch with reality. As my right hon. Friend the Secretary of State for Trade and Industry has rightly pointed out, there is a serious downturn in the global economy and, yes, its effects have been felt by some companies in the United Kingdom. With one quarter of the world, including Japan, in recession, no country is immune from the effects of the instability in the world economy, but we are in a good position to survive the worst because of the prudent economic policies and actions that have been pursued since May 1997 to ensure the underlying strength of the economy.

The Government's job, amid all that, is to continue to ensure stability at home to withstand the worst effects of the world downturn and to create the conditions for sustained and steady growth. The response of all politicians—from the Government and hon. Members on both sides of the House—should be that we should not talk ourselves into recession.

The UK's economy is still growing. There is net job creation. I have yet to hear someone from the Conservative Benches admit that. Our economic fundamentals are sound, despite what the right hon. Member for Wokingham (Mr. Redwood) would have us believe.

Mr. Brady

rose—

Mr. Bercow

rose—

Mrs. Roche

What an embarrassment of riches, but it has to be the hon. Member for Buckingham (Mr. Bercow) because I missed him at the Select Committee on Trade and Industry today, so he has his opportunity to ask me questions now. I was there for him this morning, but he was not there.

Mr. Bercow

I had a personal family commitment, so I hope that the hon. Lady will be understanding.

Why did the Secretary of State tell the Select Committee on Trade and Industry last week that his Department had made no estimate of the annual cost of the parental leave directive, when his Department had already published an estimate of an annual cost of £55 million? Why is he so palpably ignorant of the matters for which he is responsible?

Mrs. Roche

It is such a shame, because the hon. Gentleman tries so hard. I have great admiration for his efforts, but he must get a grip on reality. That is not what the Secretary of State has said. He does not need to get back to the school drawing board.

As I was saying, we should not talk ourselves into recession. The economy is growing. Despite the scaremongering by Conservative Members, our economic policies are grounded in reality.

Mr. Chidgey

Will the Minister give way?

Mrs. Roche

Let me make a little progress, please. Our economic policies are grounded in reality, ensuring long-term economic stability and employment; encouraging business to improve its competitiveness; very importantly, exploiting Britain's science base; and meeting the challenges of the new knowledge-based economy. Let us ground ourselves in reality and look at the facts. Since May 1997, 420,000 new jobs have been created in the United Kingdom. Over the past four weeks alone, companies have announced 13,000 more new jobs created than jobs lost. Those are all new jobs in manufacturing industry, which reflect the Government's commitment to long-term economic stability.

Mr. Boswell

In view of her Department's concern about productivity and the fact that even the Chancellor has produced an estimate of growth in the economy next year that is far below the trend rate for productivity, will the Minister advise the House whether, and to what extent, job losses will rise in the year to come?

Mrs. Roche

I have some respect for the hon. Gentleman, but he must get a grip on reality. Under this Government, more jobs have been gained than lost. Of course the Government have been concerned about productivity, which is why my right hon. Friends the Secretary of State and the Chancellor have been engaged with industry in looking at our productivity. That is what we want to address.

Mr. Chidgey

The Minister is talking about reality and saying that we should not talk ourselves into recession. Is it not right that she should make a distinction between the economy as a whole and manufacturing industry, which is what the debate is about? Does the Minister accept that the 29 City analysts that the Treasury uses to make its forecasts are telling us that, next year, there will be growth of minus 1.2 per cent., which is a recession? We should address that.

Mrs. Roche

If the hon. Gentleman would allow me to make some progress, I would tell him that, as a result of the global downturn, we accept that some companies have announced closures. However, the picture in manufacturing is mixed and some manufacturing companies are doing very well.

Unlike the Opposition, who seem to pray for redundancies and care only about the job losses that occurred in their party in May last year—that is what the debate is really about—the Government understand what factory closures mean for the real lives of those who work there and for the areas affected. We have taken steps to reduce the hurt caused by job losses by introducing rapid response groups, providing training and employment opportunities for those affected by closures and by working with the companies concerned, such as Fujitsu and Siemens, to help safeguard jobs.

Mr. Richard Burden (Birmingham, Northfield)

Within that context, will my hon. Friend join me in welcoming the partnership being established in Birmingham between Birmingham city council, the local training and enterprise council and the chamber of commerce to help the supply chain in the wake of the difficulties being faced at Rover? It is helping to ensure that that city is as well-equipped as it can be to withstand the challenges ahead. I ask my hon. Friend to welcome the visit made to Rover by our right hon. Friend the Secretary of State. He visited the partnership and heard the discussions that took place last week.

Mrs. Roche

I am grateful to my hon. Friend for that point. I congratulate all the partners involved. I welcome my hon. Friend's remarks about the visit made by my right hon. Friend the Secretary of State, who I know has a great deal of admiration for what is going on there.

We are targeting areas most in need through the single regeneration budget, European funds and assistance to companies. In drawing up our proposals for the competitiveness White Paper, we are taking into account the importance of small firms—much has been made of that issue, which was mentioned by the hon. Members for Daventry (Mr. Boswell) and for Eastleigh (Mr. Chidgey) and by my hon. Friend the Member for South Ribble (Mr. Borrow). It was also mentioned by my hon. Friend the Member for Crosby (Mrs. Curtis-Thomas), who has a great deal of experience as a chartered engineer in industry. All those points were well made.

Mr. Ian Bruce

rose—

Mrs. Roche

I must make some progress.

In May 1997, we inherited an economy where growth was running at an unsustainable rate and where inflation was heading way above target. The public finances were in substantial deficit—[Interruption.] Opposition Members may not like the facts, but they are going to hear them. We have determined not to repeat the mistakes made by the Conservative party. That is why we have taken tough and decisive action—[Interruption.]

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. Hon. Members must stop shouting at the Minister. No one should be shouting at the Minister.

Mrs. Roche

I am grateful to you, Mr. Deputy Speaker, but I do not mind Opposition Members shouting if they do not have any arguments.

We have taken action to prevent a return to the stop-go cycles of the past. We are determined to keep on course.

Mr. Bruce

rose—

Mrs. Roche

I must make some progress.

The economy is still expanding and creating new jobs and inflation is at its 2.5 per cent. target. There must be no return to the boom and bust of the late 1980s and 1990s when inflation rose to nearly 10 per cent. and interest rates hit 15 per cent.

Overall, nearly 3 million jobs were lost in manufacturing when the Opposition were in power. They do not like to be reminded of that, but they are going to hear it. The Opposition had the cheek to suggest today that our policies are damaging employment prospects.

Mr. Brady

rose—

Mrs. Roche

Please sit down.

The Opposition's attitude was pointed out by my hon. Friend the Member for Liverpool, Garston (Maria Eagle) in an impassioned speech. We have the policies for employment growth. We have achieved that through what we have done with the corporate tax system, with our reforms of capital gains tax and what we have done on better regulation.

The Conservative party had the cheek to say—the hon. Member for Daventry mentioned this—that our election to office would lead to inward investment drying up. Let us come back to reality. During 1997–98—the first year under a Labour Government for 20 years—my Department's Invest in Britain Bureau recorded more inward investment projects than ever before. There were no fewer than 618 in one year. It is the first time that the annual total has ever exceeded 500. I am expecting the letter of congratulation from the right hon. Member for Wokingham (Mr. Redwood) in the morning.

Mr. Bruce

The Minister, who is always kind to me, can just catch her breath. I wonder whether she can deal with the important point which I made in my speech and which I think may have alarmed colleagues throughout the House. Article 13 of the working time directive deals with the fact that people have to take the leave to which they are entitled within the leave year. If somebody starts on 1 July, they must finish their summer holiday by 1 July.

Mr. Deputy Speaker

Order. That is far too long.

Mrs. Roche

I take the hon. Gentleman's point. He will know that, when we drew up the regulations, we consulted industry. Under the previous Administration, under the premiership of the right hon. Member for Huntingdon (Mr. Major), 10,000 new regulations were introduced. I do not think that we need any lessons from the Opposition.

We have Ericsson of Sweden planning to move a major international operation to London and Silicon valley's CISCO Systems, a world leader in internet technology, is to build a major research and development centre in Britain. Volkswagen has confirmed heavy investment plans at the Rolls-Royce plant in Crewe where the work force of 2,500 is expected to grow. Those companies come here because they see the advantage of locating in the United Kingdom. They are attracted by economic stability—[Interruption.]

Mr. Deputy Speaker

Order. The hon. Member for South Dorset (Mr. Bruce) has just made an intervention. He is now making a speech while the Minister is speaking. We cannot have that.

Mrs. Roche

I am saddened by the behaviour of the Opposition, but I am not surprised, because they do not care. They do not want to hear the facts.

Inward investment cannot be our only source for new jobs. It must be matched by the creation of new home-grown companies and industry. That is what we want to do. We want more high-quality start-ups and more creative start-ups. We want to back those who want to take long-term risks and ensure that they can go on and prosper. That is why we are consulting industry and why we shall shortly publish our White Paper on competitiveness. That White Paper will include new proposals for promoting enterprise in the United Kingdom. We want to ensure that those objectives are achieved both regionally and locally.

Today's debate has shown that the Conservative party is out of touch with the people of the United Kingdom. I urge the House to reject the Opposition motion and to support the Government amendment.

Question put, pursuant to the Order [5 November]. That the original words stand part of the Question:—

The House divided: Ayes 154, Noes 323.

Division No. 372]	[6.59 pm
AYES
Allan, Richard	Goodlad, Rt Hon Sir Alastair
Amess, David	Gorman, Mrs Teresa
Ancram, Rt Hon Michael	Gorrie, Donald
Arbuthnot, Rt Hon James	Green, Damian
Ashdown, Rt Hon Paddy	Greenway, John
Atkinson, David (Bour'mth E)	Grieve, Dominic
Atkinson, Peter (Hexham)	Hamilton, Rt Hon Sir Archie
Baker, Norman	Hammond, Philip
Beggs, Roy	Hancock, Mike
Beith, Rt Hon A J	Harris, Dr Evan
Bercow, John	Harvey, Nick
Blunt, Crispin	Hawkins, Nick
Body, Sir Richard	Hayes, John
Boswell, Tim	Heald, Oliver
Bottomley, Peter (Worthing W)	Heathcoat-Amory, Rt Hon David
Bottomley, Rt Hon Mrs Virginia	Horam, John
Brady, Graham	Howarth, Gerald (Aldershot)
Brake, Tom	Hughes, Simon (Southwark N)
Brand, Dr Peter	Hunter, Andrew
Brazier, Julian	Jack, Rt Hon Michael
Breed, Colin	Jenkin, Bernard
Brooke, Rt Hon Peter	Jones, Nigel (Cheltenham)
Browning, Mrs Angela	Keetch, Paul
Bruce, Ian (S Dorset)	Kennedy, Charles (Ross Skye)
Burns, Simon	Key, Robert
Cash, William	King, Rt Hon Tom (Bridgwater)
Chapman, Sir Sydney	Kirkbride, Miss Julie
(Chipping Barnet)	Laing, Mrs Eleanor
Chidgey, David	Lait, Mrs Jacqui
Chope, Christopher	Lansley, Andrew
Clappison, James	Leigh, Edward
Clark, Rt Hon Alan (Kensington)	Letwin, Oliver
Clarke, Rt Hon Kenneth (Rushcliffe)	Lewis, Dr Julian (New Forest E)
	Lidington, David
Clifton-Brown, Geoffrey	Lilley, Rt Hon Peter
Collins, Tim	Loughton, Tim
Cormack, Sir Patrick	Lyell, Rt Hon Sir Nicholas
Cotter, Brian	MacGregor, Rt Hon John
Cran, James	MacKay, Rt Hon Andrew
Curry, Rt Hon David	Maclean, Rt Hon David
Davies, Quentin (Grantham)	Maclennan, Rt Hon Robert
Davis, Rt Hon David (Haltemprice)	Maude, Rt Hon Francis
Day, Stephen	Mawhinney, Rt Hon Sir Brian
Dorrell, Rt Hon Stephen	May, Mrs Theresa
Duncan, Alan	Michie, Mrs Ray (Argyll & Bute)
Duncan Smith, Iain	Moore, Michael
Faber, David	Moss, Malcolm
Fabricant, Michael	Nicholls, Patrick
Fearn, Ronnie	Norman, Archie
Flight, Howard	Oaten, Mark
Forth, Rt Hon Eric	Öpik, Lembit
Foster, Don (Bath)	Ottaway, Richard
Fowler, Rt Hon Sir Norman	Page, Richard
Fox, Dr Liam	Paice, James
Gale, Roger	Paterson, Owen
Garnier, Edward	Pickles, Eric
Gibb, Nick	Randall, John
Gill, Christopher	Redwood, Rt Hon John
Gillan, Mrs Cheryl	Rendel, David

Robathan, Andrew	Tonge, Dr Jenny
Robertson, Laurence (Tewk'b'ry)	Tredinnick, David
Rowe, Andrew (Faversham)	Trend, Michael
Ruffley, David	Tyrie, Andrew
Russell, Bob (Colchester)	Wallace, James
St Aubyn, Nick	Wardle, Charles
Sanders, Adrian	Waterson, Nigel
Sayeed, Jonathan	Webb, Steve
Shephard, Rt Hon Mrs Gillian	Wells, Bowen
Shepherd, Richard	Whitney, Sir Raymond
Smith, Sir Robert (W Ab'd'ns)	Whittingdale, John
Spring, Richard	Widdecombe, Rt Hon Miss Ann
Stanley, Rt Hon Sir John	Wilkinson, John
Steen, Anthony	Willis, Phil
Streeter, Gary	Wilshire, David
Stunell, Andrew	Winterton, Mrs Ann (Congleton)
Swayne, Desmond	Woodward, Shaun
Syms, Robert
Tapsell, Sir Peter	Tellers for the Ayes:
Taylor, John M (Solihull)	Mrs. Caroline Spelman and
Taylor, Sir Teddy	Sir David Madel.
NOES
Abbott, Ms Diane	Clark, Paul (Gillingham)
Ainger, Nick	Clarke, Charles (Norwich S)
Ainsworth, Robert (Cov'try NE)	Clarke, Eric (Midlothian)
Alexander, Douglas	Clarke, Rt Hon Tom (Coatbridge)
Allen, Graham	Clarke, Tony (Northampton S)
Anderson, Janet (Rossendale)	Clelland, David
Armstrong, Ms Hilary	Clwyd, Ann
Ashton, Joe	Coaker, Vernon
Atherton, Ms Candy	Coffey, Ms Ann
Atkins, Charlotte	Coleman, Iain
Barnes, Harry	Connarty, Michael
Barron, Kevin	Cook, Rt Hon Robin (Livingston)
Battle, John	Cooper, Yvette
Beard, Nigel	Corbett, Robin
Beckett, Rt Hon Mrs Margaret	Corbyn, Jeremy
Bell, Martin (Tatton)	Corston, Ms Jean
Benn, Rt Hon Tony	Cox, Tom
Benton, Joe	Cranston, Ross
Bermingham, Gerald	Crausby, David
Berry, Roger	Cryer, Mrs Ann (Keighley)
Best, Harold	Cryer, John (Hornchurch)
Blackman, Liz	Cummings, John
Blair, Rt Hon Tony	Cunliffe, Lawrence
Blears, Ms Hazel	Cunningham, Jim (Cov'try S)
Blizzard, Bob	Curtis-Thomas, Mrs Claire
Blunkett, Rt Hon David	Dalyell, Tam
Boateng, Paul	Darling, Rt Hon Alistair
Borrow, David	Darvill, Keith
Bradley, Keith (Withington)	Davey, Valerie (Bristol W)
Bradley, Peter (The Wrekin)	Davidson, Ian
Bradshaw, Ben	Davies, Rt Hon Denzil (Llanelli)
Brinton, Mrs Helen	Davies, Geraint (Croydon C)
Browne, Desmond	Dawson, Hilton
Buck, Ms Karen	Denham, John
Burden, Richard	Dewar, Rt Hon Donald
Burgon, Colin	Dobbin, Jim
Butler, Mrs Christine	Donohoe, Brian H
Byers, Rt Hon Stephen	Dowd, Jim
Caborn, Richard	Drew, David
Campbell, Alan (Tynemouth)	Drown, Ms Julia
Campbell, Mrs Anne (C'bridge)	Dunwoody, Mrs Gwyneth
Campbell, Ronnie (Blyth V)	Eagle, Maria (L'pool Garston)
Campbell-Savours, Dale	Edwards, Huw
Cann, Jamie	Efford, Clive
Caplin, Ivor	Ellman, Mrs Louise
Casale, Roger	Ennis, Jeff
Caton, Martin	Etherington, Bill
Chapman, Ben (Wirral S)	Field, Rt Hon Frank
Chaytor, David	Fisher, Mark
Clapham, Michael	Fitzpatrick, Jim
Clark, Rt Hon Dr David (S Shields)	Fitzsimons, Lorna
Clark, Dr Lynda	Flint, Caroline
(Edinburgh Pentlands)	Flynn, Paul

Follett, Barbara	Lawrence, Ms Jackie
Foster, Rt Hon Derek	Laxton, Bob
Foster, Michael Jabez (Hastings)	Lepper, David
Foster, Michael J (Worcester)	Leslie, Christopher
Foulkes, George	Levitt, Tom
Fyfe, Maria	Lewis, Ivan (Bury S)
Galloway, George	Lewis, Terry (Worsley)
Gardiner, Barry	Liddell, Mrs Helen
Gerrard, Neil	Linton, Martin
Gibson, Dr Ian	Lloyd, Tony (Manchester C)
Gilroy, Mrs Linda	Lock, David
Godman, Dr Norman A	Love, Andrew
Godsiff, Roger	McAllion, John
Goggins, Paul	McAvoy, Thomas
Golding, Mrs Llin	McCabe, Steve
Gordon, Mrs Eileen	McCafferty, Ms Chris
Griffiths, Jane (Reading E)	McDonagh, Siobhain
Griffiths, Win (Bridgend)	McDonnell, John
Grocott, Bruce	McGuire, Mrs Anne
Grogan, John	McIsaac, Shona
Gunnell, John	McKenna, Mrs Rosemary
Hain, Peter	McNamara, Kevin
Hall, Mike (Weaver Vale)	MacShane, Denis
Hall, Patrick (Bedford)	McWalter, Tony
Hamilton, Fabian (Leeds NE)	McWilliam, John
Hanson, David	Mallaber, Judy
Healey, John	Mandelson, Rt Hon Peter
Henderson, Ivan (Harwich)	Marek, Dr John
Hepburn, Stephen	Marsden, Gordon (Blackpool S)
Heppell, John	Marshall, David (Shettleston)
Hesford, Stephen	Marshall, Jim (Leicester S)
Hill, Keith	Marshall-Andrews, Robert
Hinchliffe, David	Martlew, Eric
Hodge, Ms Margaret	Maxton, John
Hoey, Kate	Meale, Alan
Home Robertson, John	Michael, Alun
Hood, Jimmy	Michie, Bill (Shefld Heeley)
Hoon, Geoffrey	Milburn, Alan
Hopkins, Kelvin	Miller, Andrew
Howarth, George (Knowsley N)	Mitchell, Austin
Howells, Dr Kim	Moffatt, Laura
Hoyle, Lindsay	Moran, Ms Margaret
Hughes, Ms Beverley (Stretford)	Morgan, Ms Julie (Cardiff N)
Hughes, Kevin (Doncaster N)	Morgan, Rhodri (Cardiff W)
Humble, Mrs Joan	Morris, Ms Estelle (B'ham Yardley)
Hurst, Alan	Morris, Rt Hon John (Aberavon)
Hutton, John	Mudie, George
Iddon, Dr Brian	Murphy, Denis (Wansbeck)
Illsley, Eric	Murphy, Paul (Torfaen)
Jackson, Ms Glenda (Hampstead)	Naysmith, Dr Doug
Jackson, Helen (Hillsborough)	Norris, Dan
Jenkins, Brian	O'Brien, Bill (Normanton)
Johnson, Alan (Hull W & Hessle)	O'Brien, Mike (N Warks)
Johnson, Miss Melanie	O'Hara, Eddie
(Welwyn Hatfield)	Olner, Bill
Jones, Barry (Alyn & Deeside)	Palmer, Dr Nick
Jones, Mrs Fiona (Newark)	Perham, Ms Linda
Jones, Helen (Warrington N)	Pickthall, Colin
Jones, Ms Jenny	Pike, Peter L
(Wolverh'ton SW)	Plaskitt, James
Jones, Jon Owen (Cardiff C)	Pollard, Kerry
Jones, Dr Lynne (Selly Oak)	Pond, Chris
Jones, Martyn (Clwyd S)	Pope, Greg
Jowell, Ms Tessa	Pound, Stephen
Kaufman, Rt Hon Gerald	Powell, Sir Raymond
Keen, Alan (Feltham & Heston)	Prentice, Gordon (Pendle)
Kelly, Ms Ruth	Primarolo, Dawn
Kemp, Fraser	Prosser, Gwyn
Khabra, Piara S	Purchase, Ken
Kidney, David	Quin, Ms Joyce
Kilfoyle, Peter	Quinn, Lawrie
King, Andy (Rugby & Kenilworth)	Radice, Giles
King, Ms Oona (Bethnal Green)	Rammell, Bill
Kingham, Ms Tess	Rapson, Syd
Kumar, Dr Ashok	Reed, Andrew (Loughborough)
Ladyman, Dr Stephen	Reid, Rt Hon Dr John (Hamilton N)

Robinson, Geoffrey (Cov'try NW)	Strang, Rt Hon Dr Gavin
Roche, Mrs Barbara	Straw, Rt Hon Jack
Rooney, Terry	Stringer, Graham
Ross, Ernie (Dundee W)	Stuart, Ms Gisela
Rowlands, Ted	Sutcliffe, Gerry
Roy, Frank	Taylor, Rt Hon Mrs Ann
Ruane, Chris	(Dewsbury)
Ruddock, Ms Joan	Taylor, Ms Dari (Stockton S)
Russell, Ms Christine (Chester)	Thomas, Gareth (Clwyd w)
Ryan, Ms Joan	Thomas, Gareth R (Harrow W)
Salter, Martin	Timms, Stephen
Sarwar, Mohammad	Tipping, Paddy
Savidge, Malcolm	Touhig, Don
Sawford, Phil	Truswell, Paul
Sedgemore, Brian	Turner, Dennis (Wolverh'ton SE)
Sheerman, Barry	Twigg, Stephen (Enfield)
Sheldon, Rt Hon Robert	Vaz, Keith
Short, Rt Hon Clare	Ward, Ms Claire
Simpson, Alan (Nottingham S)	Wareing, Robert N
Skinner, Dennis	Watts, David
Smith, Rt Hon Andrew (Oxford E)	White, Brian
Smith, Rt Hon Chris (Islington S)	Whitehead, Dr Alan
Smith, Jacqui (Redditch)	Williams, Alan W (E Carmarthen)
Smith, Llew (Blaenau Gwent)	Wills, Michael
Snape, Peter	Wilson, Brian
Soley, Clive	Winnick, David
Southworth, Ms Helen	Winterton, Ms Rosie (Doncaster C)
Spellar, John	Wood, Mike
Starkey, Dr Phyllis	Woolas, Phil
Steinberg, Gerry	Wray, James
Stevenson, George	Wright, Anthony D (Gt Yarmouth)
Stewart, David (Inverness E)	Wright, Dr Tony (Cannock)
Stewart, Ian (Eccles)	Wyatt, Derek
Stinchcombe, Paul	Tellers for the Noes:
Stoate, Dr Howard	Jane Kennedy and
Stott, Roger	Mr. David Jamieson.

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith, pursuant to the Order [5 November], and agreed to.

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

Resolved, That this House recognises that the last thing business wants is a return to the boom and bust policies of the past, with interest rates of 15 per cent., inflation above 10 per cent. and a budget deficit averaging £41 billion a year from 1992 to 1996; welcomes the Government's decisive action in taking politics out of interest rate decisions, a move which the Opposition clearly does not support; notes that employment is currently 400,000 higher than it was when the Government came into office, and that long-term interest rates are at their lowest for 35 years; welcomes the measures that the Government has taken to encourage enterprise, investment and innovation, and to help unemployed people into jobs; welcomes the McKinsey Report as an important contribution to the productivity debate and notes that, unlike its predecessor, this Government acted to increase competitive conditions through a new Competition Act; and condemns the Opposition for its own record in government, when manufacturing employment declined by 2¾million and Britain went into deficit on manufacturing trade for the first time ever in peacetime.