HL Deb 18 June 1997 vol 580 cc1240-3

3.28 p.m.

Lord Borrie rose to call attention to the case for improving the competitiveness of British industry; and to move for Papers.

The noble Lord said: My Lords, four weeks ago today this House was engaged in the fifth and final day of its debate on the gracious Speech. That day's debate was largely concerned with the economy and industry. I was most struck by the fact that during that debate speakers from all sides of the House referred to the speed and determination with which the new Government had set about their tasks in the days following the general election. In other words, the Government had indeed hit the ground running. One of the speakers in the debate, the noble Lord, Lord Tugendhat, paid tribute to the "whirlwind start" of the Chancellor of the Exchequer. The noble Lord, Lord Cobbold, congratulated the Government on what he called the "robust actions" which they had taken in the first few days of office.

The two noble Lords, both active in the City of London, were particularly interested in macro-economic policy and referred to the announcements about the responsibility of the Bank of England for setting interest rates and the new, tougher regulatory structure proposed for financial services. I believe that these developments are highly relevant to the competitiveness of British industry. After all, the CBI and others from the world of business have emphasised repeatedly the value of economic stability and a high level of predictability about the future in order to give industry that basis of faith in the future on which it can build its strategic plans for investment and growth.

Business men do not want a stop-go economy, and ensuring a high reputation for integrity, which an effective and efficient regulatory regime can bring, is extremely relevant to the success of UK financial services as provided so pre-eminently across the world by the City of London. I need hardly remind your Lordships that that reputation has received a few knocks in recent years. I mention Barings and BCCI. It is most important for UK competitiveness that the integrity of the City of London's financial services is maintained and enhanced.

I do not suppose in this debate that anyone is likely to dispute the objectives of competitiveness. Competitiveness is vital to the prosperity of every individual in this country. I pay tribute to the previous government, whose White Papers on the subject stressed this country's ongoing dependence on the sale of goods and services in all the markets of the world. But—and it is a big "but"—too often the rhetoric of those White Papers was not matched by action and there were serious inconsistencies of approach.

The efforts of many in recent years, including Ministers in the previous government, civil servants here and abroad, and ambassadors and business men here and abroad have done a great deal to further the export of British goods and services but they were hardly assisted when certain high-ranking Ministers made extremely xenophobic speeches at party conferences which were widely reported in other countries.

As I have had a long and particular interest in competition policy, perhaps I am somewhat biased in saying that, during the period of the previous government, that was the most glaring aspect where their words were not matched by action. The previous government said—and were widely supported for it—that competition provides the spur and incentive for firms to be efficient in giving customers value for money and for being competitive abroad. A White Paper was published in 1989 which promised a radical strengthening of competition policy along the lines of Articles 85 and 86 of the Treaty of Rome: to prohibit anti-competitive cartels and to prohibit the abuse of monopoly power. For seven successive years, seven successive parliamentary Sessions after that White Paper, the promises of implementation were made by the then government and were broken. It is a sorry tale.

The excuse made by the previous government in successive parliamentary Sessions was a lack of parliamentary time. According to the all-party Trade and Industry Select Committee in another place, that was "wearing a bit thin" by 1995—from whose report I take those words.

In this country we have had some measure of competition law to combat price-fixing cartels and the abuse of monopoly power for nearly 50 years, starting with an Act of the Attlee Government in 1948. But surely we have all known for some years—and the previous government said they knew for some years—that the present law was weak. It provided inadequate deterrents against misbehaviour. A lack of investigative powers and inevitable long-delayed consequences for malpractice were also serious deficiencies. It was especially weak when compared with the laws of our major competitors, especially the United States, and certainly weak compared with the laws of the European Union. Of course, our major companies which trade in the European Union are extremely familiar with and subject to European law when they engage in the inter-state trade. I know that my right honourable friend the President of the Board of Trade will be promoting a Bill on the subject in the autumn, and the Government could hardly be quicker than that. That is an excellent comparison with the record of the previous government.

Competitiveness must be an objective that is given the highest priority throughout government, and not just in the DTI and the Treasury—departments to which I have referred. It is not just a matter of ministerial pep-talks to business men, completing the common market or trade missions to South America, or congratulating a British company when it receives an international design award. Of course, all those are extremely important. but we need to go beyond the confines of trade policy. The weakness of our transport infrastructure and skills base are among the basic underlying weaknesses that constantly pull Britain back from the maximum competitiveness that it could and should achieve.

It should be recognised too that our country cannot attain real and sustainable economic success if it allows deprivation and large-scale unemployment to take a substantial hold, as indeed they have. I am interested that The Times seems to be what I might call a late convert to the view that many of us on this side of the House have held for a long time: namely, that a fractured society is not just socially divisive and harsh; it is—and I quote from a leader in The Times on 10th June— economically inefficient and expensive for those in work … it also holds back Britain's potential for growth". That is part of the subject of this afternoon's debate. Hence I believe the enormous importance of the welfare-to-work programme being pursued now and in the forthcoming Budget by my right honourable friend the Chancellor of the Exchequer. Social justice and economic success are not alternative objectives. I believe that they are necessarily complementary.

I say that it is no good talking about partnership between management and workers—another phrase which in the past governments have often stressed—if trade union leaders are treated as pariahs, excluded from involvement in discussion with business. Trade unions today do not represent as many members as they once did, but they represent and speak for 7 million people. Seven million workers cannot sensibly be left outside when consideration is given to UK prosperity, competitiveness and growth.

If competitiveness is to be really successful, it must be inclusive of all those who can contribute and it must take account of the long term. Education seems not to have been regarded by the previous government as part of the real economy, I suppose because it is largely in the public sector. It seems to me to be crazy to down-grade in resources, status and esteem such vital institutions and people as those engaged in education at every level.

I have been acting recently as an independent pay commissioner for the pay and conditions of all grades, from manual workers to professors, within our universities and colleges. I was appointed by the employers and by the seven trade unions which are involved. Well-known, reputable management consultants were engaged to make comparative studies of comparable posts in the private sector and in other parts of the public sector. At almost all levels pay and conditions in universities were worse, and have been worse for some time. It is difficult to avoid the conclusion that there has been severe erosion of standards of pay. That must surely have a serious spin-off effect in eroding over time standards in teaching and in research, including scientific, engineering and professional skills of all kinds which are so important for the UK in the high-tech, high-skilled world in which we must compete. I look forward to hearing the speech of my noble friend Lady Lockwood, who has great experience in university matters, later in the debate.

In his Mansion House speech last week, my right honourable friend the Chancellor of the Exchequer said that he expected business men to take a longer-term view of investment. Research to be published shortly by the University of Leeds reveals that at present UK business has been too short-sighted in its strategic thinking, mapping out corporate direction for only two to four years ahead. Of course, companies often blame lack of economic stability; they blame the alleged short-term perspective of the City of London. The Government can certainly help business and give that confidence in the future that will encourage it to plan much further ahead. Nowhere is this more important than in planning for the skills that will be needed. Skills cannot be acquired and learned overnight.

I recall the noble Lord, Lord Ezra, who is to speak shortly in today's debate, saying only recently in this House that, as they come out of recession, many firms have found skill shortages and have had to go elsewhere and abroad to buy those skills. We surely want to avoid that in the future in this country. In moving the Motion standing in my name on the Order Paper, I look forward to hearing the many and varied contributions from noble Lords who have tabled their names to speak. My Lords, I beg to move for Papers.