Sitting of 3 December 1985

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  EMPLOYMENT

    Tourist Industry
    Mr. Robert Banksasked the Paymaster General what has been the trend in employment opportunities in the tourist industry in the past five years.
    The Paymaster General (Mr. Kenneth Clarke): In the five years to June 1985 the number of employees in employment in the hotel, catering and leisure sectors, which are most directly dependent on tourists' spending, rose by 66,000 or about 6 per cent. In addition, self-employment has grown, for example by about 22,000 in the hotel and catering industries between 1981 and 1984. However, it is difficult to define tourist industries precisely, and various studies have suggested that 1 million to 1·5 million jobs are supported directly or indirectly by tourist spending.
    Mr. Banks: I am grateful to my right hon. and learned Friend for his encouraging reply. Will he lose no opportunity to scotch the ridiculous suggestion that jobs in those industries are not every bit as good as those in other industries and that they are in some ways servile? Will he give publicity to the fact that more than 90 per cent. of people who complete YTS courses get jobs at the end of them, and that there are vacancies in this area?
    Mr. Clarke: I am happy to agree with my hon. Friend on both points. Certainly there are serious jobs to be had in the industries most directly affected, and in many sectors such as retailing and public transport, which also benefit from increased tourist spending and activity. I also confirm that, because that is one of the fastest growing areas of new employment in the economy, there is a high success rate for those who leave training schemes directed at it.
    Mr. Dalyell: Does the right hon. and learned Gentleman agree that one of the best ways to help the tourist industry is to make money available to the Historic Buildings and Monuments Commission for England and to the Historic Buildings Councils for Wales and for Scotland because they employ many people in skilled crafts, and help tourism? Does the Minister realise that the Scottish Historic Buildings Council is skint? Will he discuss with his ministerial colleagues what should be done about that?
    Mr. Clarke: I believe that the hon. Gentleman is the inhabitant of a historic Scottish building and undoubtedly has a direct interest in the question. I shall refer the main
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    point of it to my right hon. Friend the Secretary of State for Scotland, who is responsible. The Government must get the balance right between spending on the parts of the heritage that help to attract visitors and spending on the services that provide new employment.
    Mr. Lawrence: Is my right hon. and learned Friend aware that this welcome trend would be much faster accelerated if we introduced flexible licensing hours? Will he assure the House that in the Cabinet he will urge the implementation as quickly as possible of that desirable change?
    Mr. Clarke: My views are declared because many years ago my hon. and learned Friend supported my private member's Bill which sought to achieve that end. Anybody responsible for tourism and leisure-based industries knows that there is great pressure for reform from everybody interested in employment in that area. The Government, especially my right hon. Friend the Home Secretary, have the matter under urgent review.
    Mr. Kennedy: Is the Paymaster General aware that the highlands and islands of Scotland welcome the emphasis that the Government are rightly giving to employment creation in tourism? Towards that end, will he make it clear in principle that, if Ross and Cromarty district council inquired about the potential for a mountain railway and ski development facility near Ben Wyvis at Strathpeffer in my constituency, he, as Minister responsible for employment, would take a constrictive and legitimate interest in the proposals?
    Mr. Clarke: I shall take a proper interest in both projects if they are forthcoming, and I should probably refer them to the Scottish Tourist Board, which is responsible in the first instance for looking at the disbursement of funds in that area.

    Adult Training
    Mrs. Clwydasked the Paymaster General if he will make a statement about training for unemployed adults.
    The Parliamentary Under-Secretary of State for Employment (Mr. Alan Clark): We have increased the number of unemployed people helped through the Manpower Services Commission's adult training programme. This year we aim to help to train some 200,000 adults, about half of whom will be unemployed people.
    Mrs. Clwyd: Will the Minister confirm that the Manpower Services Commission is to cut £15 million from adult training in the community programme? Will he make a statement that will show the long-term unemployed that he is concerned about their future and is willing for them at least to have the limited opportunities that the community programme affords them?
    Mr. Clark: It is true that the take-up of off-the-job training places in the community programme is disappointingly low. For that reason, it is appropriate to divert the resources and use them in other forms of training. I draw the hon. Lady's attention to the fact that training expenditure has gone up from £458 million in 1979–80 to £1·2 billion in 1984–85 and to £1·23 million in 1985–86.
    Mr. Latham: Is my hon. Friend aware that where the Paymaster General met a deputation of the Knitting

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    Industries Federation from the east midlands he gave the impression that the Government were thinking of making more help available to adult training and retraining? Has he any statement to make on this matter?
    Mr. Clark: I do not know about the knitting industry, but I can tell my hon. Friend that the amount of money devoted to training increases year by year and has more than doubled in real terms in the life of this Parliament.
    Mr. Sheerman: The Minister has made a most dishonest statement—
    Mr. Speaker: Order. The hon. Gentleman cannot use that word.
    Mr. Sheerman: The Minister is seeking to mislead the House.
    Mr. Speaker: Order. That is also an unparliamentary expression.
    Mr. Sheerman: I withdraw both those expressions. The Minister is inaccurate in talking about an increase in training for the adult unemployed when there have been dreadful cuts in the skillcentre network. The Government promised that this money would be switched to the community programme for training. Not only have the skillcentres been cut to the bone, but now we have cuts in the promised training of people on the community programme. When will the Government commit themselves to quality training for the unemployed?
    Mr. Clark: I have already answered the question about training on and off the community programme. The provision is there, but the places are not being taken up. The number of adults who have been helped under the training scheme since 1983 has doubled, and the amount of expenditure since the Conservative Government were first elected in 1979 has nearly trebled.

    Labour Statistics
    Mr. Flanneryasked the Paymaster General what is the total of people unemployed; how many of these are (a) women, and (b) men; and how many unemployed are under 21 years of age.
    Mr. Kenneth Clarke: On 10 October 1985 the number of unemployed claimants in the United Kingdom was 3,277,000, of whom 1,043,000 were women, 2,234,000 were men, and 555,000 were under 20 years of age.
    Mr. Flannery: Is this not appalling—[Interruption.] It is obvious from the way that Tory Members are laughing that they do not think that it is. Is this situation not productive of misery and a sense of despair and hopelessness just before another Christmas? When will the Government admit that all this is due to their dogmatic and wrong policies, and that if they do not make a fundamental change, next Christmas and the Christmas after—if they are still in office—they will still be trying to explain away more and more millions of unemployed people—bigger numbers, incidentally, than those who are claiming benefit?
    Mr. Clarke: The situation is serious, but there are encouraging signs that it is improving. The seasonally adjusted unemployment figure has fallen for two consecutive months, and, when it fell last month, it was for the third time in five months. The rate at which new
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    jobs are being created in the British economy is now high, and the increase of new jobs over the past few years is equal to the increase in the entire European Community. The number of vacancies in our jobcentres is the highest since 1980, and the number of people being placed is going up. Therefore, we are able to tackle the most intractable problem, which is that of the long-term unemployed,. We were able to announce initiatives a fortnight age in the job start scheme, following up through job clubs and contacting the long-term unemployed because we now have some hope of being able to offer them a return to work.
    Mr. Ralph Howell: Will my right hon. and learned Friend give the House his estimate of the number of unemployed who are actively seeking work? Is he satisfied that the work test is working properly? If not, will he say what plans he has to improve it?
    Mr. Clarke: The last labour survey implied that some people who were registered as unemployed were not actively seeking work, but that others who were not registered as unemployed were actively seeking work. The figure is about 3 million. I agree with my hon. Friend that it is important remember that to qualify for benefit the work test should be that somebody is genuinely available for work. It is right that we should continue to enforce the long-standing rules and ensure that they are properly enforced.
    Mr. Wainwright: Can the Paymaster General confirm that, over and above the total of new jobs, there has been a net loss of 1·1 million jobs since May 1979 and that the more optimistic figures about the creation of new jobs derive from taking base lines during the recession of the 1980s?
    Mr. Clarke: I suspect that the hon. Gentleman's first point is right. There was a great shakeout of labour in many of he uncompetitive sectors of our economy. I did not understand and therefore will have to read the hon. Gentleman's second point. I hope that he is not trying to undermine the objective assessment of the rate at which new jobs are being created. On the best independent estimates that are available to us, 670,000 new jobs have been created in the British economy since the spring of 1983. That record is unrivalled anywhere else in the European Community.
    Mr. Budgen: May I remind my right hon. and learned Friend that his positive discrimination proposals will damage the black unemployed, since they make black people the object of resentment? Further, may I remind him that libertarians everywhere will note that there is no law to justify the pressure now being put upon employers to take into employment additional black people and that, when employers tell the Government to mind their own business, they will receive widespread support from right hon. and hon. Members who sit on the Government Benches?
    Mr. Clarke: If I had in mind any positive discrimination proposals, I should be concerned about my hon. Friend's strictures against them, but I am not aware that I or any of my right hon. and hon. Friends have put forward any such proposals. We are concerned about persistent unemployment among deprived minorities of all kinds and about the state of the economy, especially in the inner cities. We have to ensure that no section of our

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    community is put at a disadvantage when we take measures to improve employment. My hon. Friend's fears that the Government will take steps that incite a white backlash are probably much exaggerated.
    Mr. Pavitt: Will the Paymaster General consider the number of school leavers in Brent under the age of 20 who have been unable to find work for more than a year, the excellent report of the Church of England, and the survey of drug abuse in north-west London among youngsters who leave school and go on to the dole, with no possible hope of obtaining work? Is the Paymaster General unable to give any hope to youngsters in the inner cities who come straight out of school and go on to the dole?
    Mr. Clarke: There is nobody in the country who is not seriously concerned about the state of many of our inner city areas and about unemployment there. I do not know whether the hon. Gentleman has read the report to which he referred, but it contains a number of inaccuracies, as one would expect from its rather Left-wing membership. To cite an example to those who may not yet have read it, the report candidly asserts that the only programme on which the Government have increased expediture is police expenditure in the inner cities. Spending on unemployment and training measures alone has doubled in real terms since 1979. I hope that the hon. Gentleman, who is genuinely concerned about these matters and about the social problems in his Brent constituency, will address his mind to the problems brought upon the area by Brent council. It imposed rate increases on the area which made it extremely difficult to attract new business and new employment to the borough.
    Mr. Parris: How many real jobs are created when the Government give £1 million to English Sewing Linited to destroy 300 jobs in my constituency and to create 300 jobs near Glasgow?
    Mr. Clarke: I suspect that that question should be directed to the Minister responsible for the grant about which my hon. Friend complains. I shall address myself only to the generality behind the question. In all the measures that we take that are aimed at encouraging employment, we must take care that we do not simply create jobs in one place and displace jobs in another. We address ourselves to that carefully in managing the community programme and other measures for which our Department is responsible.
    Mr. Prescott: Does the Paymaster General accept that the deplorable figures he has mentioned are but the minimum of the true level of unemployment, confirmed yet again by a recent survey in Scotswood in Newcastle which shows that seven out of 10 males are unemployed in the area? When do the Government intend to ratify the new ILO recommendation requiring Governments to accept their responsibility to achieve and maintain high employment levels, or is the 83 per cent. employment level in Britain high enough?
    Mr. Clarke: I make no attempt to shrink from the fact that 3 million unemployed or thereabouts is a serious social problem for Britain. Frankly, I do not see the point in anybody, of any political complexion, seeking to exaggerate the figure by adding a million or two. All the steps that we are taking are designed to bring down the present total. The Government's responsibility is clear: it is to create a climate within which successful business can
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    flourish and grow and create new employment opportunities. The figures for the past two to two and a half years are extremely encouraging and show that we are suceeding. I shall study the ILO recommendation, but it sounds as though it merely confirms the Government's commitment.

    Local Enterprise Agencies
    Mr. Roweasked the Paymaster General if he has any plans to extend the scope or improve the effectiveness of local enterprise agencies.
    The Parliamentary Under-Secretary of State for Employment (Mr. David Trippier): The scope and effectiveness of local enterprise agencies is ultimately in the hands of the directors and boards of the agencies. However, the Government intend to encourage agencies to plan their businesses and extend their services by making the provision of a business plan one of the conditions for Government grant under the new scheme of support for them.
    Mr. Rowe: I do not believe that it is entirely due to my having put down a question that my right hon. and learned Friend should have chosen to announce a £2·5 million scheme for the financial support of the enterprise agencies. Is he prepared to put the same effort into manpower extension, in particular by using the management extension scheme as one source of additional assistance to those desirable agencies?
    Mr. Trippier: The announcement to increase funding to the local enterprise movement was made some three weeks ago and it was only the detail of how the Government would match every pound raised from the private sector that was given yesterday. My hon. Friend makes a compelling point about the management extension programme, and I am certainly prepared to consider it with the Manpower Services Commission.
    Mr. Tony Lloyd: Does the Minister accept that the private sector is shedding jobs in manufacturing industry at a frightening rate? In my constituency, GEC has declared 300 further redundancies. How much effort realistically needs to be put in through local enterprise agencies before we can begin to create jobs? It will require an enormous effort by local authorities to wipe up the damage being done by that one company, let alone the damage being done by the private sector in manufacturing industry throughout the north of England.
    Mr. Trippier: I draw the hon. Gentleman's attention to my constituency, which is only 16 miles away from his, where we saw the shedding of labour to which he referred, in particular between 1980 and 1982 in what I call the teeth of the recession. As a result of setting up the local enterprise agency, we have managed to reduce unemployment from 19·1 to 13·2 per cent. Those are pretty compelling figures, and I think that the hon. Gentleman will draw comfort from them. While I am on my feet, I should compliment the local enterprise agency operating in the hon. Gentleman's constituency, which I visited on two occasions. It is doing a fantastic job.

    British Tourist Authority
    Mr. Gerald Bowdenasked the Paymaster General if he intends to increase funding to the British Tourist Authority.
    Mr. Kenneth Clarke: Yes, Sir, but I cannot give a precise amount at this stage. We are increasing the total funding for the British Tourist Authority, English Tourist Board and section 4 next year by some 20 per cent. to £40 million. I have asked the BTA and the ETB to submit details to me by Christmas on how they propose to spend the funds. I have asked them to give additional emphasis in their new plans to improving employment opportunities, encouraging the dispersal of visitors throughout the United Kingdom and extending the tourism season.
    Mr. Bowden: I thank my right hon. and learned Friend for that answer. Does he feel that there should be any change of emphasis among the regions where those new resources should be deployed?
    Mr. Clarke: We must look at those parts of the country, by no means all of them in the north, where there is potential for improved tourism and the more growth of employment based on tourism and leisure activities. That is a point on which I have asked the boards to concentrate in putting forward their proposals and, as I described in my main answer, to encourage the dispersal of visitors throughout the United Kingdom.
    Mr. Willie W. Hamilton: Before the Minister waxes too lyrical about the increased number of jobs in tourism, will he recognise that those are generally no-tech and very low-wage jobs and that that situation is likely to be worsened by the Government's proposals on wages councils?
    Mr. Clarke: There is a tendency in manufacturing industry for there to be a declining number of unskilled jobs as technology changes the nature of work. It is, therefore, encouraging to note that some of the jobs being created in this area are for unskilled or less skilled people. Nevertheless, there are many other skilled jobs as well, and the benefits of the increased level of spending by businesses—22 per cent. up this year compared with last year—are spread over a great many activities and provide a wide range of employment for many people.

    Local Enterprise Agencies
    Mr. Couchmanasked the Paymaster General how many local enterprise agencies are now in operation.
    Mr. Trippier: There are 308 local enterprise agencies currently in operation, as recorded by my Department.
    Mr. Couchman: I thank my hon. Friend for that answer. Is he aware that his announcement yesterday of the details of the new funding for enterprise agencies will be warmly welcomed by the Medway enterprise agency, which serves my constituency and which, in its four years of existence, has helped to secure or create 2,500 jobs from 630 applications?
    Mr. Trippier: That is a truly remarkable record, and I compliment the Medway enterprise agency on what it has achieved thus far. In the two and a half years during which I have been Minister responsible for small firms, I have visited the Medway enterprise agency on three occasions, when I have been impressed with Mr. Guy Sibley, its director, whose enthusiasm is infectious. I am glad to hear that he will welcome our new proposals for further assistance to enterprise agencies.
    Mr. Campbell-Savours: May we have an assurance that in the allocation of funds to enterprise agencies there
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    will be no discrimination against agencies that are already successful? Will the Minister undertake to examine the relationship between Department of Employment offices where enterprise allowance arrangements are set up and enterprise agencies to see that they are communicating the names of recipients of enterprise allowances—in other words, to ensure that there is an adequate relationship between the two?
    Mr. Trippier: I can give the hon. Gentleman the assurance for which he asks in the second part of that supplementary question. Indeed, I am currently working on a scheme which, I hope, will ensure that enterprise agencies are more involved with enterprise allowance scheme applicants. The hon. Gentleman makes a valid point in the first part of his question. We have said that we shall not be prepared to assist enterprise agencies with incomes in excess of £60,000, taking out any secondees that they may have. We are determined to try to help the smaller enterprise agencies that may have difficulty in attracting private sector finance, and we shall match the funds that they can raise from the private sector up to £20,000.
    Mr. Thurnham: Will my hon. Friend commend private sector employers who have funded the Bolton business venture? Will he encourage the Churches to assist in the provision of funds for enterprise agencies in inner city areas?
    Mr. Trippier: In answer to the first part of that supplementary question, I am happy to commend and compliment the private sector sponsors of the Bolton business venture. That, too, is a most successful enterprise agency, which is doing an excellent job.
    The answer to the second part of the question is that I am keen to encourage the Churches to contribute to enterprise agencies, wherever they may be. There is greater need in the inner city areas, and what my hon. Friend asks would not create a precedent in that a number of enterprise agencies based in the inner cities are helped by various churches.
    Mr. Meadowcroft: Will the Minister accept that in Leeds, the work of the West Yorkshire enterprise board is regarded as an important component of the enterprise agency service? Is he aware that there are worries about the future of the enterprise board, and will he say what will happen to this important aspect of the work of the agency after the abolition of the metropolitan county council?
    Mr. Trippier: The hon. Gentleman is getting matters a little mixed up. The West Yorkshire enterprise board is not part of the enterprise agency movement. In an earlier debate on small firms I said that the Government have no wish to scrap enterprise boards that have been set up. We are entirely neutral on them. Some of the work that they do is good, although the cost per job created by some of them is remarkably high. The enterprise agency movement is private sector-led, although some local authorities help to sponsor it. The initiative lies with the private sector, and that is why they are successful.
    Mr. Bellingham: Is my hon. Friend aware that I have helped to set up a local enterprise agency in north-west Norfolk which, with the backing of local business and the borough council, should be a great success? I hope that it is as successful as the agency in Medway. Does my hon. Friend agree that one way of increasing the effectiveness

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    and job-creating potential of local enterprise agencies is to encourage them to set up local business expansion scheme funds?
    Mr. Trippier: The House will wish every possible success to the enterprise agency being set up in my hon. Friend's constituency. Local enterprise agencies have an important role to play as marriage brokers under the business expansion scheme. They can also join together in drawing funds from their community, be it a region or sub-region, for investment in small firms in the area.

    Women (Hours of Work)
    Mr. Brandon-Bravoasked the Paymaster General if he proposes to introduce legislation to repeal the statutory restrictions on women's hours of work; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Employment (Mr. Peter Bottomley): We propose to introduce legislation to repeal the statutory restrictions on women's hours of work in the Sex Discrimination Bill, which we hope to bring forward early in 1986.
    Mr. Brandon-Bravo: Equality is the theme of much of our current legislation. However, can my hon. Friend say how such legislation will assist employers and, therefore, employment? Will it be necessary to repeal some special industrial legislation, such as the Baking Industry Act 1954?
    Mr. Bottomley: Yes, Sir. The key point is that employers will not have to apply for special exemption to employ women outside the present restricted hours, so women will benefit from increased employment opportunities. If we did not consider repeal of the baking industry legislation, we should be left with the anomaly that men were protected for working at night but women were not, so we are asking interested parties for their views on the repeal of that legislation.
    Ms. Richardson: Does the Minister agree that we should improve conditions, including hours of work, for men and women, and not remove restrictions that may result in women being exploited by having to work longer hours for mean rates of pay or risk the sack?
    Mr. Bottomley: We should consider the deregulation aspect. At present, more than 200,000 women are exempt from the restrictions and can work at night. I do not know whether the hon. Lady has asked many of them whether they wish to be prohibited from working at night in the way that men may be prohibited.

    Small Business Clubs
    Mr. Conwayasked the Paymaster General what information he has as to the number of small business clubs which have been established.
    Mr. Trippier: The latest directory of enterprise agencies produced by business in the community shows that at least 53 local enterprise agencies run business clubs.
    Mr. Conway: I am grateful to my hon. Friend for that reply. Does he accept that small business clubs are a good way of encouraging training and of helping to find some solutions to the problems of small firms? If so, will he encourage their formation and promotion?
    Mr. Trippier: I shall encourage and try to promote them wherever I can. It is interesting to note that, during the past 12 months, there has been a 50 per cent. increase in the number of small business clubs. I agree with my hon. Friend that they provide a useful opportunity for people to get together to exchange ideas and to consider promotional activities, and they also provide an opportunity for local business men to be introduced to suppliers and buyers.

    Enterprise Allowance Scheme
    Mr. Neil Hamiltonasked the Paymaster General what training is available for the self-employed on the enterprise allowance scheme.
    Mr. Trippier: Both private and public sector training, including the full range of the Manpower Services Commission's training provision, is available. The latter includes free study workshops designed for people considering self-employment and free courses for one-person businesses, small businesses and businesses with real growth potential.
    Mr. Hamilton: I welcome the recently announced increase in the places available on this scheme and the reduction in the qualifying period. Can my hon. Friend estimate how many jobs have been created by the scheme, and will he say what proposals he has to improve training on it?
    Mr. Trippier: The number of jobs that have been created as a result of the enterprise allowance scheme has been calculated at the rate of 100 businesses set up under the EAS creating about 99 additional jobs. The trick is to try to graft the training for which the Department of Employment is responsible through the MSC on to the enterprise allowance scheme applicants in such a way as to increase their awareness of their limitations in management expertise and marketing financial control. I am considering the matter and hope to make an announcement soon.
    Mr. Skinner: What have all the enterprise allowance schemes, enterprise agencies, enterprise zones and small business clubs to do with the glorious success of monetarism and the market place that we were promised in 1979? Is the Minister aware that in my constituency it has been said that all this Government intervention is little more than an extension of post-war funk?
    Mr. Trippier: On this, as on so many subjects, the hon. Member for Bolsover (Mr. Skinner) suffers from delusions of adequacy. Free market forces have a great deal to do with the local enterprise agencies that have been set up while this Government have been in office, principally because we have realised that the private sector—
    Mr. Skinner: It has collapsed.
    Mr. Trippier: No, it has not. The private sector has taken the initiative in supporting communities by backing enterprise agencies and thus providing new jobs. That is what the Government are about—providing new jobs through enterprise and free market forces.

    Job Creation
    Mr. Willie W. Hamiltonasked the Paymaster General if he will make a statement on the estimated effects on employment in (a) England and Wales and (b) Scotland of the proposals in the autumn statement.
    Mr. Kenneth Clarke: The proposals in my right hon. Friend the Chancellor's autumn statement will further improve the climate for economic growth and new jobs in England and Wales, and in Scotland.
    Mr. Hamilton: Why is the Minister so shy of giving any estimate of the effect on employment of the autumn statement? Now that the Government have achieved the miracle of creating more unemployment than Britain has seen since 1930, will he give a specific guarantee that, as a direct result of the autumn statement, unemployment will be lower in 12 months, or even in two years, than it is now?
    Mr. Clarke: In previous answers I have referred to the encouraging growth in new jobs in the British economy, and everything that we are now doing is designed to reinforce that. The autumn statement will enable us to finance the job start scheme and the trials that we are now running in nine areas, including Dundee, which are designed to help the long-term unemployed to get back into jobs. More vacancies are being notified, more are being filled by the jobcentres and there is an expansion of employment in the economy, which enables me to give the hopeful answer that I gave.
    Mr. Viggers: Does my right and learned Friend agree that much remains to be done, as shown by the fact that although there is no shortage of jobs in my constituency, many of the unemployed cannot afford to take them because of the tax and benefits structure? Does my right hon. and learned Friend also agree that subsequent financial statements should give the highest priority to ironing out those anomalies?
    Mr. Clarke: My right hon. Friend the Secretary of State for Social Services, in his Green Paper, has put forward worthwhile proposals for consideration to open the gap between earnings in work and benefits out of work. I believe that further tax cuts, especially if concentrated on the lower paid, could do a great deal to increase the rewards for work. Recent Government initiatives, including the job start scheme, have been designed to enable people to make the transition more easily from benefit into work.
    Mr. Loyden: Does the Minister accept that the Government's response to unemployment has been an abysmal failure and that they are misleading the House and the country when they argue that there are now more people in work? Unemployment relates to the percentage of people out of work, and that figure is growing. So far, Government action has failed to deal with mass unemployment, especially in the northern region.
    Mr. Clarke: The figure for unemployment is not growing. With respect, the hon. Gentleman is resorting to generalisations and slogans, as most of his hon. Friends have done today. We are putting forward measures and figures which show an encouraging growth in employment.
    Mr. Dickens: I welcome my right hon. and learned Friend's optimistic forecasts. Does he agree that more jobs
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    are being created and more people are working in the United Kingdom than ever before and that in job creation we are outstripping the whole of western Europe?
    Mr. Clarke: My hon. Friend is, as ever, factually completely sound. It is worth reflecting that there are over 1 million more people in work now than there were under Lord Stockton's Government of which we were all fervent supporters, and that they are all earning more money than they were under that Government. Our economy has been successful in sustaining higher levels of work and prosperity, but obviously we need to do more.
    Ms. Clare Short: Will the Paymaster General take it from me that he cannot fool the people by fiddling with the figures? The autumn statement makes it clear that the Government do not expect any growth in real jobs. The only promised improvement is the introduction of more schemes. The increases in the numbers of vacancies to which he refers are community programme vacancies. He has referred to about 600,000 jobs, but there has been a decrease in full-time jobs for men and an increase in part-time, low-paid jobs for women. There has been an adjustment to the estimate of the number who are self-employed. The Minister cannot fool the people with the sort of figures that he has presented to the House. They know that unemployment is still high and is not improving.
    Mr. Clarke: It is probably by the medium of written answer that we can most usefully go into the statistics. It is absurd to allege that we are fiddling the figures. The figures on which we are relying have been produced by the same statistical service that serves all Governments and all Departments objectively and well. I cannot understand the Opposition's motive in trying to discredit the figures and make the situation appear worse than it is. The Opposition should be as encouraged as we are by the obvious signs of improvement in the economy. It is becoming somewhat pointless for them to continue to try to dismiss the signs of improvement and to suggest that the situation is worse than it is.
    Mr. Wainright: In view of the Paymaster General's responsibility for employment, is he not unhappy that the policies of high interest rates and a high sterling exchange rate, as confirmed by the autumn statement, are inhibiting the real expansion of the economy and, therefore, employment opportunities, especially in advanced industries?
    Mr. Clarke: I hope that we all welcome the prospects of reduced interest rates, which seem currently to be quite good. I reject entirely the notion that we should devalue our currency to compensate for loss of competitiveness. That approach has failed in the past. I hope that the hon. Gentleman will consider the valid inflation figures and take comfort from the fact that a steadily falling inflation rate is one of the factors that are helping to create an optimistic outlook for the immediate future.
    Mr. Nicholas Winterton: Does my right hon. and learned Friend agree that the autumn statement would be more encouraging if the Government would say that if resources are available they will be directed, first, to raising the tax threshold and, secondly, to ensuring that British industry is not subject to unfair competition, especially the unfair practices of Japan?
    Mr. Clarke: I shall refer both of those interesting suggestions to those of my right hon. Friends who are

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    responsible for such matters. I agree with my hon. Friend that one encouraging feature is that Conservative Members are able to indulge in interesting discussions on how best to deploy tax cuts to give a further stimulus to the economy and job creation.

    Training Schemes (Injuries)
    Mr. Ron Brownasked the Paymaster General how many people have been injured while taking part in Government training schemes since 1979; and what was the total amount of compensation paid out.
    Mr. Peter Bottomley: Since 1 April 1981 over £930,000 has been paid under the MSC's industrial injuries scheme. Since 1980, nearly 1·5 million people have entered training opportunities, job training and youth training schemes, and 5,873 have been injured. Nearly all were minor injuries.
    Mr. Brown: Is the Minister aware that many of those youngsters have no rights and are used as cheap labour? Does he understand that many of them suffer horrendous injuries? I take, for example, the case of James MacCormack, who was severely injured in 1981 and who died this year. He was one of my constituents. He was supposedly receiving training at MacGregors Quayside Mills in Leith. That young fellow suffered a lingering death. He had no rights whatsoever and his family did not even receive the death grant.
    Mr. Speaker: Order. The hon. Gentleman must ask a question, not make a statement.
    Mr. Brown: It is an important point. Conservative Members may not appreciate that.
    Mr. Speaker: Order. All the points are important, but the hon. Gentleman must ask a question.
    Mr. Brown: I hope that the Minister will reply. This young fellow—
    Mr. Speaker: Order.
    Mr. Brown rose—
    Mr. Speaker: Order. The hon. Gentleman would be better advised to try to obtain an Adjournment debate on this subject.
    Mr. Brown rose—
    Mr. Speaker: Order. The hon. Gentleman has been here long enough to know—[Interruption.]—that this is Question Time. He is perfectly entitled to ask a question, but he must put it in the form of a question and not make a statement. The Minister may answer.
    Mr. Bottomley: I am aware of that sad case, and the hon. Gentleman has made persistent representations through correspondence with my ministerial colleagues. It is little consolation to the family, but the same compensation has been paid as would have been paid under the statutory scheme if it had been covered in that way. The arrangements under the MSC are for payments to be made equivalent to the DHSS scheme, even though there is no statutory cover.

  PRIME MINISTER

    Engagements
    Mr. Neil Hamiltonasked the Prime Minister if she will list her official engagements for Tuesday 3 December.
    The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): I have been asked to reply.
    My right hon. Friend is in Luxembourg for a meeting of the European Council.
    Mr. Hamilton: Has my right hon. Friend seen the excellent speech made by my hon. Friend the Member for Dartford (Mr. Dunn), the Parliamentary Under-Secretary of State for Education and Science, last week in which he said that, in spite of the many helpful measures passed during the past six years, parents still have insufficient choice in schools and standards of achievement are still too low? Does he agree with my hon. Friend, who is supported by many Conservative Members, that the solution to the difficulties would be to move towards denationalising the education system?
    Mr. Biffen: I agree with my hon. Friend that there is great scope for further parental influence and involvement in the running of our schools. I hope that the Education Bill, which will be presented later, will move towards that. As for progress beyond that., I agree with my hon. Friend that there will be a continuing debate about the importance of a much more robust assertion of parental involvement in our education system and the changes that may be necessary to secure that.
    Mr. Stephen Rossasked the Prime Minister if she will list her official engagements for Tuesday 3 December.
    Mr. Biffen: I have been asked to reply. I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Ross: Will the leader of the House take this excellent opportunity to apologise to the 140 skilled members of the work force of the British Hovercraft Corporation who have been given their redundancy notices today? And we must not forget the 463 who have been given redundancy notices at Yeovil, Milton Keynes and Weston-super-Mare, all working for Westland. Does he not think it ironic that at a time when Westland is in trouble, his colleague, the Secretary of State for Defence, should be going to Europe to ask nationalised industries in Italy and France to bail out Westland, when the Government could have done much more to help?
    Mr. Biffen: I express my regrets about the redundancies, as does every other hon. Member in the House, whether in respect of those in their own constituencies or otherwise. I understand that the hon. Member for Yeovil (Mr. Ashdown) would wish to be associated with those comments.
    I do not believe that anyone can fault the way in which the Government have sought to promote successful and major sales of Westland helicopters to the Indian Government. If they were attended with the success which I hope will be desired throughout the House, the position of the company would be further remedied.
    Mr. McCrindle: In the light of the sad case of Jasmine Beckford, can the Leader of the House tell me whether there are any plans to introduce legislation on child care,

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    updating the Children and Young Persons Act 1969, and once again laying responsibility on magistrates and others to emphasise the interests of the child, even if from time to time that may lead inevitably to the break-up of the family?
    Mr. Biffen: My hon. Friend expresses a deep anxiety that will be widely shared in the light of the most tragic circumstances that have been revealed by the Blom-Cooper report. The wisest way to proceed would be to have a thorough and reflective study of the recommendations and then see what further action may be necessary on the part of the Government.
    Mr. Kinnock: I echo the view expressed by the hon. Member for Brentwood and Ongar (Mr. McCrindle) and take comfort from the fact that it is a matter of concern right across the House and that there are no political differences.
    May I press the right hon. Gentleman further? First, will he give an undertaking that there will be effective steps to clarify the law in so far as it affects children at risk? Secondly, will he give me an assurance that the Government will not proceed with any proposals from the Department of Education and Science to make a cut in the training and retraining provision for social workers? Can we look forward to immediate and necessary action that falls within the general requirements of the Government and their responsibility for promoting the best practice to try to ensure against a repetition of horrors such as those suffered by little Jasmine Beckford?
    Mr. Biffen: As I have said, the findings of the Blom-Cooper report will be given immediate study by my right hon. Friends and during that study they will take up the wider issues that the right hon. Gentleman has mentioned.
    Mr. Heathcoat-Amory: Does my right hon. Friend agree that the creation of a common market in financial services does not require any amendment of the Treaty of Rome or any enlargement of the powers of the European Assembly, and does not need us to relinquish the veto, as it is fully in line with existing commitments by member states? Will my right hon. Friend transmit to the Prime Minister our support for the stand that she is taking?
    Mr. Biffen: In response to the first part of my hon. Friend's question, that would be my judgment.
    I shall happily convey the sentiments expressed by my hon. Friend in the second part of his question.
    Mr. Steel: Does the Leader of the House accept that we all welcome the fact that the Government will give serious and reflective study to the Blom-Cooper report, but will he convey to the Prime Minister on her return the fact that those of us who have seen the advance full text of the Church of England report on inner cities, which will be published later tonight, are appalled at the rubbishing anonymously given to it by Ministers over the weekend? Will he make it clear, on behalf of the Government, that we welcome any contribution to solving the intractable problems that come from that source?
    Mr. Biffen: I at once repudiate entirely the proposition that the report was rubbished by Ministers over the weekend. The House would be well advised to treat the report as what it purports to be—a serious contribution to studying the problems in our city centres. We know from the words of the Bishop of Liverpool, one of the authors, that it is a substantial and carefully researched
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    report by people who know a good deal about the cities. I should like to make an open contribution to the debate by asking that that research be carried just one stage further, so that we know the estimated total public costs of the proposal and to what extent they may be offset by the abolition of mortgage interest tax relief.
    Dr. Mawhinney: Will my right hon. Friend accept that as a member of the General Synod I would hesitate to approach him and his right hon. Friends in the Cabinet at Downing street for spiritual guidance—[Interruption] but that as a Member of the House I have no intention of seeking political guidance from the cabinet of Canterbury because, however well-intentioned it may be. it is short on reality, on history and, above all, on theology?
    Mr. Speaker: Order. The same rules must apply to both sides: questions, not statements.
    Mr. Biffen: I congratulate my hon. Friend on his perception of the limitations of what the Treasury Bench can answer. Of course he is right to entertain the anxieties that he does. I hope I may be permitted to say that the Church through the ages has sought to interest itself in social affairs, but when it does so it has to accept that it will be judged on the quality of its contribution to the argument.
    Mr. Merlyn Rees: In view of the denigration of the authors of the report, will the Leader of the House find out from the Prime Minister why she keeps recommending to the Queen all these Marxists for appointment to bishoprics?
    Mr. Biffen: I hope that it will not infringe the spirit of the occasion if I take the question seriously.
    As to the first point about the composition of the commission, that certainly helps to explain the quality of the report. It is neither smear nor innuendo to observe that many of those people have long and distinguished careers in the public service, where they have never hesitated to indicate where the balance of their judgment lay.
    As to the point about the appointment of bishops—[Interruption.] I say no, they are touching the truth—a great many words are spoken, some in mirth and some in passion. However, I hope that we will think seriously before disturbing the present relationship between the state and the Church of England.
    Sir John Farr: May I ask my right hon. Friend for his advice in respect of some of my constituents who work for Leicester city council and who have been threatened with lack of promotion and even dismissal unless they attend a city-run racial awareness course? Does my right hon. Friend agree that that is a gross intrusion into the private lives of my constituents and a gross impertinence by the city council? What does he recommend I should tell them?
    Mr. Biffen: The House has the opportunity of knowing of this matter, which sounds thoroughly disturbing—[HON. MEMBERS: "Why?"]. Because of the undue pressure which seems to operate. I think the whole House would very much enjoy the chance of hearing more about it. I hope that my hon. Friend is successful in bringing it before the House in an Adjournment debate.
    Mr. Winnickasked the Prime Minister if she will list her official engagements for Tuesday 3 December.
    Mr. Biffen: I have been asked to reply.

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    I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Winnick: Is the Leader of the House aware that when people see Ministers trying to smear and discredit the Church of England report they are reminded instantly of Nixon-style politics? Does not the report largely bear out the words of the right hon. Member for Old Bexley and Sidcup (Mr. Heath)—that no matter what publicity or propaganda there may be, however sleek, there is no evidence whatsoever that Britain is booming?
    Mr. Biffen: I am not among the most devoted fans of the commission's report, but even I would say that it needed better friends than the hon. Gentleman. The report is seeking a serious and sustained debate about how we might use our resources in city centres to mitigate the evident social problems that exist, and to what extent that can be a partnership between private initiative and collective responsibility. It would be better if we conducted it in those terms.
    Mr. Spencer: Does my right hon. Friend welcome the Transport and General Workers Union's leaders' late conversion to democracy? Taken with the fact that we have had fewer strikes than for many years, does he agree that in industrial relations the Tory party has got it right?
    Mr. Biffen: My hon. Friend makes an admirable point. The House has lived under the shadow of the belief that trade union legislation passed by this place and receiving the Royal Assent was, none the less, rendered ineffective
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    by the friends of the hon. Member for Bolsover (Mr. Skinner). We are now seeing that that is nonsense and that a triumph of moderation has been secured by this Government and their legislation.
    Mr. Ron Daviesasked the Prime Minister if she will list her official engagements for Tuesday 3 December.
    Mr. Biffen: I have been asked to reply.
    I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Davies: Will the Leader of the House draw to the attention of the Prime Minister the position that exists in the Mid Glamorgan area health authority, which has the third largest waiting list in England and Wales and has been forced to make cuts of £5·5 million, resulting in hospital and ward closures and the sacking of 240 health workers? What advice will he give to the Prime Minister if the Shropshire area health authority, which has the second highest waiting list, is forced into making similar cuts?
    Mr. Biffen: I should, out of county patriotism and intellectual conviction, point out that the Shropshire area health authority is run increasingly efficiently as a result of the application of general management techniques. As to the wider question that the hon. Gentleman asks, I noted his contribution to the debate on the Queen's Speech and the subsequent early-day motion. I shall draw the attention of my right hon. Friend the Prime Minister to the matter, as he requests.

Rate Support Grant (Scotland)
3.31 pm
The Secretary of State for Scotland (Mr. George Younger): With permission, Mr. Speaker, I should like to make a statement about aggregate Exchequer grant for Scotland for 1986–87 and also about the arrangements for revaluation rate rebates next year.
On 24 July I announced an increase of £59 million in local authority expenditure provision for 1986–87, and that increased provision formed the basis of the current expenditure guidelines which I issued to all authorities in October. I am now in a position to announce the remaining element in the settlement for next year. Aggregate Exchequer grant for 1986–87 will be £2,005 million. That is a cash increase of £100 million over the figure initially announced for aggregate Exchequer grant for 1985–86, although, as the House knows, we made two substantial additions totalling £57·5 million to that initial figure as information became available about the effects of revaluation, taking the figure to £1,962 million. The figure that I have just announced is thus a cash increase of £43 million over the final grant figure for 1985–86.
A further addition will be made to the figure of £2,005 million, following consultations with the Convention of Scottish Local Authorities in recognition of the transfer to local authorities of financial responsibility for list D schools in 1986–87. The figure I have suggested to the convention for this transfer is £3·65 million.
On the basis of present estimates of loan charges the grant figure of £2,005 million will mean a reduction in the grant percentage from 57·7 per cent. this year to a provisional figure of about 56·1 per cent. in 1986–87. This continues the pressure on authorities to reduce their expenditure and come into line with our plans. The effect of this on rates is a matter for authorities. Expenditure above guidelines pushes up rates and grant penalties, both of which have to be financed by ratepayers. I hope that all authorities will bear in mind the effects of high expenditure on ratepayers when considering their budgets for next year.
I will be consulting the Convention of Scottish Local Authorities in two week's time on the division of the grant into its usual elements, and on its distribution among authorities. Following those consultations, I shall lay an order before the House.
Earlier this year, I introduced special relief under the Rating (Revaluation Rebates) (Scotland) Act 1985 to mitigate the effects of the revaluation on domestic and commercial ratepayers, whose new rateable value was over three times more than their old one. It was never intended that that relief should be a permanent part of the system, but I realised that those receiving relief would face large increases in their rate bills if it were ended next year. I have, therefore, decided that the relief will continue for 1986–87, but at a rate of 75 per cent. The maximum relief on any one property will be £7,500. The cost of the relief in 1986–87 will be about £20 million. I will lay the necessary order before the House shortly.
Mr. Donald Dewar: This is an all too typical example of the Secretary of State's stewardship. It is another sad tale of an inadequate cash increase, marking a substantial cut in real terms. Will the right hon. Gentleman confirm that the grant is rising this
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year by only 2·2 per cent., which is well short of even the Government's most optimistic inflation forecasts? Is he not black affronted to announce a reduction of the rate support grant percentage to 56·1? Does he recall that the figure was 68·5 per cent. in 1980–81—more than 12 per cent. higher? Is he aware that if that figure were applied to this year's relevant expenditure a further £443 million would be available to help hard-pressed ratepayers? Is it not shameful nonsense that the Secretary of State can cooly announce a reduction in the help given to the unfortunates whose rateable values have increased by more than 300 per cent.? The relief on the excess is being reduced from 100 per cent. to 75 per cent., and there will be a great deal of irritation at that sadly inevitable but mean little saving.
Does the Secretary of State remember that at the Conservative party conference in Perth originally he promised £50 million and that it turned out to be £30 million in practice? Is he aware that he is now boiling the figure down to £20 million in the second year of the revaluation? It was not thought that relief would necessarily be permanent, but surely the Secretary of State will accept that there is no logic in giving help in the first year and then increasing the burdens in this way in the second year of the quinquennium. The way in which the money has been spirited away is a form of magic, but not the sort of magic that people want or desire. It looks more like sleight of hand.
What will happen to the domestic element? Will it be maintained at 8p? If so, will that have to be completely financed from the settlement that the Secretary of State announced today, or will he make additional money available? Where is the room in the grants total of which he has spoken for a realistic offer which might settle the teachers dispute? What has he included for that possibility in his calculations, or will he again provide additional funds for the type of settlement that will require a good deal of cash, but which we all badly want and hope to see soon?
The key to the statement is the statement:
"This continues the pressure on authorities to reduce expenditure and come into line with our plans."
It is another piece of bullying and a recognition by the Secretary of State that this is a cut in real terms. It is increasing the pressure for a reduction in services and jobs. They could well have been added to the casualty list implied in that sentence.
Will the Secretary of State accept that there is no good news in his statement, either for those who believe in local democracy or for those who are worried about the increasing shift under the present Administration from the Treasury to ratepayers? It is thoroughly bad news for anyone who is interested in decent levels of local authority services.
Mr. Younger: The hon. Gentleman is long on rhetoric and short on fact. From what he said, one would not think that local authorities are planning to spend about 1·8 per cent. more in real terms this year than they were six years ago. That puts his ideas about cuts in spending into perspective.
The hon. Gentleman said that the settlement was miserable compared with that of last year. It is higher as a proportion than the original figure mentioned last year. I thought that the hon. Gentleman would welcome that.
It is true that the rate support grant percentage has been brought down. As the hon. Gentleman may remember,

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when the rate support grant percentage was kept steady for four years running, local authority expenditure soared as a result and the ratepayers had to pay a great deal more as a consequence. In this case, the rate support grant percentage will go down further to persuade local authorities to bring their spending more into line. If they did not do so, the ratepayers would have an even greater burden to face because they would have to finance still more extra spending by local authorities.
I was surprised that the hon. Gentleman was so inconsistent in what he said about the Rating (Revaluation Rebates) (Scotland) Act. He accepted that it should not be permanent but seemed to be advocating that it should remain as it was last year. If that is not being permanent, I do not know what is. This extra help for ratepayers will continue next year at the rate of 75 per cent. of what it was, which is extremely generous and much more than most people expected.
It comes ill from the hon. Gentleman to say such things, because when his colleagues were last in Government, at the last revaluation in 1978, as he may care not to remember, the increases for many ratepayers were greater than they have been in this revaluation, and the Government, in spite of repeated requests from me and other Conservative Members, refused pointblank to give any extra help to any ratepayer.
As to the teachers' offer, I have already found extra money and have been trying to persuade the teachers to accept it. Therefore, the hon. Gentleman's point about that does not carry any weight.
Sir Hector Monro: In view of what would seem to be high current expenditure by local government in real terms, can my right hon. Friend assure me that those authorities that have behaved themselves and kept their expenditure to modest levels will do much better in the financial arrangements than they have done in the past? Will the guidelines be nearer the assessed needs than they have been in the past? I welcome my right hon. Friend's continuation of the rate relief. Is he confident that he will be able to introduce a new rating system before the next general election?
Mr. Younger: I am grateful to my hon. Friend. I can assure him that the settlement this year should enable those authorities that have been spending within the guidelines for some time to be pretty fairly treated, although he will understand that I cannot give the detailed distributions until I have had a chance to speak to COSLA in a fortnight's time. The guidelines this year are nearer to assessed needs, and I hope that we shall be able to ensure that there is progress towards this when we announce the distribution.
As to rating reform, I assure my hon. Friend that we are on course for what I have undertaken to do. The Government will produce proposals around the turn of the year.
Several Hon. Members rose—
Mr. Speaker: Order. I remind the House that two important debates are to follow the statement, and short questions will be appropriate as there is to be a debate on the order later.
Sir Russell Johnston: Would the Secretary of State like to speculate about the response he would make to this statement if he were in
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opposition rather than in government? He referred to the £43 million cash increase. What does it mean in real terms, taking inflation into account? As to the reduction of relief following revaluation to 75 per cent., why do we in Scotland have to bear this burden when there has been no revaluation in England and none is proposed? Is this not too much from a Government who promised rate reform in 1979?
Mr. Younger: On the last point, the hon. Gentleman knows that we have already moved a long way in that direction by producing a Green Paper and making changes in the rating system, and we are in any case now involved in a major reform of the system. We are on course for producing proposals around the turn of the year, and I hope that the hon. Gentleman feels that we can wait to look objectively at those proposals when they come. As to increases, authorities are planning to spend in real terms about 1·8 per cent. more than in 1985–86. The settlement for this year that I have announced today means that there will be a small reduction in real terms on their budget for last year. That is consistent with our desire to reduce public expenditure.
I am glad to respond to the hon. Gentleman's first request. If I were in opposition today I should say, "May I congratulate the Government on their great generosity in once more recognising the hard times that ratepayers have experienced because of the overspending by Labour-controlled councils."
Lord James Douglas-Hamilton: Is my right hon. Friend aware that the rates of many Edinburgh shopkeepers have escalated tremendously? Will this settlement be of benefit to them, provided that the local authorities keep within the guidelines?
Mr. Younger: Yes. If local authorities spend at or on the guidelines laid down by this settlement, it will be possible for there to be rate reductions, not rate increases.
Mr. Gregor MacKenzie: As the Secretary of State is anxious constantly to remind the House of Commons about the rate support grant percentage figures in 1979, will he go over them once again and tell the House that since he took office they have been reduced by over 12 per cent. and that he has been able to reduce them only by putting considerable pressure upon local authorities to reduce the number of people that they employ and the number of services that they provide for the people who elected them?
Mr. Younger: I appreciate the right hon. Gentleman's point about the reduction in the rate support grant percentage. I make no secret of the fact that it has been a major method of persuading local authorities to reduce their spending. However, 1 must confess that local authorities have not been very successful. They are still planning to spend more in real terms than they were when the right hon. Gentleman left office. However, the reduction in the rate support grant percentage has not, unfortunately, led to a reduction in manpower. By far the largest reduction in manpower achieved by local authorities took place when the right hon. Gentleman's party was in Government. In 1976, a very large reduction was made overnight. Even allowing for the reduction in the number of teachers, due to the fall in school rolls, the fact is that there has been a substantial increase in manpower.
Mr. Nicholas Fairbairn: May I ask the Secretary of State as quickly as possible to get rid of the ghastly guidelines concept that was introduced by the Labour Government? There is now an assessed needs basis. It is ridiculous that my right hon. Friend's distinguished officers should have to work out what an area needs and should then have to invent what is called a guideline that causes prudent authorities to lose and spendthrift authorities to gain.
Mr. Younger: I appreciate my hon. and learned Friend's point. We are making steady progress. I hope to continue to make steady progress over the assessed needs of all authorities. We should have made much better progress towards meeting the assessed needs of authorities and would have been very much nearer to meeting them if the overspending by certain authorities had not precluded the Government from moving as fast as they could towards recognising the efforts of those who have tried to reduce spending. It is a sad fact that the worst authorities are making life more difficult for those authorities which try hard.
Mr. Harry Ewing: Does the Secretary of State have any comprehension of what he is doing to the ratepayers of Central region in general and Falkirk district in particular because of his rate support grant settlement for 1986–87? It was the Secretary of State who removed outside plant and machinery from the rating and valuation roll in Central region and who refused to compensate the region for the £8·5 million loss that central region and Falkirk district had to sustain. Therefore, the rate increases in Falkirk district are primarily his responsibility. How will the Secretary of State explain to the people of Falkirk that he willingly joined Her Majesty the Queen in opening the new leisure complex at Camelon, only to see it closed later because of his rate support grant settlement?
Mr. Younger: The effect of the rating system upon outside plant and machinery has two aspects: first, its effect upon local authorities, and, secondly, its effect upon the industries concerned. It was in response to the heartfelt pleas of the industries concerned and the jobs that they provide that the Government felt that they had to equalise the treatment of those industries with the treatment of their competitors south of the border. That is the answer to the hon. Gentleman's plea. That is a factor for the ratepayers of Falkirk district, but another factor is the level of spending of the local authority, and I hope that the hon. Gentleman will bear that in mind.
Mr. Barry Henderson: Many ratepayers will welcome the fact that my right hon. Friend is maintaining downward pressure on the expenditure of local authorities, but will he recognise that the combination of the distribution formulae and the way in which the individual authorities establish their resources, on top of the perverse effects of revaluation, sometimes results in responsible authorities receiving less than they might reasonably expect while bolshie Labour authorities, including Fife regional council, which put a 10p impost on ratepayers this year, receive a great deal more?
Mr. Younger: I appreciate what my hon. Friend says. When I announce the distribution of the settlement after consultation with COSLA in a week or two's time, I hope that he will see that we have managed to recognise the
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efforts of those who have tried to spend sensibly. If all authorities spent according to guidelines, it would be possible to have reductions in rates this year, and I hope that that at least can be attempted by many authorities.
Mr. Donald Stewart: Is the Secretary of State aware that he will be seen as Mr. Rising Rate in Scotland in reducing the rate relief to 75 per cent., which he ought not to do until the Government redeem their pledge to deal with the rating system? In view of the reduction in the grant percentage, do not the Government's figures show that the right hon. Gentleman is accepting a thinner and thinner slice of the cake of United Kingdom outlays year by year?
Mr. Younger: No, that is not the case. If the right hon. Gentleman looks south of the border, I think he will find that my colleagues there have a cash standstill this year and we do not. The right hon. Gentleman might welcome that. I repeat that we are once more agreeing to give generous help from next year to those with exceptionally high increases in rateable value, something which no previous Government have ever done in spite of repeated requests from me and others to do so. There is no excuse for the Opposition to complain about the generous treatment that I have announced this afternoon.
Mr. Michael Hirst: I welcome the extra resources that my right hon. Friend has announced for local government in Scotland, but may I remind him that the revaluation rebate scheme, which is to be continued, will provide the most hard pressed ratepayers in Scotland with £20 million, a figure which is comfortably in excess of anything that those on the other side of the House, in particular the Liberal party, advocated that the Government should introduce last year?
Mr. Younger: It is remarkable how short memories are. If I recall rightly, the Liberals and possibly the Social Democrats, were talking about £2 million to £3 million being all that was needed to help the ratepayers. We are producing £20 million even in year two. My hon. Friend is right: most ratepayers will think that that is pretty generous.
Mr. George Foulkes: Will the Minister confirm that he is receiving critical representations from Tory councils, including the usually sycophantic Struan Stevenson, the leader of the Tory group on the Kyle and Carrick council, who is pointing out that the right hon. Gentleman's policy could already mean the closure of Ayr baths, golf courses and other facilities, and, worst of all, the threat to the future of the Ayrshire art festival? Will the right hon. Gentleman confirm that his announcement today makes things even worse for Kyle and Carrick and that Struan Stevenson should be taking the right decision and moving out of the party as Gibson MacDonald did before him?
Mr. Younger: Of all the adjectives that one could apply to Mr. Stevenson, "sycophantic" is about the last. Kyle and Carrick exceeded its guidelines, and it is being treated just the same as anyone else, which is perfectly fair. The hon. Gentleman would be complaining his head off if I were doing anything special for it, would he not?
Mr. Dick Douglas: Will the Secretary of State enlighten us on his fiscal arithmetic for revaluation relief? We start with a figure of £50 million. The right hon. Gentleman achieved 60 per cent. of that and

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now he reduces it to 50 per cent. of the original figure. How far do we have to go in this stupidity before he recognises that he is putting on local authorities a burden that they should not have to bear? He is asking them to finance essential services by a regressive tax. When will he recognise that the Government have an obligation to ensure that local authorities are properly funded and that the services that people require are properly provided?
Mr. Younger: After that question, I look forward to the hon. Gentleman warmly supporting our rate reform proposals when they come forward. I remind him that central Government pay the majority of the money that is spent by local government. As for the money for rate revaluation rebates, the £50 million that was spoken of was £50 million more than the Labour Government ever gave, and the £20 million is £20 million more than they ever gave, and the ratepayers will note that.
Mr. Dennis Canavan: What mandate did the Secretary of State receive from the people of Scotland for this deplorable statement?
Mr. Younger: I do not know what mandate the hon. Gentleman has from the people of Scotland—[Interruption]—considering that his party is also in a minority.
Mr. David Lambie: Now that the Secretary of State has announced the level of rate support grant for next year and recently informed district councils of the amounts of rate fund contribution that they could make before being subjected to clawback, is he prepared to state the rent increases that he is expecting in the coming year from district councils, the Scottish Special Housing Association and the new town development corporations?
Mr. Younger: I appreciate the hon. Gentleman's concern about this subject; it goes back a long time. He will appreciate that those details will be announced in the normal way after consultation shortly with the COSLA housing committee.
Mr. Tom Clarke: As local authorities attempt to make some sense of the remarkably low figures of 56·1 per cent., will the Secretary of State explain what figure he had in mind for inflation and what figure he has in mind for wage settlements? Are we to assume that the right hon. Gentleman is expecting no solution to the teachers' dispute over the duration of this settlement?
Mr. Younger: This is £43 million more, not less, than was previously projected. As for assumptions, this is the maximum that we can afford to provide and it is what local government must work within.
The answer to the hon. Gentleman's question about the teachers' dispute is that I have already found a large sum of extra money—£125 million—besides which the sums which we are discussing pale into insignificance, but so far the teachers have shown no sign of wishing to accept it.
Mr. Robert Maclennan: When he is removed from office, would the Secretary of State like to be remembered as having been generous to local government or as having been a disciplinarian?
Mr. Younger: I am not sure. Long ago I gave up speculating in what way I should be remembered after leaving office. I can only do the best I can while I am here.
Mr. John Home Robertson: Will the extended revaluation rebate scheme bring the cumulative expenditure on this rebate over two years up to the £50 million that was promised in one year?
Mr. Younger: I suppose that, even on the hon. Gentleman's arithmetic, if one adds 30 to 20 one gets approximately 50.
Mr. Tam Dalyell: If there is a cut in real terms, on the Secretary of State's arithmetic, there must be a figure in St. Andrew's house for the number of men and women in the service of local government who will lose their jobs as a result of this package. What is that figure?
Mr. Younger: No, there is no such calculation. Indeed, the number of people in local government has increased in recent years—[Interruption.] I should have thought that the hon. Gentleman would know that the number of people in local government had not decreased but had increased. I wish it had not increased. The number should be reduced in the interests of ratepayers having less to pay.
Mr. Ron Brown: Will the Secretary of State, when he refers to the last Labour Government, remember that two wrongs do not make a right? As he is short on memory as well as cash, will he forgive me for reminding him that the ratepayers of Scotland, many of them Tories, throughout his period in office have been ripped off to the tune of over £1 billion? Will he recognise the situation, for example, in the Lothian region and meet the leaders of COSLA and explain his strategy to them? Does he have the guts to do that?
Mr. Younger: I frequently meet COSLA and my hon. Friend the Under-Secretary of State met COSLA yesterday. We shall be meeting again soon, and I shall discuss all the issues against the background that COSLA, is still spending more in real terms than it did six years ago. The hon. Gentleman said that two wrongs do not make a right, but there have been two wrongs and no right.
Mr. Archy Kirkwood: I support the points made earlier by the hon. Member for Dumfries (Sir H. Monro) and the hon. and teamed Member for Perth and Kinross (Mr. Fairbairn). They said that the combination of the reduction in the percentage Exchequer grant and the reduction in the commercial rate relief and the delayed implementation of the client group approach leaves sensible, moderate and responsible authorities such as those in the Border region in an unjustifiably unfair position financially. It is wrong for the Minister to say that it is a shame that they cannot get more money because of the high-spending authorities in other regions.
Are we to assume that the reduction in the commercial rate relief to 75 per cent. will presage future reductions? May we expect the reduction in the 8p domestic element—a point raised by the hon. Member for Glasgow, Garscadden (Mr. Dewar)—next year?
Mr. Younger: The hon. Gentleman will have to wait until I announce the distribution. However, most of the authorities that have been spending sensibly have made steady progress towards their needs assessment arid towards a reasonable settlement.

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The hon. Gentleman mentioned the revaluation rebates. I cannot give an undertaking about the future, but I shall take into account all the pressures on ratepayers when considering whether the scheme should be employed in the future. The domestic rate relief will be announced in the normal way when I meet COSLA.
Mr. Alex Fletcher: On a point of order, Mr. Speaker. Shortly after my right hon. Friend the Secretary of State rose to make his statement, I went to the Vote Office for a copy of it. None was available, but I believe that copies were distributed elsewhere.
Mr. Speaker: That is a matter for the Government. I have no knowledge of it.

Westlands (Redundancies)
4.3 pm
Mr. Paddy Ashdown: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the announcement by Westlands of a major programme of redundancies entailing the loss of 750 jobs, mostly in Yeovil."
Westlands today announced redundancies amounting to 742 jobs of which the lion's share—461—will be from Yeovil. The redundancies will be a severe blow to the community that I represent and to areas such as the Isle of Wight. They will also be a blow to Britain's aerospace industry.
Unless there is a change of Government attitude and policy towards Westlands, the redundancies will prove to be only the first in a series. I have repeatedly warned the Government that, unless they stopped shilly-shallying, jobs would be lost, Westlands would be damaged and Britain's defence industries would be weakened. That has now happened.
The Government encouraged Westlands to take risks for the Indian order, but now refuse to provide temporary support until the order is formalised. The Government set up a competition for the new helicopter that the defence forces need so badly, but when Westlands won hands down against stiff international competition they promptly moved the goalposts and changed the rules. The Government have delayed decisions and strung out orders to save money for the Trident nuclear missile.
When the Government had their crisis in the Falklands, Westlands pulled out all the stops to help and was praised by hon. Members on both sides of the House for what it did. Now that the boot is on the other foot, all that Westlands gets in return is a kick in the teeth.
The Secretary of State for Defence is now, at the twelfth, or thirteenth, hour rushing round European Governments asking for help. I hope that he succeeds, but for 461 people in my constituency he is too late. We wanted action from the Secretary of State six or eight months ago. To say the least, it is ironic that the right hon. Gentleman is asking European Governments to do what he has refused to do. As all other European helicopter companies are nationalised, will the result of the negotiations be to put a representative of a foreign Government on the board of Westlands? Would not that amount to foreign nationalisation of Westlands while the Government have sat by and refused to do anything? Why did the chief executive of Westlands, a private company, not know about the discussions that could so crucially affect his company and shareholders until he read of them in a newspaper?
These are important matters that have serious implications not only for my constituency but for Britain's defence industry. I hope that you, Mr. Speaker, will agree that they are urgent and specific enough to be debated as soon as possible.
Mr. Speaker: The hon. Member has asked leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the announcement by Westlands of a major programme of redundancies entailing the loss of 750 jobs, mostly in Yeovil."

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I do not underestimate what the hon. Gentleman has said about the impact of the announcement on his constituency and other constituencies. I have listened carefully to what he has said. However, I regret that I do not consider that the matter that he has raised is appropriate for discussion under Standing Order No. 10. Therefore, I cannot submit his application to the House.

STATUTORY INSTRUMENTS, &c
Ordered,
That the draft Security for Private Road Works (Scotland) Regulations 1985 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Hill Livestock (Compensatory Allowances) (Amendment) Regulations 1985 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Durant.]

EUROPEAN COMMUNITY DOCUMENTS
Ordered,
That European Community Documents Nos. 9193/84 and 7832/85 concerning the protection of workers by the proscription of specified agents and/or work activities be referred to a Standing Committee on European Community Documents.—[Mr. Durant.]

OPPOSITION DAY
[1ST ALLOTTED DAY]

Northern Region
Mr. Speaker: I have selected the amendment in the name of the Prime Minister.
4.6 pm
Mr. Nicholas Fairbairn: On a point of order, Mr. Speaker. I seek your guidance on this matter. At Question Time there was much discussion about the document on the inner cities of Britain, which was really about the inner cities of England. This motion is about policies in the northern region, which has the highest rate of unemployment in the United Kingdom. My understanding of the United Kingdom is that Caithness and Sutherland are the northern region. If the motion refers to England, the debate is about England. If it is not, will Scottish Members be called?
Mr. Speaker: The Chair is not responsible for the motion on the Order paper. It is an Opposition day.
4.7 pm
Mr. Jack Dormand: I beg to move,
That this House condemns Government policies which have brought to the Northern region the highest rate of unemployment in the United Kingdom outside Northern Ireland, shown callous disregard for the region's traditional industries, failed to provide adequate measures for the attraction and creation of new jobs and brought about a lowering of the quality of life; and demands a fundamental change of policy to end this savage decline.
It is significant that we are using part of our first Opposition day of the Session for a debate on the northern region. It is significant not only because we recognise the region's many problems, but because the Opposition realise the value of the north's contribution to the country, to the industrial development of Britain in the past and its potential for the future.
Most of the region's difficulties arise from its high unemployment which remains the highest in the United Kingdom outside Northern Ireland. It has held that unenviable position in the unemployment league since the Government came to office in 1979, and the position has worsened since that date. In October 1979 there were 99,900 people unemployed in the region—7·3 per cent. There has been no reduction in any year since that time. In October of this year there were 227,500 unemployed—a disgraceful rate of 18·1 per cent. The north has lost 219,000 jobs since 1979, 125,000 of them in manufacturing. It has lost 30,000 jobs in the service sector, while 369,000 service sector jobs have been created in the United Kingdom. The Government make great play these days about the service sector, but apparently that does not apply to the north.
However, that is not the whole story. In the north, 440,000 people earn low wages. They are paid below what the Council of Europe calls the decency threshold. That figure represents 42 per cent. of the work force in the north. When I asked the Prime Minister on 21 March about unemployment in the north, she replied:
"The wages in that region are also comparatively high."—[Official Report, 21 March 1985; Vol. 75, c. 986.]
She said that that might be related to the high unemployment. All I can do is repeat what the right hon.

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Member for Old Bexley and Sidcup (Mr. Heath) said of the Government recently—that they must live in a different world from the rest of us.
Those statistics are especially relevant to what was said by the present chairman of the Conservative party, then the Minister of State, Department of Trade and Industry, in a debate on the north on 15 July 1981:
"I share and understand the concern at the levels of unemployment in the region, and that concern is recognised in our regional policy, which gives such a high priority to the North of England."—[Official Report, 15 April 1981; Vol. 3, c. 354.]
In view of the figures that I have just quoted, heaven help those who do not get such high priority.
George Bernard Shaw once said:
"You can get used to anything, so you have to be very careful what you get used to."
Those are wise words. I confess that I have become extremely worried that the people of the north will get used to the low standard of living brought to the region by the Government.
I chose a quotation from the former Minister of State, Department of Trade and Industry in 1981 for a specific reason. At that time, the Government's new regional policies were beginning to take effect. Some might have thought, "Let us give them time to work." Those regional policies were introduced with such a fanfare in 1979 by the then Secretary of State for Trade and Industry, now the Secretary of State for Education and Science. They were so good and effective that they had to be changed again last year, although the changes last year were instituted as part of a cost-cutting operation. The words "flexibility" and "cost-effectiveness", which were bandied about so much at the time in relation to regional aid, were euphemisms for the biggest cuts ever made in regional provision. On the Department of Trade and Industry's own admission, total aid to the north during the past six years has been cut by no less than 57 per cent. If the Minister has received any praise for the new system from employers, local authorities, trade unions or anyone else, the Opposition would like to hear it.
That brings me to the nub of the problem, and to what the Opposition believe to be the essence of the debate. How much longer must we wait for the Government's policies to work? That is a perfectly legitimate question to ask. If six and a half years of Tory government is insufficient time, any impartial judge would say, "Enough is enough. Confess your failure and start anew."
Of course, we know what the answer will be. When the Minister replies, he will give a catalogue of events dressed up as progress. However, he had better remember the words of the Under-Secretary of State for Employment—I am glad to see him in his place—in an Adjournment debate initiated by my hon. Friend the Member for Hartlepool (Mr. Leadbitter) as recently as 22 October 1985. In his typically straightforward and whimsical fashion, referring to the Prime Minister's recent description of success stories in the northern region, the Under-Secretary of State said, "Alas, they are few." We admire his truthfulness and perception, but he had better be careful. He might drown in the sea of crocodile tears which the Prime Minister continually sheds for the north.
I shall be so bold as to anticipate two points with which the Minister will regale us. He will tell us that organisations in the north have responded positively to the
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youth training scheme and that the Manpower Services Commission plans to provide more than 25,000 places for young people in the north this year. He is perfectly entitled to report such progress, if progress it be—[Interruption.] The Minister laughs. What worries me and my hon. Friends is that the Government appear to believe that those places are an adequate substitute for what we call real jobs. I do not say that some of the experience gained by some youngsters is not valuable. However, I advise the Minister to listen to the colourful language used by some youths in my constituency when describing their experiences. I beg the Government to begin thinking about permanent, productive employment for our youngsters.
The tragedy of the position was starkly illustrated a fortnight ago by the devastating reply from the chairman of the Conservative party to a northern newspaper reporter, who asked whether he agreed with the view being expressed in the north that there would be a lost generation—a generation of youngsters who would never obtain permanent jobs. The right hon. Gentleman said that he thought that could possibly be the case. When I hear such an admission, I wonder how some members of the Government can sleep soundly in their beds at night.
The Minister will also tell us about the Government's generous treatment of the coal industry, which plays an important role in the economy of the north. We shall be told not to worry because NCB Enterprise Ltd. will take care of all the problems caused by pit closures. However, we have some questions to ask about that. Why, if it is such an important and necessary organisation, was it not established until late 1984? Pits were closing long before then, and the Government and the NCB were determined long before the miners' strike to accelerate the closure programme. The scheme is barely in operation now. If it is the best way of coping with job losses in the coal industry, why was it not established in 1982 or 1983? After all, the Government have had the exact parallel experience of the steel industry.
Secondly, why was the pitiful sum of £5 million allocated to NCB Enterprise Ltd? The Government partly answered that question by shortly afterwards increasing the sum to £10 million, more recently increasing it to £20 million, and saying that more money will be made available should it be necessary. It is difficult to imagine a more pusillanimous, hesitant or muddled attitude to any Government policy. Perhaps the real reason is that their heart is not in it.
In the context of a completely misguided policy for the coal industry, I hope that the scheme will make some contribution to the well-being of mining areas in the north, but my recent experience shows its limitations. A fortnight ago I had the pleasure of opening a new factory in my constituency. I was delighted that such a well-known company as Bowaters Containers should come to the area. That factory employs 16 workers now and hopes to increase the number to 40 within a few months. Exactly one mile from that factory is Horden colliery, which the NCB proposes to close with the loss of 900 jobs. The pit will go through the new review procedure, but if, like so many pits in the north, it must close, NCB Enterprise Ltd. will have to perform little short of miracles in the area. The Government have been completely ham-fisted in this matter. Any rational and caring Government would have provided a bridging period for an area with such difficulties.

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The Government can refer to one success in the region—
Mr. Roland Boyes: Before my hon. Friend leaves the point about the problems of jobs for coal miners, may I ask whether he agrees that another travesty of justice by this Government is the decision to close the development corporation which has the task of creating industry? My hon. Friend has raised this matter many times. Does he agree that the corporation could have created jobs for the miners?
Mr. Dormand: I was just about to make that point.
The Government can refer to one success story—the record of the three new towns in the area—but I do not believe that the new towns will get a mention as the Government have reached new heights of lunacy by deciding to abolish the development corporations in 1988.
Washington, Aycliffe and Peterlee cover a very large sub-region of the north. They have attracted thousands of new jobs and will continue to do so. They also have ready access to excellent road, rail and sea communications but—I hope that the Minister will acknowledge this—their great appeal is to offer what is called a "one stop" deal for companies. The proposals now being made simply do not meet that criterion. With an accelerated pit closure programme, can the Government believe that there will be no further use after 1988 for the expertise and dedication of the staffs of the new town corporations? The Government's decision in this matter epitomises their misjudgments and misconceptions about the northern region. I ask them to reconsider a decision that was based purely on a doctrinaire attitude.
The motion refers to the quality of life in the northern region—and having a job makes the biggest single contribution to that. The Government have failed abysmally in that respect. There are, however, other factors to which I am sure my hon. Friends will wish to refer.
The state of the environment is an important factor in the quality of life. As vice-president of the Northumbria tourist board, I would be the first to praise the attractions of that part of the region. The beauty of most of Cumbria is self-evident, but there is a considerable legacy of the industrial revolution, and present-day heavy industry also leaves scars on the region. I could give horrific descriptions from my own constituency, but I prefer to mention two recent reports. The Commission on Energy and the Environment published its report "Coal and the Environment" in 1981, an the 10th report of the Royal Commission on Environmental Pollution was issued as recently as 1984. I regret to say that both reports give special mention to the northern region. They make very depressing reading, but the Government's response to the recommendations in both reports has been negligible. When will the Government take action on those recommendations?
It would be more than a gesture for the Government to make arrangements with the Arts Council to increase the grant to Northern Arts. Northern Arts, which does an excellent job for the region in difficult circumstances, receives most of its income from Tyne and Wear county council which, as the Minister will know, is soon to be abolished. An act of positive discrimination is needed, but perhaps that is too much to hope for from such a philistine Government.
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If the Government are serious about helping the northern region, they should change and strengthen their regional industrial policies by establishing a northern development agency, structured and financed on the lines of the Scottish and Welsh Development Agencies. The Government could also transfer Civil Service jobs to the region. The Labour party has not forgotten that one of the first acts of the 1979 Tory Government was to cancel the arrangement to transfer 1,000 Civil Service jobs to Cleveland. Since then, not one Civil Service job—as I know, having asked many parliamentary questions on the matter—has come to the north. The Government could also establish research and development agencies in the region now that there is considerable evidence that firms tend to stay in the area where the new products are developed.
The Government could improve their regional policies by accepting the advice of their friends in the CB1. The CBI adopted Labour party policy at its annual conference two weeks ago when it said that the Government should spend directly on reducing unemployment rather than on cutting income tax. The north needs £300 million-worth of road improvements and repairs. That is the CBI figure, not mine. The northern CBI last month said that the picture in the region was very mixed. Some companies are finding a worsening of the position. The heavy capital sector is still depressed and more orders are needed for shipbuilding and ship repair companies. The situation in six months is likely to be even less hopeful. If the Government will not listen to the Opposition, perhaps they will heed their own supporters in industry and business.
The last thing that the Opposition want to do is give the impression that the north is a dull, dreary, desolate place, lacking excitement, beauty, enjoyment and culture. In fact, the opposite is the case, despite our history, which has involved hard and dangerous work in heavy industry, the destruction of large parts of the landscape and an almost total lack of interest by Conservative Governments.
Mr. A. J. Beith: The hon. Gentleman has mentioned the Government's lack of interest and touched on the idea of an economic development agency for the north. Why did the Labour Government, of which he was a member, resist the pleas by Labour Members and others to take the opportunity offered by a devolution programme for Scotland and set up a regional development agency for the north?
Mr. Dormand: The hon. Gentleman has got his facts wrong. He has been a Member of this House long enough to realise that it is not possible for any Government to implement a full programme. He has obviously forgotten that the Labour party's manifesto at the last election specifically mentioned a development agency for the north.
The region's greatest resource is its people. They are responsible, proud and hard working. Any employer who has come to the north will agree with that statement. The people would like the opportunity to demonstrate those qualities in full measure. The Prince of Wales, in his recent statement on the so-called northern employee attitude, could not have been more wrong. It ill becomes one in his comfortable position to present such an inaccurate picture of northern workers.
Mr. Deputy Speaker (Sir Paul Dean): Order. I remind the hon. Gentleman that references to the royal family in aid of debate are not in order.
Mr. Dormand: In a modern society it is not unreasonable to expect to have a job, to live in a decent house in a pleasant environment, to benefit fully from the education system and to rely on the Health Service. The Opposition believes that the northern region is being denied those basic rights. In the circumstances, it is not surprising that Tory Governments have such meagre support in the north. If the Government refuse to recognise the reality of the situation, refuse to change direction and ignore the Opposition's pleas, we shall not be surprised if they receive even less support in future.
4.29 pm
The Minister of State, Department of Trade and Industry (Mr. Peter Morrison): I beg to move, To leave out from "House" to the end of the Question and to add instead thereof:
'recognises the particular problems the Northern region has faced in the transition from old to new industries and fully endorses all the Government policies which have taken into account these particular problems in creating the proper basis for sustainable growth and thus lower levels of unemployment generally and, in particular, those policies providing special assistance to the Northern region and deplores the Opposition's continuing attempts to undermine the efforts of those in the region seeking to attract new businesses and new jobs.'.
I assure the hon. Member for Easington (Mr. Dormand) that, contrary to what he may think, I am delighted to debate the problems of the northern region. I am also delighted to follow the hon. Gentleman, because he is distinguished in his capacity as chairman of the parliamentary Labour party and he has been a constant champion of the northern region. He has championed the northern region in a forceful and charming way for a long time as well as being the vice-president of the local tourist board.
The hon. Member for Easington and I are old partners in crime in terms of our capacities as pairing Whips for Government and Opposition in successive Parliaments.
The Minister of Agriculture, Fisheries and Food (Mr. Michael Jopling): Crime in the Whips' Office!
Mr. Morrison: My right hon. Friend has picked on the word "crime" in terms of what we were up to in the Whips' Office. Of course there was no crime—we were merely enjoying doing what was best for all our hon. Friends.
I believe that we last debated the northern region some time ago, in 1983. I may be wrong, but it occurs to me that the timing of today's debate may have something to do with a by-election in the north-east on Thursday.
Mr. Dormand: If the Minister thinks that we need to mount a debate on the northern region to win the Tyne Bridge by-election, he is even further out of touch with reality than I thought.
Mr. Morrison: As the hon. Gentleman knows, I am an innocent fellow and such thoughts cross my mind occasionally, but I accept entirely that I was wrong.
I accept entirely that unemployment in the region is far too high at more than 18 per cent. I hope that the Opposition will acknowledge, although there is a political debate about it, that unemployment remains very much at the top of the Government's priority list. [Interruption.] The Opposition may mock that. We hear a great deal of
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analysis of unemployment levels from them, but we never hear any solutions. It is a continuing challenge to create jobs and to reduce unemployment. That is bound to be so. As our amendment states, the transition from the old industries to the new is more painful in the northern region than in other parts of the country.
Mr. John McWilliam: Will the Minister give way?
Mr. Morrison: No, I should like to get on as I know that a large number of hon. Members wish to participate in the debate.
I hope that the Opposition will endorse the Government's view that the only way to tackle the unemployment problem in the northern region is to get the economy as a whole on a sound footing. That means being competitive, productive and profitable. It is not easy, but it is possible and it takes time. I emphasise that if the solution, which the hon. Member for Easington may have been suggesting, were simply to pump money into the region, the problems would have been solved long ago. I will give some figures to illustrate my point.
Since the Conservatives came to power in 1979, more than £108 million has been paid out in regional selective assistance and about £700 million has been paid out in regional development grant. More than that, the urban programme has entailed £214 million, urban development grant £11·5 million, which has attracted about £60 million in private investment, the traditional urban programme has reached nearly £10 million, derelict land grant more than £61 million and the housing investment programme more than £870 million. In all, that is more than £2 billion. That does not include the training and special employment measures to which I shall allude later and to which my hon. Friend the Under-Secretary of State will no doubt also refer.
Mr. Alan Williams: What would the figures have been if the Government had not cut regional aid and the rate support grant?
Mr. Morrison: The right hon. Gentleman will surely agree that it is sensible to have some control of rates, as high-rating authorities drive business away. There is no doubt about that, as can be seen in various parts of the country, perhaps including certain parts of the northern region.
Throwing pounds at problems is not the simple answer that the Bishop of Liverpool or Sir Richard O'Brien—
Mr. Giles Radice: Those well-known Marxists.
Mr. Morrison: —would have us believe. As a Minister I have had to deal with both those gentlemen and I was not surprised at their most recent proposals as they have been in the business of throwing pounds at problems for some time.
The creation of jobs in the northern region will depend on the overall attractiveness of the area to potential investors and the competitiveness of local industry. I agree entirely with the hon. Member for Easington that it is people who count. I know from my many visits to the area since I became a Minister that the people of the north positively welcome the outsider and the outside investor.
Mr. D. N. Campbell-Savours: How does the Minister expect the people of Cumbria, especially

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those who work for Matthew Brown, to welcome the intervention of Scottish and Newcastle Breweries and its attempt to take over a highly profitable brewery in Workington with the sole intention of closing it? Does the Minister wish to justify that, or will he condemn it from the Dispatch Box?
Mr. Morrison: I do not wish to get involved in what seems to be an internecine dispute between certain parts of the north. Business decisions are no doubt being taken, but it is not for me to promulgate from the Dispatch Box the benefits of Newcastle or Cumbria in a debate about the region as a whole.
The suggestion made by the hon. Member for Easington towards the end of his speech—that the Government were not interested in the north—is totally belied by the facts. Quite the reverse is true. There are many pockets of very high unemployment in other regions which do not receive the same attention. In the northern region, we have provided direct and practical help, first, for those most affected by unemployment through our wide-ranging employment and training measures, secondly, through our regional industrial policy aimed at reducing disparities in employment opportunities, and, thirdly, through our urban programme aimed at combating inner city deprivation.
Mr. Beith: The Minister refers to areas outside the region in which those measures do not apply, although similar problems exist, but those facilities have also been withdrawn from areas within the region by the narrowing of assisted areas and the exclusion from the urban programme of many small communities with severe urban problems.
Mr. Morrison: I note what the hon. Gentleman says, but many other parts of the country can make the same claim. Tiny pockets are extremely difficult to administer, so I hope that the hon. Gentleman will appreciate that the panacea that he seeks is not easily achieved.
The hon. Member for Easington, unlike some, did not promote an air of doom and gloom. He will recall that my right hon. Friend the Prime Minister described certain reporters as moaning minnies, and she was right to do so because they do not represent the attitude of the people of the northern region. They undermine the attitude and attractiveness of the northern region.
There are many successes, and I think that the future can be viewed with a certain amount of optimism—for example, the Newcastle technology centre was recently opened. No Government handout was given and the centre came about because of local initiative. That is a demonstration that there is confidence in the region and in its industry. The result will be more competitive practices and processes and the promotion of the take-up of new technology. This is good because it has been born out of its own.
The north-east is becoming increasingly less dependent on the old industries and more attuned to the growing sectors of the economy—[Interruption.] The hon. Member for South Shields (Dr. Clark) laughs. Is he not proud of the fact that the pharmaceutical industry, which hardly existed 10 years ago in the north-east, now employs over 5,000 people? Is he not proud that 16,000 people are engaged in electronic-related industries, which range from
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component manufacturers to computers, radar, fibre-optics and opto-electronics? All the hon. Gentleman does is laugh at those who are employed in those industries. I am sure that his constituents would not be laughing.
The Nissan project was the most sought after scheme in the United Kingdom during the past four years. It is a £350 million development which offers direct employment which could—I emphasise "could"—reach 2,500. This is a great pat on the back for the northern region and confirms the point made by the hon. Member for Easington. It has happened by a combination of the Government's encouragement and the taxpayer's encouragement to come to the region. In addition to the 2,000 employees at Nissan, there may be a further 2,000 employed indirectly. That is a vote of confidence in the northern region.
The Nissan project is not the only project. Last year, NEK Cables of Norway announced a £4·5 million expansion, which will mean a further 100 jobs in Washington.
In October of this year, Ikeda Bussan (Japan) announced a joint venture with Hoover to manufacture car seats for Nissan. This is an investment of £1·5 million that will create 200 jobs. NSK Bearings (Europe) Ltd. of Japan last year announced further expansion in Peterlee. That is a further example of inward investment. I could continue to give examples of inward investment, but it is not just a matter of plant and machinery.
Mr. Tony Blair: Does the Minister realise that pats on the back are fine provided that there are not punches in the solar plexus at the same time? Thousands of jobs have been lost in the northern region even since 1983, let alone 1979. When will the Government realise that unless they take steps to encourage intervention in the north-east there will he no possibility of building future success out of past failure?
Mr. Morrison: I said earlier that about £2 billion had been provided in urban grants, industrial grants and regional aid. By any stretch of the imagination, that is a significant amount of money over the past six years. Had no grant been available, those industries would have Seen less likely to come to the region.
Mr. Michael Fallon rose—
Mr. Morrison: I must get on. I shall give way in a moment.
New plant and machinery are important and so, too, are new working practices. Labour Members may not like the example of Black and Decker, a factory which I have visited, but in 1974 it had about 2,500 employees and was producing 40,000 units per week. Now it has only 1,300 workers. This has caused a problem of about 1,200 unemployed in the region, but the company is far more productive and is now producing 150,000 units compared with 40,000 previously. The company is competitive and making profits, and that is what attracts new industry to the northern region.
Mr. Dormand: When?
Mr. Morrison: The hon. Gentleman knows that it is coming. He has heard of the examples and he can see them when he visits his constituency every weekend.
The basis of a sound economy is a relatively well-developed small firms sector. This sector is relatively undeveloped in the northern region because of its past

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reliance on large public sector industries. I am sure that the Opposition will be pleased to know, however, that the small firms centre in Newcastle deals with more than 1,500 inquiries a month. There are now about 90,000 self-employed people in the north-east compared with 57,000 in 1979, an increase of about 60 per cent. The House will be pleased that that is a trend in the right direction.
I am sure that the hon. Member for Workington (Mr. Campbell-Savours) will be interested to know about the pleasing developments in Cumbria. In Workington, more than 500 jobs have been created in the enterprise zone since its creation two years ago. The number of firms in the area has doubled and full-time employment has risen. The largest single increase was on the Solway estate at Maryport, where over 370 jobs have been created. This was due to the expansion of existing firms and the fact that new firms have moved into the units offered by the English Estates as well as by private investors.
There are many examples. The CADAM centre in Middlesbrough could provide about 5,000 high-tech jobs by 1995 and—[Interruption.] Labour Members laugh once more. The Metro centre shopping and leisure complex, which is an investment of £50 million in Gateshead, could provide between 4,000 and 5,000 jobs.
Mr. Radice: The Minister has given us much anecdotal evidence. Can he say how many jobs have been lost and how many have been created in the northern region since 1979?
Mr. Morrison: I cannot give the hon. Gentleman precise figures and I do not wish to mislead the House, but—
Mr. Nicholas Brown rose—
Mr. Morrison: The hon. Gentleman scoffs and scorns the enterprise and initiative that has taken place in the northern region. He is what my right hon. Friend the Prime Minister described as a moaning minnie. He is turning away potential industrial investment—because his words are closely heeded by the industrial investor—and that cannot be good either for his constituents or for the northern region.
Some Labour Members say that we ignore the northern region. They should remember that since 1983 we have spent £141 million on the youth training scheme within the region on about 61,000 entrants. It is said that a place on the YTS is not a real job. Those who take that view should understand that it is real training and that it enhances substantially—there is no question of this—the opportunity of getting a job at the end of what will be potentially for every 16-year-old a two-year scheme.
We have introduced the community programme for the long-term unemployed. We have spent about £190 million on the programme since October 1982. There have been about 6,700 applicants for the enterprise allowance scheme. These figures show that there is much activity.
I accept, as I did at the beginning of my speech, that the problems of the north-east are difficult. I accept that the problems in the northern region are greater than those in some other areas. There can be no doubt about that. However, I do not accept the implication of the hon. Member for Easington—that the Government do not
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care. Nothing could be further from the truth. We recognise the problems and, as I have demonstrated, about £2 billion or more of aid in many different forms—this is not an anecdote—has been made available by the Government. We care, and we are doing a great deal to try to overcome the region's problems. There is still more to be done, and we shall continue to do it.
4.52 pm
Mr. Ian Wrigglesworth: The Minister was right to say that the debate has been initiated by the Labour party because of the Tyne Bridge by-election. Let the House have no doubt about that. The message that goes out from the House is that the Labour party is clearly running scared in Tyne Bridge and has initiated the debate to try to secure a party political by-election benefit. It has not done so because of the desperate unemployment that exists throughout the region.
Mr. Ron Lewis: Will the hon. Gentleman give way?
Mr. Wrigglesworth: No. I shall give way later.
The Labour Opposition might have been expected to set out on the Order Paper a list of proposals to show how they would tackle the problems of Tyne Bridge, Sunderland, Teesside or other areas that are hit so badly in the northern region. As was said about a candidate in a Democratic primary, there is no meat in the diet that has been put before the House. The Opposition have moved an entirely negative motion. It was the alliance which had to introduce some proposals for dealing with the northern region's problems.
There are many ways in which the northern region can be helped, and we should welcome some of the information that the Minister has given to the House about the expansion of self-employment in the region and the number of new businesses that are being started. That activity goes to the core of one of the problems that the region must face. We need more new business start-ups, more self-employment and more service industries. That has been urged by many of us over many years in debates of this sort.
Unemployment in the north stands at 238,200—which is the equivalent of unemployment figures 30 years ago when Lord Stockton was Chancellor of the Exchequer. It is a sad reflection upon our abilities, and especially on the Government's policies, that the level of unemployment in the region is similar to that which prevailed when Lord Stockton was Chancellor of the Exchequer. The number of jobs has fallen—I shall give the figures if the Minister will not—by over 200,000. That is twice the rate of decline nationally and is the greatest fall in any region. That is why the northern region has the highest level of unemployment outside Northern Ireland.
The Prime Minister visited a ward in my constituency on the day when she made an offensive remark about moaning minnies. There is 30 per cent. unemployment in that area—42 per cent. male unemployment. It is not good enough for Ministers to talk about the unemployed getting on their bikes, being workshy or being moaning minnies, and to lecture those in the northern region about getting off their backsides. Those are the implications behind the comments of many Ministers. When we in the north hold our surgeries we see week by week a sad trail of those who have tried time after time to get a job. Those

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who are in that trail tell us that they have not even received acknowledgements of job applications, and that that has happened dozens of times. Against that background, we hear Ministers' offensive remarks about the plight of those who are genuinely searching for jobs and cannot find them.
Mr. Peter Morrison: Perhaps I did not make myself clear. I made precisely the point that the hon. Gentleman is making. I observed that a characteristic of north-easterners, or northerners, was that they were not moaning minnies. I said that the pity was that one or two were and that they gave the wrong impression. I agree with the argument that the hon. Gentleman is advancing.
Mr. Wrigglesworth: One of the major problems of the northern region is that it dwells too much on the past and does not think enough about the future. There is one way in which the region could help itself more than in any other—by snapping out of nostalgia about the old industries and directing itself—[Interruption.] Labour Members might listen to what I am about to say. Excellent work is being undertaken in Newcastle polytechnic on fashion design and—[Interruption.] That is a source of amusement for Labour Members. I mention fashion design as an example, because it seems so remote from the traditions of the northern region. It is the sort of service industry that has brought enormous employment opportunities in other countries and other parts of the United Kingdom.
Benetton of Italy has provided work for many Italians and has become an international firm. We must recognise what Laura Ashley has done in Wales. We must not scoff at what Newcastle polytechnic is doing. Many Labour Members wallow in the nostalgia of mining, shipbuilding and the past generally, instead of turning their attention to the industries of the future, such as the high technology and service industries.
Let us have Civil Service jobs by all means. They were referred to by the hon. Member for Easington (Mr. Dormand) when he opened the debate. Let us have the white-collar industries and the professional jobs that the region needs desperately. The mix of employment oppportunities that it has been able to create and provide is all wrong. The entire region is skewed in the wrong way. Unless we address ourselves to that problem, we shall never provide a long-term solution to the present high levels of unemployment.
How can that be done? The Government must play a major role in bringing that about. It is no good the Minister reading out a list of the moneys that have been given to the region and boasting about them. Why did he not do that six years ago? Instead, he was decrying the amount of public money that was being put into industry and criticising the extent of Government intervention in industry.
As I said yesterday, there has been a C-turn, but I have no doubt that it will become a U-turn by the time of the next general election. The Government realise that votes for the Conservative party depend on reducing unemployment levels. By then, the Minister and the Government generally will have realised that unless they boast more about the contribution that they are making to the creation of jobs in areas such as the northern region, they will not win the next general election. That is what the U-turn that is taking place is all about. The
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Government have started to boast of their record. The Minister is hoist on his own petard. Having criticised public investment so much, he is now having to laud the Government's record to try to secure votes.
Sir Nicholas Bonsor: I am surprised that the hon. Gentleman is unable to distinguish between the aid given by the Labour party, which was aid with strings attached so that it could control the industries in which it invested, and aid given by the Government to stimulate investment and make the economy grow.
Mr. Wrigglesworth: The hon. Gentleman might believe the hyperbole and rhetoric from his own party conference, but he should not try to persuade people who look at those matters objectively that that is the case.
The Scottish Development Agency still exists. It is bigger in terms of the number of people that it employs—700 or 800—and it is one of the most interventionist agencies that one could imagine. The Government have not abolished it, for one political reason—they would lose even more votes than they did over Gartcosh. They are no different from the previous Labour Government. Let us do away with the party political hyperbole in which the hon. Gentleman is indulging, and look at the facts.
The facts are that the Government are intervening and supporting industry, but not as much as they should. Following their party conference hyperbole, they cut regional aid by a massive amount. They have halved the level of support to the regions since they came to office. In the most recent public expenditure forecast, they are again proposing to halve the support for regional aid. Inevitably, regions such as the north have been hard hit.
As we said in our amendment, there must be changes in the way in which the Government work and a radical change of attitude towards regional government. There should be decentralisation of power from Whitehall and Westminster. I mentioned the Scottish Development Agency. In the meantime, high priority should be given to the creation of a northern development agency. That should be the first step in shifting decisions to people in Newcastle, Durham, Sunderland and Middlesbrough rather than Ministers and their civil servants in Whitehall and Westminster.
The polarisation between central Government in Whitehall and the northern local authorities has undermined the valuable initiative of the proposed regional industrial executive. That was not mentioned by the hon. Member for Easington. It is amazing that it was not mentioned by him. The proposal is supported by some, but not all, in the trade union movement. It has the support of the local CBI and it would address a desperate need for the region.
One of the problems of the northern region, which Scotland does not have, is that it does not have a united voice and organisation, and it does not act in concert, as in Scotland. Instead, we have bickering between local authorities and between trade unions and the CBI. We do not have the cohesion that is found in other parts of the country. It is sad that the local authorities have not been prepared to give more credence and support to the proposal for a regional industrial executive, which has foundered because of the lack of cohesion in the region.
A northern development agency should have a venture capital arm and a small firms division, as in the Scottish Development Agency, to help business start-ups and small

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businesses. The Scottish Development Agency and the Highlands and Islands Development Board are good examples of the excellent work that can be done by Government agencies, stimulating new businesses and helping existing small businesses to grow. There is a desperate need for that to happen in a more co-ordinated way in the region. It should also take over the role of the NEDC in promoting indigenous firms and attracting inward investment. It is equally important that it should co-ordinate the plethora of regional job-creation agencies.
We have the most incredible position, with job creation agencies all over the region fighting one another for jobs. I turn on Radio Tees and hear Easington spending money advertising for jobs in Teesside which has the highest level of unemployment of any county in the country. It is a ludicrous waste of money for a neighbouring enterprise body to advertise in an area that has higher unemployment than the area to which the advertisement is asking new businesses to go. There are many examples of that beggarthy-neighbour attitude by local authorities and agencies that are all trying to beat one another, wasting public funds. They should help businesses rather than try to promote narrow areas—areas that should be promoted on a wider basis.
We saw a national example of that when Nissan and other overseas projects were being proposed. People tripped off to Japan spending public funds for no apparent reason in an unjustified and unco-ordinated way. It is even worse when one studies what is really happening.
The agency could build up links with financial institutions, even though it does not have Scotland's advantage of administrative devolution and close links between industry and the banking system. In my view, economic development in the region is held back by lack of private financial capacity. The region has no private investment trust, no commercial bank of any size, one major building society only, in Newcastle, and no local headquarters of a building society or bank. Of 52 pension funds in the region, only six are locally managed.
In co-operation with the banks, the agency could help to administer the industrial credit scheme, which we have proposed. As the House of Lords report on overseas trade—which is being debated today—recommended, it would be specifically targeted on low-interest medium-term finance for small and medium-sized enterprises directed at high technology projects, product innovation, marketing, exports and design. I was delighted to see that the Treasury spokesman for the Labour party took up the proposal of an industrial credit scheme. I hope that the Government will also take it up.
If we are to do anything about the state of the region's employment, there needs to be a regional dimension to the allocation of public spending directed towards increasing the region's share of expenditure on research and development, which is currently 2·5 per cent., contrasted with a remarkable 47 per cent. being spent in the south-east. The region also needs new venture capital incentives through a corporate business expansion scheme to enable large companies, including multinationals, to write off up to £100,000 per annum in investments in small high-tech companies and full 100 per cent. depreciation allowances in the first year for start-up high-tech companies.
Those are the sort of proposals that might get new businesses and new industries under way in the region, but
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the Government have followed a scorched earth regional policy. Last week the Minister admitted, in reply to a question which I tabled and which the hon. Member for Easington quoted, that the Government had cut regional aid by 57 per cent. in real terms, from £287·1 million in 1978–79 to £122 million in 1984–85. That is before the cut in regional development grants and before the cost per job limit was imposed. In December 1984 the Government cut the national regional aid budget by half. Projecting that for the northern region could mean a further reduction, in the next three years, of some £60 million in regional aid.
The Secretary of State for Trade and Industry told the Conservative party conference that regional decline
"now represents the gravest social and economic problem facing us as a nation. We ignore it at our peril …"
He went on to say:
"In making all our economic and regional decisions we should always ask ourselves this question: What impact will that decision have upon that gulf between the different parts of the country?"
Unfortunately, his colleague the Chancellor has no such awareness. Only the alliance has spelt out how the economic policies that we want will help the northern region. We estimate that cutting the employers' national insurance contribution by 1 per cent., will create 2,000 jobs in the northern region. The north-eastern share of the £1 billion infrastructure programme that we propose would create 20,000 jobs. Doubling the community programme in the northern region would create 15,000 jobs. Our anti-poverty programme, which expands FIS and gives the long-term supplementary benefit rate for those unemployed for more than one year, would boost demand and create 10,000 jobs. Expanding local authority spending on labour-intensive services and a crash programme of education and training for skills would create 8,000 jobs. Setting up new businesses through small firm investment companies and the industrial credit scheme, as well as the enterprise allowance scheme, would initially create 2,000 jobs.
Those policies, which we have proposed nationally, would reduce unemployment in the north by 50,000 to 60,000 within two years. That is a realistic target. It is not enough, but it would be a substantial improvement on the present prospects for the region. It would give new hope not only to Tyne Bridge, but to Wearside, Teesside and other parts of the region that have been devastated by the events of the past six years, particularly the devastation of our manufacturing and industrial base during that time.
Several Hon. Members rose—
Mr. Deputy SpeakerOrder. It will be obvious to the House that many hon. Members wish to speak in this short debate, so I appeal for short contributions.
5.10 pm
Mr. Neville Trotter: I agree that we should not dwell on the past but look to the future, but it is germane to remind the house that the industrial background of the north-east, with its traditional dependence on heavy industry, is largely to blame for the serious unemployment that we face. Such industries in all the western world face intense competition, especially from cheap labour in the far east, as well as technical change on a scale that was never foreseen, even 30 years ago. We are seeing technical change in a time span of five years that took a generation only a few years ago. All too often, those technical changes produce automation and

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less employment in the traditional heavy industries. These are largely the reasons for the problems that we face in the north-east, and it is right to look to the past for that historical background.
We should look to the future and success stories such as Nissan, mentioned by the Minister of State, and described as the most attractive industrial prospect in recent years. The north-east won that chance through its own efforts.
The north-east is certainly not a desert. We should never, wittingly or unwittingly, convey the impression that it is. It is important that we create a true impression of the advantages in the north-east. I am sure that hon. Members taking part in the debate appreciate that. It is essential that potential employers are aware of the regional pluses and are not led astray by moaning about the problems that we face.
I remind the House that we possess the finest communications system in the country. We have an excellent system of roads, fine airports and up-to-date sea ports. Our rail system from the south is about to be electrified. We have outstandingly beautiful countryside. We have a skilled and hard-working work force. I pay tribute to our fine industrial relations. Traditionally, the north-east has enjoyed good relations between the two sides of industry. I am pleased to be told by those involved in the industrial scene that industrial relations have never been better than they are today.
I pay particular tribute to the leaders of both sides of industry who have been working quietly and persistently for about 18 months seeking to establish a new co-ordinating body for the north-east, which has, I am sure, the blessing of all hon. Members representing constituencies in the north-east. I believe that the scheme will also have the Government's blessing when the proposals are put formally to them.
We have not only the prospect of Nissan as a fine manufacturing centre but every sign of confidence from the retail trade. In fact, there are staggering signs of confidence in retailing. I am told by those who run the Newcastle branches of national shops that the trade that they are now doing in the city is among the best in the whole country. The Metro centre is opening in Gateshead in a year's time and will employ about 5,000 people. This imaginative local initiative will be the first such gigantic shopping centre in the country. There is every sign of confidence in the community in the north-east. That does not mean that we do not have problems, but we are confident that we can match up to them and we are seeking to do so by our own efforts as much as possible.
In recent weeks the Queen Mother, always a most popular visitor to Tyneside, opened the new coal staithes on the Tyne, an effective investment in the future by the port of Tyne. In Scotswood, the Vickers tank factory is one of the most modern plants in Britain. In my constituency, at the former Clellands shipyard we have a thrusting, dynamic and successful offshore oil industry firm—William Press. Also in my constituency is Elmwood Sensors, a very successful subsidiary of Hawker Siddeley. Eighty three per cent. of that factory's production is going to the German and French car industries, which is a great success story.
Recently, smaller companies have been established in north Tyneside, such as Aerial Access Equipment and Scanro, both of which recently received the Queen's Award for Exports early in their lives. The former
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company sells hydraulic lift mechanisms and the latter sells windsurfing boards. Both are examples of small businesses and both are very successful. There is, however, a need for us to encourage small firms and entrepreneurs more than we have in the past. The recent celebrated comment that more needs to be done in this respect was not wrong. As The Newcastle Journal said in an editorial at the time, it is not criticising the north-east to make that point but simply recognising a problem that is there, and one that most northerners, in their hearts, know is there. We need to face that problem.
Much has rightly been said by the Minister of State about the huge amount of money that has been made available for the north-east in urban and industrial aid. Enormous efforts are being made by the Manpower Services Commission in the region in training and in the many different schemes in which it is involved. I should like to give an example of self-help—the creation of Northern Investors. A number of leading industrial and commercial firms in the north-east have got together to provide finance for investment in new businesses in the region. It has got off to a good start, and I am sure that we all wish it well.
We can take great pride in our education system in the north-east. We have two fine universities and three fine polytechnics. However, Lord Elliott who, for many years, contributed to our debates on the north-east as a Member of the House, was accurate in saying in his recent maiden speech in another place, that in the past the north-east had given too much emphasis to academic education and training rather than vocational training. We should bear that in mind for the future.
I was pleased to be present at the recent opening of the technology centre at Newcastle university when he performed the opening ceremony. Mr. Reay Atkinson, the regional director of the Department of Trade and Industry, referred to the centre's major role in the regeneration of the region. He saw it as helping in the creation of new forward-looking businesses and keeping more of our young people in the region by showing them that there was scope and hope for them. This could help the north-east to become more closely involved in the prosperous offshore oil and gas business. That was a local initiative, taken by the university of Newcastle, working with local businesses.
I pay tribute to the work of Mr. Reay Atkinson, who, for the past few years, has been the head of the Department of Trade and Industry in the north-east. He retires at the end of the month, and I know that all hon. Members from the northern region will join me in paying tribute to his outstanding work. He has become very much a northerner in the past three years. Indeed, he originally came from our part of the country, but he suffered for a while because he was based in London.
I have said that I do not believe that we do enough to encourage people in the north-east to set up businesses and to become entrepreneurs and employers. We must however, also seek to increase the amount of inward investment in the region. It is for that reason that for a long time I have been of the opinion that we needed to improve the co-ordinating machinery in the north-east, which is now non-existent. I fully support, as I believe all hon. Members should do, the creation of a regional industrial executive, or whatever one likes to call it. It does not matter what the name is as long as we get the organisation right. I hope that in 1986 it will be the principal feature

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of the north-east's move to help itself. I hope that during next year a proposal will come from the north-east to London to set up a new agency. It will probably take over the work of the North-East Development Council. It will have a small central staff and two prongs, one dealing with inward investment and the other with promotion of the region. It will be what is known as a one-stop shop. There is a great need for that if we are to play our full part in the development of the north-east.
This initiative of the region's Confederation of British Industry and the TUC, I hope to be supported in the near future by the local authorities, will be the greatest achievement that we can look forward to in 1986. In the north-east we have people of great ability and pride. It is only right that we should come to the Government in the new year with proposals to help ourselves by setting up an agency on the lines that I have suggested.
5.19 pm
Mr. Ron Lewis: I am delighted to take part briefly in this important debate on the northern region. If I concentrate on my area, I hope the House will forgive me, because the region stretches from the far north-east right across to the far north-west and embraces the county of Cumbria and my constituency of Carlisle.
The hon. Member for Stockton, South (Mr. Wrigglesworth) made an unwarranted attack upon the Labour party, bearing in mind that he would never have been in the House had it not been for the Labour party. I hope that at some time he will be honest with himself and publish the amount of money that he received from the Labour and trade union movement in the past when he was a Labour candidate and that helped to get him here. I also point out that humility is not one of his great characteristics.
I want to concentrate upon my patch, the city of Carlisle. A delegation met the Minister of State recently to request development area status. Although the Minister received us courteously, I very much regret that he turned a deaf ear and a blind eye to our request.
My hon. Friend the Member for Workington (Mr. Campbell-Savours) referred to Matthew Brown and the Scottish and Newcastle breweries. This may seem odd coming from me, but the great fear in my constituency is that, if the deal goes ahead, not only will the brewery in Workington close but there is every possibility that the brewery of Theakstones in my constituency will also come under the hammer. When amalgamations take place, the ordinary working man and woman employed in the industries asks, "Will my job be secure?"
As hon. Members know, there is also the possibility of the amalgamation of Imperial Tobacco and United Biscuits. No doubt the first thing that my constituents who are employed by United Biscuits and who work at Carrs factory in Carlisle will ask is, "I wonder if my job will be safe." That is a perfectly legitimate worry. From my contacts in the past with the chairman of United Biscuits, Sir Hector Laing, I believe that he will do all that he can to retain the biscuit factory in Carlisle.
In the 1930s, there were many small family firms in my constituency, but over the years they have been swallowed up and now belong in the main to great combines. In the 1930s, there was very little unemployment in the constituency when the rest of the country suffered massive
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unemployment. In the 1980s, the position has changed considerably. In Carlisle in October of this year unemployment was running at 12 per cent., four times what it was 10 years ago when Carlisle had assisted area status.
More than 6,000 persons are unemployed in the Carlisle travel-to-work area. The unemployment rate shows an overall upward trend and, despite what the Miniser said, there is little to suggest that it will not continue to do so. Despite the promising fall during the summer of 1983, the unemployment rate is back to its highest level, equivalent to the previous peak in 1982.
In his speech, the Minister did not say one word about unemployment in the city of Carlisle. Male unemployment has gone up from 5·3 per cent. in 1979 to 14·1 per cent.; female unemployment has grown from 5·3 per cent. to 9·6 per cent. in the same period. A few weeks ago I met a group of young people, together with representatives of the social services. Every one of those young people was out of work. They could not get jobs and there is no hope for them. No wonder that at times people are driven to despair.
Statistics reveal that long-term unmployment is emerging as a major problem in my constituency. About 40 per cent. of all the unemployed men have been without work for more than a year and nearly a quarter of the unemployed men under 19 have been unemployed for more than a year. As for those under 19, there is nothing worse for a young person leaving school and looking forward to starting work than finding that there is no job to go to. There is no encouragement for them in what the Minister said today.
Mr. Peter Morrison: The hon. Gentleman said that I did not refer to his constituency; that is correct. I hope he will be generous enough to remind the House that he and some of his constituents came to see me only last week to discuss the position in Carlisle. I hope that he felt that he had a fair hearing.
Mr. Lewis: I thought I had made it clear that I had no complaint about that meeting. I thought I had paid tribute to the Minister; if I did not, I apologise. He received us courteously and listened to us. But when we went out of his office, that was the end of it. I give him full marks. The first thing that happened when we went into his office was that someone put on the kettle. The trouble with many Ministers is that they put the kettle on after delegations leave.
Despite everything the Minister said today, what hope has he given to the unemployed in my constituency? What hope will the Under-Secretary of State for Employment be able to offer to unemployed men and women in Carlisle when he replies to the debate? We look to him for an answer. I hope the Government will act as a result of this short debate.
5.30 pm
Mr. Michael Fallon: I can agree with the hon. Member for Carlisle (Mr. Lewis) on one point. It is typical of the Opposition's cynical disinterest in the north-east that the first full-scale debate that they table on the north-east should take place in a week when their majority in the safe seat of Tyne Bridge is at risk. Tyne Bridge is a good example of the results of Labour misrule—

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captive municipal misery, with people herded into council houses and deprived of jobs by high-rating Labour-controlled authorities.
It is a great shame that the Opposition motion did not draw attention to the systems of Socialism in the north-east that deny choice, frustrate ownership and deprive people of the standards of living to which they are entitled. The Socialism that we have seen in the north-east has contributed to a serf mentality in many constituencies.
The debate is about the role of government in the north-east and aid for the north-east. It should be about not the quantity of aid, but rather its quality. There should be no doubt about the quantity of aid that has been provided. The north-east has been an assisted area since the early 1930s. In the past 20 years it has received one third of the regional aid budget—about £6 billion out of £20 billion.
Since the Government came to power in 1979, the north-east has received, as we have heard, more than £1 billion. It is a £1 billion-pound region. Every Member who has studied the problems of the north-east knows that it is not the quantity of aid that matters. There is no shortage of public money. The problem has been the shortage of private money, capital, investment and enterprise. I can think of no project that my right hon. Friends have not been prepared to consider on its merits and to give aid where appropriate—Nissan, the electrification of the east coast main line and many others. The question before us is not the quantity, but the quality of aid that has been made available. How can we make it more effective? That is the test that we should apply to the Government.
There is no doubt that the Government are doing well on that test and that regional aid is very effective. There has been an end to endless capital subsidies and subsidies of replacement investment—merely modernisation investment that creates no new jobs. There has been an end to the Sullom Voes, the Moss Morrans and the Billingham nitric acid plants, and so on. More jobs are now being created for the taxpayer's money.
Subsidies are being reduced. The wasteful subsidies that we saw in the past poured down the pits and shoved into the shipyards and the steel plants have been reduced, and all three industries are now edging towards a more profitable position than they have had for some years. The hon. Member for Stockton, South (Mr. Wrigglesworth) mentioned the smaller companies, the service companies and the new technology companies that are now coming. They are already there. They are not just pipe dreams for the future. In the north-east, 5,000 new companies register for VAT every year. New service companies are being created and new technology companies are now coming to the region.
About 20,000 people in the region work in about 160 new technology enterprises which operate across the range of the technologies—computers, telecommunications, electronics, and so on. It is a myth to pretend that those companies have not yet been created. Those jobs exist and there are more of them to come.
Mr. John Ryman rose—
Mr. Fallon: I shall not give way because we are short of time.
The Government are stimulating job creation and providing training. Next year about 18,000 adults will receive training and about 25,000 youngsters will go through the YTS in the north-east.
Mr. Stuart Randall rose—
Mr. Fallon: The north-east is seeing training and retraining on a scale that it has not seen in any previous time of industrial change. On that point the Government are to be congratulated.
Mr. Ryman rose—
Mr. Fallon: The role of the Government is not to fossilise the region through extensive and unnecessary subsidy, as encouraged by the Labour party, and not to prolong the agony of industrial change, but to assist that change, to put people at the front of that change and to stop them being the victims of that change. Public money should be used to do that, but it must be used wisely to clear away the debris of the last industrial age, to pay for the retraining of our work force, to stimulate job creation in a modern industrial environment, and, above all, to help re-establish in the north-east the spirit of enterprise and self confidence that the region needs.
Those policies will need time to take effect. The problems did not start in 1979. They are deep-rooted. They have existed for more than 20 years in the north-east. Even Joe Mills, the secretary of the northern TUC acknowledges that the problems of the north-east began over 10 years ago. It is a period, interestingly, that starts with the beginning of the former Labour Government.
There is no doubt that, applied thoroughly, those policies will succeed. The House need not take my word for that; it can take the word of those companies which have come to the north-east from overseas—Nissan to Washington, the Grove Corporation to Sunderland and Tabucchi to Teesside. It is inconceivable that the north-east would have seen overseas investment on that scale had Labour won the last election, had this country been pulled out of the European Community, and had those companies had to face the prospect of investing in a country with high inflation and with public finance out of control.
Mr. Boyes rose—
Mr. Fallon: No one can reasonably argue that Nissan would have come to this country.
Mr. Boyes rose—
Mr. Fallon: Nissan and the other Japanese companies that we hope to attract take a long-term view. They are correct to do so. They chose the north-east. They were not directed there. They chose it because of its strength and because this Government, unlike any previous Government, have provided the stability—
Mr. Boyes rose—
Mr. Fallon: —the low inflation and the attractive control of public finances for which they have been looking. Instead of moaning about the north-east, we should be playing on those strengths. The north-east has plenty of natural resources. We have water, coal and offshore gas. We have human resources, skills in the new technologies and a work force that can adapt, as Nissan is proving, to new working practices.
Mr. Boyes rose—
Mr. Fallon: We have a work force that has transformed itself—
Mr. Boyes: On a point of order, Mr. Deputy Speaker. May I ask for your guidance? Is there not a convention by

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which, if a Member spends a considerable part of his speech talking about a factory or something else in another Member's constituency, he gives way, especially when he has made erroneous—
Mr. Deputy Speaker: Order. It is a matter for the hon. Member who has the Floor. I remind the House that there is great pressure on time and that interventions prolong speeches.
Mr. Fallon: I am not giving way, Mr. Deputy Speaker, because I know that many hon. Members, especially Opposition hon. Members, want to speak.
We have natural and human resources. We have, above all, cheap land and housing, space for development and the attractive environment that the modern company needs. If those skills and resources are encouraged, we can promote the north-east not as an industrial museum which lives in the imagination of the Labour party, but as a region of opportunity, combining low-cost enterprise with a higher quality of life than that found in rootless southern suburbia or the overcrowded Thames valley.
My right hon. Friends can help in that process, first, by keeping down inflation. Low inflation puts more money into the coffers of companies in the north-east than any amount of regional aid or subsidies. They can help by keeping public finances under control to continue to attract overseas investment to the north-east. They can help by stimulating the enterprise and job creation that will allow and encourage our home-grown enterprises to expand and develop.
I agree with the hon. Member for Stockton, South that it is time that our public expenditure system was reviewed. There is no reason why it should not have a regional dimension. There is no reason why our public expenditure system should continue to discriminate against the English regions by over provision for Scotland, Wales and Northern Ireland. There is no justification for the formula by which the Secretaries of State for Scotland, Wales and Northern Ireland automatically receive block grants which are not based on proven need and which are beyond Treasury scrutiny.
Secondly, I should like the Government to cut down on some of the reverse regional subsidies—the southern comforts. Each year £300 million is spent on London and the south-east commuter services, and the Government, local government and other public bodies pay their staff £150 million a year in London weighting allowance. Will the Government consider mortgage interest tax relief, not the principle of it, but its effect of trapping people in the north, and making it more difficult for them to move within the United Kingdom labour market?
Finally, will my hon. Friend the Minister knock a few heads together in the north? As the hon. Member for Stockton, South said, a plethora of agencies are wastefully competing among themselves and chasing international investment. If we are to sell the north as a region of opportunity in the United Kingdom and overseas, we need to co-ordinate our efforts in a much better way than the development corporations, agencies, local authorities, and a range of other bodies have done until now.
5.40 pm
Mr. Jack Thompson: The debate is taking place today because it is an Opposition day and the
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Government have never created an opportunity in their time to discuss the problems in the north of England. I remind hon. Members who have spoken—especially the hon. Members for Stockton, South (Mr. Wrigglesworth) and for Darlington (Mr. Fallon)—and the Minister, who is not present, that the issues of the northern region have been brought to our attention by an organisation called the North-East County Councils Association. Each year it produces a report, and this year it presented its sixth report to various Ministers and Secretaries of State. Those documents have been made available on six occasions—the seventh is being prepared—yet they have been almost completely ignored by the Government.
I had the honour and pleasure of being a member of a delegation which came to London to meet the Secretary of State for the Environment and his colleagues to present the fifth report on the state of the region. It, too, was examined and rejected. There is no question but that the north-east has been interested in presenting its case during the past six years, and the credit for that rests entirely on the shoulders of the local authorities.
The debate is important because the north of England has severe problems. That is recognised by various organisations, including the Confederation of British Industry, the Trades Union Congress, local authorities and other organisations that are keenly interested in the economic development of the region. We have valuable assets, but some are in decline. The coal industry is almost completely lost now, and the steel industry has been decimated. They were part of our natural resources. We have other resources, particularly our people.
During the past 150 years, we have developed the coal and steel industries, which were the foundation of the industrial revolution. I remind the few hon. Members from the south of England who are present that their prosperity is based on the resources that came from the north of England, Wales, Scotland and other peripheral regions. The south is reaping the benefits of what we in the north have established during the past 150 years.
Mrs. Ann Clwyd: Not for long.
Mr. Thompson: I am reminded that the south will not enjoy those benefits for long.
One remaining asset is our people. As the hon. Member for Darlington recognised, they have adaptable skills, but, sadly, the Government are penalising our people by actions such as the closure of the Killingworth skillcentre. My hon. Friends the Members for Wallsend (Mr. Garrett) and for Blyth Valley (Mr. Ryman) and I met the Minister earlier this year about the closure. I remind my hon. Friend the Member for Carlisle (Mr. Lewis) that we, too, had a cup of tea. That seems to be the procedure in the Minister's office. One gets a cup of tea but loses a skillcentre. I would have preferred it the other way round. That is an example of the Government's attitude to the north. The Killingworth skillcentre was the only one between the Tyne and the Borders, and we have lost it.
The retention of the skillcentre was important for training and retraining our people. Every hon. Member who represents the northern region recognises that we want to keep our communities together. That is of paramount importance. At present, we are not succeeding. We are losing our better educated young people because there are no opportunities for them in the north. Our communities are close-knit, and we are fighting

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desperately to preserve them. As the Minister said, we should be allowed to play a full part in achieving national prosperity, but it should be a fair part, in the sense that we have the same rights and privileges as people elsewhere.
I shall tell the House a short story which reflects the employment position in the south and the north. Two years ago, before I came to the House, I met a gentleman in a hotel in London. He told me that he had a brother-in-law in Brighton who had lost his job two years previously, found another job, was made redundant, found another job, lost that one, and found another job. In other words, he had four jobs in two years. He was despondent about his brother-in-law. I reminded him that in the north when one loses one's first job there is no other job. That is the difference between the north and the south. We have the manpower, and the basic skills, which need to be topped up through skillcentres, but we are not allowed to use and develop them as we wish.
In the north, manufacturing investment fell from £613 million in 1979 to £343 million in 1982. That is a decrease of 61 per cent. All sections of our community resent the lack of a regional dimension in Government policies. At one time, the attitude towards the regions was positive—for example, in the days of industrial development certificates. They were important to the northern region, and their loss had a serious effect.
An aluminium smelter in my constituency directly employs 1,100 people. It came in the 1960s, with the help of intervention from the Labour Government. The company agreed to establish the smelter in the north, and the Wilson Government helped. The plant supports a further 5,000 jobs, which extend as far as the River Tyne, which is 15 miles away. That sort of project could be undertaken again.
The problem cannot be solved by encouraging large numbers of people to move. Already evidence shows that social pressures are building up in other parts of the United Kingdom because of the migration of people from the north. The south-east has housing problems, but the north is not under the same sort of pressure. Our main problem is unemployment. We have accommodation and people, but no jobs. Complaints are made in the south-east about over-development. We do not suffer from that.
It is not true that the northerners keep carping about the position. They are placid, quiet and gentle. That is shown by the fact that, despite all the economic pressures on them, they have not yet taken violent action, such as has occurred elsewhere.
I apologise to my hon. Friend the Member for Houghton and Washington (Mr. Boyes) for mentioning this matter, but I think that he will support what I have to say. One of the reasons, although not the principal one, that Nissan came to the north-east—I participated in the exercise—was because the North-East County Councils Association met five northern counties, the Tyne and Wear county council and the North-East Development Corporation, and agreed to support a site at Sunderland. I was honoured and privileged to take part in that exercise. Nissan did not come to my area, but there has been a regional dimension in the work that has been done, and that will be expanded.
It is not all doom and gloom in the north of England. Many companies have settled there and are satisfied. The Government are keen to remind us of the value of private enterprise. If the United Kingdom were recognised as a private company and we in the north were recognised as
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shareholders, like the other regions, it would also be recognised that we have put a considerable amount of wealth into the enterprise. Now we ask only for the dividends to which we are entitled.
5.51 pm
Mr. Piers Merchant: I am grateful to the Opposition for giving us the opportunity to debate this subject, for it enables the House to consider three most important facts about the northern region. First, the region offers unparalleled opportunities for investment, industry and growth, and should be regarded as a frontier region, ripe for expansion, where the best hopes can be nurtured. The city of Newcastle is the gateway not to despair, as some would have us believe, but to future enterprise. Secondly, this is not a dream; it is coming true. There is now a thriving record of achievement with major new job creation, thanks entirely to the Government's policies. Thirdly, heavy and damning responsibility for the decline and industrial hiatus since 1974 must lie with the Labour leadership of the region and with the Labour party.
Bearing those three points in mind, it is curious that the Opposition have sought to highlight their failure and the Government's successes only two days before a by-election in a constituency that admirably proves all these points. It is all very well to talk vapidly about the future, but we shall not get it right if we do not understand the lessons from the past nor address ourselves to the difficulties that the region has faced and the way that they are now being overcome.
The region is particularly dependent on traditional smokestack industries which made it especially vulnerable to a combination of recession and fundamental changes in the pattern of market demand, which did not begin in 1979. This dislocation could have been avoided, and much of the blame for not preventing it from happening in the early days must be borne by industrialists and business leaders whose talents had become exhausted and who had lost the drive, initiative and inspiration that their predecessors on Tyneside had possessed.
The appalling condescension that these exhausted industrial leaders showed to their work force only encouraged the worst elements in trade unionism to prosper, and blame must lie on them. For sheer destructive obstinacy, little can beat some of the union attitudes displayed on Tyneside until a few years ago. They are responsible for as many lost jobs as bad management, which must also take its fair share of blame. Today, luckily, as many well as good industrial leaders in the north-east, there are many responsible trade union leaders.
An important part can be played by constructive trade unionism on Tyneside. For example, I should like to praise the efforts of Mr. Joe Mills, to whom my hon. Friend the Member for Darlington (Mr. Fallon) has referred. He recently sought to obtain all-party support in a move to improve the region. I welcome that, and I am happy to co-operate, as I am sure my hon. Friends will. In his letter, Mr. Mills had the honesty to point out that the region's problems did not begin in 1979, as some Labour Members would have us believe. He specifically and correctly pointed to a decline that began in 1974. Everyone knows which party was in power between 1974 and 1979.
Perhaps Labour Members who have been lecturing the Government on their economic policies can explain why they did so little when they were in power and why, if they

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now claim to have better policies than the Government, such policies were not applied when the Labour party had ample opportunity to do so. Why, in 11 years of their national rule, did the region not improve but deteriorate? Perhaps they can explain why decades of municipal Socialism have succeeded only in creating inner city jungles of despair in the north-east and concrete labyrinths of decay, which anybody who visits Tyne Bridge, next door to my constituency, can see amply demonstrated. Perhaps they can explain that the problem lies in the failure of policies, not resources, the shortcomings of state planning as a system and the lack of virtually all incentive.
The success that the north so badly needs means independence, and that breaks the power of municipal bosses, shop stewards and Labour political control. The policies that have been advocated by the Labour party and pursued by their town hall apparatchiks have been anti-enterprise, anti-growth, anti-investment, and therefore anti-job creation, and ultimately anti-people. The results are living proof of the failure of intervention policy over the years.
It is no coincidence that the most deprived regions are always those that are controlled by the Labour party and that have lived longest under Labour rule. The so-called north-south divide is fundamentally not economic but political. Regions that formerly had almost identical industrial structures, and therefore potential problems similar to those of the north-east, were able to avoid the high unemployment and consequent problems because they had the political will and flexibility to adapt rather than become fossilised in a dogmatic Socialist dust bowl.
Thankfully, in 1979, a Government with the strength and determination to tackle the long-term problems in regions such as the north-east took power. Overcoming years of neglect was inevitably slow, but now clear results are being reported weekly. In the past few months, Tyneside has been promised almost 15,000 new jobs. I can list them. Some 5,000 jobs will come at the new Metro centre in Gateshead, with, according to the developer, a possible future expansion of up to as many as 11,500 jobs. In addition, between 500 and 1,000 jos have been created during construction work. There will be 2,500 spin-off jobs as a result of the Nissan project in Washington. Another 3,000 jobs will come from the Gateshead garden festival—1,200 jobs in construction and reclamation, which have been started, 1,000 during the festival and up to 1,000 afterwards, not to mention the spin-off jobs that will be created.
Another 2,000 jobs are to be created at the newly announced Armstrong centre on the north bank of the Tyne in Newcastle. This large superstore and leisure complex combined with a business park will create 350 construction jobs, with the promise of 1,700 jobs once it has been built. There will be 1,000 jobs at the Howard Doris oil rig construction yard at Wallsend, and 500 jobs at the new Lipton superstore at Tyneside. Another 400 jobs are to come at Burton the tailors, and 400 at Morrisons in West Moor. An additional 400 are to come at new Fine Fare stores on Tyneside. Also, 250 jobs are to come at the Charlton Leslie offshore company at Wallsend, 200 at the new Dewhirst clothing factory in Sunderland, 200 at Presto at Cowgate, 100 at NEI, 100 at Findus and 50 at Boots—I could go on and on.
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Thousands of new jobs have been created and are being created by the Government's policies. Last week, the Evening Chronicle found it necessary to produce a special supplement to include the 300 job vacancies that were available on only one day. In addition, in the enterprise zone about 12,000 new jobs have been created, including the Vickers Dreadnought factory project and a tank factory on the banks of the Tyne. It is the largest covered tank factory in Europe. Apart from the permanent jobs that have been created, 6,488 people in the northern region have benefited from the enterprise allowance scheme. Under the city action team programme, Newcastle and Gateshead alone will receive next year £23·5 million of public money. It will be split among 300 separate schemes and will create hundreds of jobs.
I said at the beginning of my speech that the north is a region of opportunity. If the conditions are right, we shall flourish. We have the raw materials, people with skills and talent, unlimited space and a beautiful environment. The enterprise zone has shown what can happen if the shackles of the state are struck off and if an atmosphere of incentive is created. Great opportunities are available—for example, in tourism. Next year the tall ships race and the Gateshead garden festival will attract thousands of visitors and millions of pounds to Tyneside.
The Government are to allow £300 million of public money to be spent upon east coast electrification. There is to be direct investment in the roads system. The completion of the Newcastle western bypass is foreshadowed, as well as other major road projects.
I criticise the Government in only one respect. I do not think that many of my right hon. and hon. Friends sufficiently appreciate what the north could achieve if only it were encouraged to develop an enterprise culture. The north does not want subsidies or endless grants. It does not want its begging bowl to be filled. It wants to be freed from controls and overburdening taxation. I should like at least some of the advantages of the enterprise zone concept to be extended to the whole of the Tyneside development area. I want something fully and finally to be done about penal rates. The rates in Newcastle—the highest in the country—have destroyed many jobs. As industry is modernised and grows in the enterprise climate that is created, I want the Government to appreciate, as was pointed out by my hon. Friend the Member for Darlington, that a proper regional aspect—at least temporarily—to the Government's procurement policies is needed. The north-east wants change. It wants to look forward, not back. It wants to stand on its own feet. If it is given a full opportunity to do so, the only moaning to be heard will be the death rattle of the Labour party.
6.2 pm
Mr. John McWilliam: The hon. Member for Newcastle upon Tyne, Central (Mr. Merchant) has made a number of points with which I agree: that the north-east has the infrastructure and the skilled manpower, the will to work and the ability to attract industry. However, I take exception to the fact that Conservative Members claim that they attracted Nissan to the north-east. They did no such thing. The Secretary of State for Wales went to Japan and tried to get the Nissan plant for Wales. It was only because the Labour-controlled local authorities and trade unions in the north-east acted in concert that Nissan came to the north-east.

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There is no point in the hon. Gentleman also claiming that the Metro centre in my constituency was paid for with Government money. It was not. It is situated on land that is included in the development zone. It was expected that that land would attract manufacturing industry, but it did not. I am grateful for the Metro centre and for the construction jobs that it has created, but for every job that is created in the Metro centre another job will be lost somewhere else in the north-east.
The hon. Member for Newcastle upon Tyne, Central read out a long list of jobs that have been created. I shall read out another list of jobs that have been lost. In Tyne Bridge alone there have recently been redundancies. Vickers has made 1,918 workers redundant. NEI Nuclear Systems—not exactly low technology—has made 1,588 workers redundant. Smokeless Fuels has made 310 workers redundant; Osram 300; G. Shepherd, 255; BOC Cutting Machines, 254; Huwood, 180; Rose Forgrove, 160. The list goes on and on.
Between 1979 and 1984, Tyne and Wear firms lost 85,000 jobs. That represents a 16 per cent. reduction in the employment base. That is the reality of it—not the padded lists that have been handed out by parliamentary private secretaries to Conservative Members who are enjoying a short tenure of their north-eastern constituencies.
There are real problems in the north-east. Conservative Members agreed with the Government's policy to close the Consett steelworks, but it was producing the cheapest liquid steel in Europe. Why did the Government close it? It was closed because of the British Steel Corporation's stupid accountancy policies and because the Government believe that if we cannot make steel more cheaply than the subsidised steel of our overseas competitors we should import steel from them. For an island nation that is a very dangerous philosophy. If we do not have a steelmaking and shipbuilding capability and if we do not develop our indigenous energy resources, we shall be in strategic trouble. The sooner the Government realise that, the better.
It is no use the Government saying that this country can buy Korean steel because it is cheaper than steel that is produced by British companies. It is no use saying that the European Community's distribution of steel quotas is good enough. It is not. It has cost us dear. We are not pitting our traditional industries against the new technology industries. We need steel to make motor cars and other manufactured goods. To make steel we need coke, but the closure of the Derwenthaugh coke works in my constituency has been announced, with the loss of 300 jobs. It produces a third of the coke for the British steelmaking industry. If the Government are killing the cokemaking capacity by a third, they will cut the steelmaking capacity by a third. I warn those who make steel in other parts of the country that, because the Government have cut our steelmaking capacity, they will be in trouble.
The Labour party has policies to deal with this problem. A northern development agency is needed urgently. The billions of pounds that have been exported overseas since exchange controls were lifted by the previous Chancellor of the Exchequer must come back to this country and be invested in British jobs—not in Taiwanese, Korean or South African jobs. British money ought to be invested in Britain. The hon. Member for Darlington (Mr. Fallon) is
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right. Private capital is not being invested in the north-east. In 1979, £600 million of private capital was invested in the north-east. In 1982 it had been reduced to £300 million and, it is still falling. We need capital investment. However, the Government are exporting it overseas.
There is a simple solution to the economic problems of the north; get rid of this lot and elect a Labour Government—the sooner the better.
6.8 pm
Mr. Richard Holt: It is a privilege to follow two of the best speeches that I have heard since I became a Member of Parliament. They epitomise the differences in philosophy and outlook between my party and the Opposition over the problems of the north-east. There have been speeches from two young. vibrant Members of Parliament. They looked to the future. Their speeches were not based upon class warfare or historic concepts. They looked to the future and brought to it the kind of dimension that I should have liked to find in the speeches of Opposition Members, but we have heard from the Opposition only words of gloom and doom. They came from the hon. Member for Wansbeck (Mr. Thompson). That is part of the culture of the north-east which many of us are trying to eradicate, and the quicker we do that the better.
The hon. Member for Blaydon (Mr. McWilliam) wants to see changes in investment and at the same time he wants to claim the credit for Nissan coming to the north-east. Of course we want Japanese investment. We want multinational investment from all over the world. We want to make sure that there is an enterprise culture. We do not want that enterprise culture stultified at the end of the day by the dead hand of Socialism, which has been the ruination of the north-east for too many years.
Let me say something about Cleveland. Cleveland is a bureaucratic nightmare. Those who represent my part of it wish that they were still in Yorkshire and those who represent the other part wish they were still in Durham. [HON. MEMBERS: "Your Government created it."] We may have created it. We make mistakes, but I hope to God that we shall eventually get rid of it in the same way as we have got rid of Tyne and Wear, Greater Manchester, the GLC, and others. I have been on record several times as saying that I would like to get rid of Cleveland county council because it is a duplicated tier of local government which adds nothing to the economic welfare of the region. It is that stultifying hand of Socialism which creeps in. Conservative-controlled areas do not have special committees run by trade union officials and organised by trade unions to control the destiny of the local council and tell it what it can do.
I want to be fair. I do not want to suggest for one moment that the Labour party is entirely wrong or that the Conservative party is entirely right. That is also part of the culture problem that my hon. Friends referred to when they talked about the north-south divide being a political one. If Conservatives put forward an idea in my area, however well thought out and merited, that idea is knocked on the head straight away. It is not given proper thought, yet there might be a germ of a good idea there. That sort of thing does not enhance the area's economy.
Let me give a short example. A factory in my constituency wishes to expand and take on 20 people. It submitted a planning application to Langbaurgh council and was told that permission would be granted provided

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that the factory was relocated in South Bank—a Socialist ward. So that investment does not take place and there is no expansion. That happens on a large scale.
I do not want anyone to run away with the idea that Langaurgh does not have its success stories. I went to a factory the other day and was amazed to see a huge piece of metal. The managing director told me that it was a rib for a Trident submarine. When I went round the corner I saw some small pieces of metal, all worked in the same factory by the same excellent work force. I was told that they were the end cappings for motorway safety barriers. That sort of enterprise exists in the north-east if we can bring it out rather than knock it on the head with the planning and financial strictures which we enjoy from Socialism.
I must take issue with my hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Merchant) yet again, and I apologise for doing so for a second time. Newcastle is not the highest rated authority; it has the highest rate poundage. Unfortunately, it is my people who suffer from the highest rate. Last year ICI, a fundamental business in the area, had to pay £1 million in increased rates. How many jobs might ICI have been able to provide within the region if it had not had to produce £1 million for no extra productivity? That money had to be handed over straight away to those who run the county council. That council is doing important business on behalf of the people of Langbaurgh and of the north-east. It is using that money to go to Spain for a meeting of the nuclear-free zone international committee—£10,000 worth of ratepayers' money.
My constituency stretches across Langbaurgh council and Middlesbrough council. When I leave my home I am in Langbaurgh. When I reach the border between the two local authorities, signposts tell me that I am entering a nuclear-free zone. I am waiting for the retaliation from Langbaurgh county council in the form of a signpost saying "Now you are leaving it, thank God." The money wasted on such things by local authorities in the north-east is what drives businesses, industrialists and others away from the region.
Since I was elected I have written hundreds of letters to people asking them to consider investment in the north-east. I have extolled all the virtues which my hon. Friends have mentioned. But the industrialists are not prepared to come to an area where others interfere in the running of their businesses.
The hon. Member for Blaydon talked about the steel industry and the price of steel. He should accept that if we have to use high-price steel we shall make high-price cars and we shall not sell either the steel or the motor cars. That is why it is necessary for us to produce steel profitably and properly, and that is now done for the first time in many years.
Of course, one of the tragedies of the shake-out is that far too many people are unemployed. Here I look to my Government for more concern in the way in which we handle this transitional period. Seven years ago on south Teesside, two employers, ICI and British Steel, employed 47,000 people. Today they employ fewer than 20,000. Frankly, it is impossible for 27,000 people to become hairdressers and ice cream salesmen overnight. The Government should look again for ways in which they can ameliorate the problems of transition. It was that to which
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the Conservative party chairman referred and which the hon. Member for Easington (Mr. Dormand) mentioned when he talked of the lost generation. I lay much of the blame for that at the door of the Labour party, because it has not taken a proper lead in looking after the north-east. There has been low calibre leadership among the municipal authorities in the north-east for generation after generation. The people who come here are afraid of losing their electoral power base; they are not prepared to turn round and tell some of those in the municipal town halls in the north-east that they have got it wrong. The Labour party has had years in power, but there is only one area in which it has any political clout left at all, and that is the north-east, yet that is being rapidly dissipated. Labour Members will learn to their cost that they have neglected the north-east for too long.
It is because of the spirit of enterprise put in by the Conservative party to encourage entrepreneurs, having identified where the ratholes have been, that the people of the north-east are more and more turning to the Conservative party. We may not win the by-election on Thursday, but Labour Members will not be too pleased with the result either.
I said that the Government were not doing sufficient to assist in the transition. We should be looking at shipping, because the north-east had great pride in that industry and it employed great numbers. Successive Governments have allowed the shipping industry to run down and it is now in a parlous state. We should start doing something about that, thereby demonstrating what the Labour party could have done when it was in power. There are many problems that we are now having to put right, because former Labour Administrations spent and spent but achieved little.
Is the Japanese language being taught anywhere in the north-east? In other words, what is that region doing to encourage other than Nissan to go there? After all, Nissan is only one small jewel, whereas many more are needed in the crown of the north-east.
Mr. Fallon: Does my hon. Friend agree that the ports in the north-east would have a better chance of attracting international trade of the sort he is describing if they were able to opt out of restrictive arrangements, such as the dock labour scheme, and prove themselves as attractive as ports such as Felixstowe and others on the east coast?
Mr. Holt: My hon. Friend is absolutely right. [HON. MEMBERS: "Get on."] Opposition Members may complain about my having spoken for 12 minutes. Some of them spoke for much longer. They may not like to hear the facts of life from these Benches, but they will have to listen to them.
The House has heard success stories and the job potential of the Newcastle area. Other excellent developments are going on elsewhere, although they are not mentioned by Labour Members. They do not mention Whessoe, the development for offshore oil and the huge development on Teesside. Klingers will become the major gasket manufacturers in the world, and Tees Components is already a leader in industrial engineering.
Having said that, I cannot allow the Government to get away with it. I think of the revenue by way of BBC TV licences and wonder how much is spent in return in the north-east by the BBC. Why do we not have something akin to the PSA and other centralised Government services in the north-east?

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I conclude by not attempting to attribute blame 100 per cent. in either direction. We have a signpost to the future. It is clear that whatever the result on Thursday, the north will become a Conservative enterprise area, as is the whole of the midlands and the south of England.
6.23 pm
Mr. D. N. Campbell-Savours: The question that I put to the House tonight is simple. To what region does Cumbria belong? Historically, we have been linked to the north-east, yet the Departments covering industry, employment, transport and the environment, and the operations of the MSC, are now based in Manchester. The only remaining link with Newcastle and the north-east is in the sphere of health. Indeed, I am wondering whether in the ministerial box today there are any civil servants from the north-west region.
The message that I bring from Cumbria is a desperate one. Five years ago, whenever a closure occurred or redundancies were announced, inevitably a fight was put up by the workers at the plants concerned to try to defend their jobs. That climate of fight no longer exists. Far too many redundancies and closures now occur, with the work force resigned to the loss of their jobs. They seem unwilling to fight for the future of their employment. Perhaps they recognise the Government's inflexibility.
I do wish, however, not to dwell on the past but to look to the future and to the prospect of a Labour Government being in power from 1988. That Government will set about the restoration of a compassionate society in a three-stage approach to resolving the problems of unemployment. In Cumbria, we shall see the restoration of the community programme on a sensible basis.
Some interesting work has been done by Mr. Gavin Davies of city stockbrokers Simon and Coates. He found that for the expenditure of £1 billion on tax cuts, only 21,000 jobs would be produced; that if the £1 billion was spent on public infrastructural works, 382,000 jobs would be produced; that if the £1 billion was spent on health, education and current public expenditure, 65,400 jobs would be created; and that if the £1 billion was spent on the community programme on the basis followed by the Government in the last two years, nearly 500,000 jobs would be created.
Mr. Cecil Franks rose—
Mr. Campbell-Savours: I will not give way to the hon. Gentleman. The hon. Member for Langbaurgh (Mr. Holt) spoke for far too long.
If the next Labour Government pursue that approach and spend £1 billion, we shall be able at a stroke to cut unemployment in the county of Cumbria, and that will be but the first stage.
The second stage will be to deal with the wider area of public expenditure increases. We shall increase expenditure on housing development and improvements and on the development of sporting facilities, and we shall try to establish a more equitable arrangement in the use of public money in the north and north-west of England compared with the situation in Ulster, where there is gross inequilibrium with other parts of the United Kingdom.
We shall see major expenditure in public building works. In Cumbria, £4 million is desperately needed now for repairs to schools, and we need £2 million to cope with the backlog of repairs to hospitals. Indeed, to restore the
198
buildings in the hands of the county council to their former glory, we should need to spend £35 million. Yet in the budget last year, only £4·8 million was allocated when even to stand still we needed £11 million.
There are many public sector projects which the incoming Labour Government, following the next election, will support in the county of Cumbria. I can tell my electorate, and the 500,000 people throughout Cumbria, that the salvation of our county rests on there being a change of Government with the adoption of a brand new strategy based on the careful and selective use of public expenditure.
The third stage in Labour's new deal for the people of my county and of the northern region as a whole will be to set about the economic reconstruction of Great Britain. We shall have a real regional policy that deals with the underlying problems that have arisen not recently but in successive generations, problems that have been severely aggravated under Tory rule. That incoming Labour Government will take action on imports where at present there is much unfairness and injustice in international trade. We shall reconstruct a real policy on training and further develop schemes such as the YTS.
In the few minutes during which I have addressed the House I have explained how Labour will give a new deal to the people of the northern region. We are committed to putting them back to work. We intend to do that, and the sooner we have the opportunity to do it, the better. Our policies will be in the interest of all the people of Britain.
6.28 pm
Mr. Robert C. Brown: The House will forgive me if I begin my contribution on a personal note. I am angry. I have spent much of the past three weeks observing and taking a small part in the Tyne Bridge by-election campaign and in the Scotswood ward. The Scotswood ward is where I was born and bred, where I was married 40 years ago—and I still am married—and where my two children were born. Having my roots there, having lived there for 32 years, and having represented the area for 10 years as a city councillor and for almost 18 years as a Member of Parliament, I can reasonably claim to know the area and its people well.
During the past three weeks that I have been in the Scotswood area, it has grieved me to see the amount of degradation inflicted on the people there. The awful increase in hardship is evident in the faces of people who answer their doors to canvassers. In the past I could readily identify long-serving Conservatives in the Scotswood area, because there were not many of them. However, let me tell the Prime Minister that many lifelong Conservatives whom I met during the past three weeks told me that she had forfeited their vote in the by-election and that they would not support her candidate in any circumstances.
If the Government had not juggled the figures for lost deposits from 12·5 per cent. to 5 per cent. of the vote, the Tory candidate would lose her deposit. Indeed, I am not sure whether, with 5 per cent. of the votes needed to save a deposit, the Tories will not lose their deposit on Thursday. Tyne Bridge will exact a heavy price at the ballot box on Thursday for the treatment that they have received from "TBW" and her Government.
The debate is on the northern region, but I wish to discuss the economic problems of the city of Newcastle.

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Unemployment in Newcastle has reached an unprecedented high. It has doubled during the past eight years. In October this year, 25,794 people were unemployed in the city, whereas in 1976 there were 11,900. That is the measure of the disaster that the Government have wreaked. A year ago there were 7,300 people unemployed in Tyne Bridge. In 12 short months that figure has increased to 9,815. Can anyone justify the Government's record during the past five years?
New job opportunities have contracted to the extent that there are now 17 unemployed city residents for every notified vacancy. In 1976, the ratio was 7:1, which was far too high, but it was like paradise compared with today. In July this year, 46 per cent. of the unemployed in the city of Newcastle had been out of work for more than 12 months, compared with 3,500 who had been unemployed for that time during the Labour Government's tenue of office.
School leavers are the worst affected group, with only 16 per cent. entering permanent employment within three months of leaving school. That contrasts dramatically with the 1974 figure when more than 75 per cent. of summer school leavers were in employment by the end of September, only weeks after leaving school. The problem has continued to deteriorate since the Government were elected. Of a total of 12,200 redundancies in the Tyne and Wear county, there have been 2,337 in Newcastle in 1984–85.
I could continue, but that would be unfair to the Front Bench spokesmen, who need the time to reply to the debate. I leave the House with the message that the debate may be taking place at a propitious time, but that we do not need any debate to sweep away Tyne Bridge's Tory candidate on Thursday.
6.35 pm
Mr. Don Dixon: We have had a good debate today on the problems of the northern region that have been created by the Government's policies. My hon. Friends have made genuine speeches about genuine people, and they have made constructive points.
I congratulate my hon. Friend the Member for Easington (Mr. Dormand), who opened the debate with a magnificent and constructive speech. He talked about the development agency, which was in our 1983 programme and which the Social Democrats, two years later, have decided to follow, which is typical of the Social Democrats. My hon. Friend also made a point about aid for the arts.
My hon. Friend the Member for Carlisle (Mr. Lewis) discussed the problems in his area. My hon. Friend the Member for Wansbeck (Mr. Thompson) talked about the North-East County Councils Association and its report on the state of the region which all hon. Members representing constituencies in the northern region should read, if they have not already done so. My hon. Friend the Member for Blaydon (Mr. McWilliam) discussed employment in the Tyne and Wear county and mentioned a northern development council. My hon. Friend the Member for Newcastle upon Tyne, North (Mr. Brown) discussed the Tyne Bridge area and the city of Newcastle, which has tremendous problems. On Thursday, those problems will be drawn to the notice of the Government by the ballot box rather than by the brick as in other areas.
200
My hon. Friend the Member for Workington (Mr. Campbell-Savours) talked about the problems in the county of Cumbria.
We have heard one or two speakers from the Opposition, and one wonders, having listened—
Mr. Robert Atkins: Conservatives are not the Opposition.
Mr. Dixon: They will be shortly.
When I return to the north at weekends I wonder whether I am going back to the same area as before, because there is now massive unemployment and massive problems. It ill behoves some Conservative Members to lecture unemployed people in the north when they have two jobs themselves.
Our motion is about people who want the right to work but who are denied that right because of the Government's policies. It condemns the Government's deliberate policy of creating mass unemployment as an instrument of economic policy. Every week in my surgery I see out-of-work people who have suffered from the harmful effects of Government policies on family life. For the breadwinner, those policies mean acute financial hardship, worry and depression. For young people leaving school who are unable to find work, the effects are tedium and demoralisation, which in some cases lead to solvent abuse, to drug taking and eventually to crime.
Beyond Whitehall, in the northern region, there are real people living in the real world of bankruptcies and lay-offs. The region is the worst affected in mainland Britain, with 227,000 unemployed but only 11,000 vacancies.
We all welcome the coming of the Nissan plant, but, even if Nissan were to employ 2,000 people in a few years' time, it would take 120 Nissan plants to absorb the unemployed in the region. In its recent final recruitment phase, Nissan advertised 240 shop floor jobs at the princely wage of £6,700 a year—less than the sum hon. Members receive for their London accommodation. It expects 15,000 applications for those 240 jobs. That is the sort of thing that happens in the northern region. That is the truth about the north, not the nonsense that we have heard from some Tory Members and from the Minister.
In the north, we continue to have no control over our destiny. Since the Government were elected in 1979, more than 290,000 jobs have been lost in the region, and three in 10 of all manufacturing jobs have gone. In 1979, three quarters of north-east manufacturing employment was in firms controlled outside the region. Of the 43,000 manufacturing jobs lost in Cleveland, Durham, Tyne and Wear, Northumberland and Cumberland between 1979 and 1982, more than 80 per cent. were in externally owned firms. Many of the larger companies in the region do not have local purchasing programmes, which means that they bring in their materials from outside the region. That does not assist the development of smaller companies or service industries. Many of the subsidiary firms that have been established are only production units, and we have discovered to our dismay that they can be shut at a minute's notice.
Many of the unemployed in the north are long-term unemployed. They suffer most from the brutal impact of unemployment. They suffer from severe poverty, desperate demoralisation, the loss of self-respect and the loss of self-confidence. The strains of family life become intolerable, and marriages break up. That is the reality of the Government's policy.

201
I wish to read a letter from one of my constituents. It is better than any speech I have heard in the House. It states:
"Please help me, through no fault of my own, I have been out of work for over a year now. I assure you, sir, I have tried, I have looked for work. Within the last year sir, I have had over 52 formal interviews within south Tyneside and out, including places as far as Dover, Hull and London. Some of these interviews I've even hiked it."
He probably took the advice of the former Secretary of State for Employment and got on his bike. The letter continues:
"Even whilst I write this letter sir, I promise you I am seeking fitfull employment. I feel despair, I feel degraded, no longer a member of the human race."
That is what the Government have done. That is what long-term unemployment means. Although one Minister talked about high wages being a problem, the director of the north-east region low pay unit, A1 Rannie, claimed that more than half a million people in our area are low paid. The Minister talks about people pricing themselves into jobs, but what happens to the people who are priced out of jobs?
Of course, we relied on the traditional industries in our region for a long time. The steel industry at Consett, Hartlepool and Redcar has disappeared, and in Jarrow the last steel plant will close next year, with 240 men being thrown out of work without the hope of obtaining new jobs. The same thing has happened to the mining and power industries in our area. At one time, NEI Reyrolles of Hebburn employed 13,000 men and women. Indeed, the Labour candidate at the Tyne Bridge election, David Clelland, worked there for 22 years until he left two years ago. Only 2,000 people are employed there now.
One need only visit the River Tyne to see what has happened to shipbuilding. At one time one could walk from one bank of the river to the other across ships, but now there is hardly a ship on the river. It is no good telling the men that they priced themselves out of jobs. According to last year's financial report from British Shipbuilders, the Tyne shipyards made a profit of £13·3 million, so we cannot blame the workers on the Tyne for the problems there. It is economic nonsense to put a shipyard worker out of work. It costs £6,000 to put him on the streets, whereas the Government accept that it costs them only £3,000 in subsidies for each shipyard worker on the Tyne.
The shipbuilding industry is not dying. For as long as Britain is an island, it will need a shipbuilding industry and a ship repair industry to maintain its fleet.
We have heard a great deal from the Minister and from Tory Members about the new tech industries. I assisted my hon. Friend the Member for South Shields (Dr. Clark) with a problem at Plessey, in his constituency. It paid off 600 people, and at the same time as we met the Prime Minister to discuss the matter, Plessey used Government grants to open a plant in Plymouth that will employ 600 people. That is an example of the problems with which we have contended for many years.
In addition to all our problems, regional aid has been cut. In 1984, regional aid to industry was cut by £28 million. The resources for the English Industrial Estates have been cut. Its money was frozen following the Government's decision to divert money to the west midlands, which resulted in the axing of plans to build much-needed factories in the north at a cost of £3 million. Schemes at Sunderland, Longbenton and in my
202
constituency of Jarrow have had to be dropped. That is what has happened to the resources that the Government claim are being pumped into the north.
Local authority spending has been cut. For each of the past six years, the Government have cut financial support to local authorities, which are among the biggest employers in the area. The biggest employer in my constituency is south Tyneside council. Compared with the rate support grant of 1979—
Mr. Keith Best rose—
Mr. Dixon: Sit down. Go and take a car ride or something.
Compared with the rate support grant in 1979, Newcastle has lost £240 million and Gateshead has lost £123 million. That has been repeated all over the area. When the former Secretary of State for Employment talked about people getting on their bikes, he meant the young and active; but when they get on their bikes to look for work they cannot take with them community centres, old people's homes or libraries, which must be paid for by the rest of the people. Yet at the same time the Government are cutting resources.
Housing investment has been slashed. The hon. Member for Newcastle upon Tyne, Central (Mr. Merchant) talked about housing. In Gateshead, the housing budget has been cut by £82 million, and in Newcastle it has been cut by £130 million. In 1979, when I was chairman of the housing committee of south Tyneside council, its HIP allocation was £14·7 million. This year, it is £6·2 million—[Interruption.] It is no good the hon. Member for South Ribble (Mr. Atkins) looking at the clock. If his hon. Friends had not spoken for so long, we should have been finished by 7 o'clock. There is no way that I will sit down early.
Had south Tyneside maintained the 1979 figure, it would have needed £27 million in real terms this year. Those who desperately need assistance in the north are being denied it because of the Government's policy.
Adding to the devastation that their policies have wreaked on our communities, the Government, without inquiry or investigation, decided to abolish Tyne and Wear county council and remove the safeguard of a caring and active council that has been a powerful defender of jobs in public transport in our area. When one switches on the television and sees the Prime Minister shedding tears about her father, Alderman Roberts, losing his council seat because of the Labour party, one wonders how many tears she has shed for the hundreds of decent councillors who will be sacked because the Government wish to abolish the metropolitan county councils and the GLC.
The Transport Act 1985 has jeopardised the best transport system in Britain—the Tyneside metro. The Government have refused to guarantee that pensioners in the area will continue to be provided with valuable and much-needed concessionary passes. I challenge the Minister who will reply to the debate to guarantee that the concessionary passes held by pensioners in the Tyne and Wear area will be maintained.
The Government's new board and lodging regulations are a special insult to the young. On 13 November, The Journal in Newcastle carried an article headed,
"Young 'to be forced out for Christmas'."
It stated:
"Up to 1,000 youngsters in the North will be forced to leave their homes just two days before Christmas because of the new

203
DHSS regulations on board and lodgings … Housing aid leaders throughout the region have condemned the new laws and say it will mean hundreds of youngsters wandering the streets looking for accommodation."
That is an example of what the Government have done to the area, and to Tyne Bridge, where the election will be held on Thursday.
Some youngsters went to the recent Tory party conference to present a petition about the board and lodging regulations. One of those youngsters was a Gateshead lad who lived in Tyne Bridge. In a letter—
Mr. Holt rose—
Mr. Dixon: I think that the hon. Member for Langbaurgh (Mr. Holt) wishes to make an intervention. It will not take him long to find his place after the next general election. He will be back on the GLC if there is a chance for him there.
As I was saying before I was interrupted, the youngster in my constituency said:
"I am a Gateshead resident. I live here, my friends are here and my family live here, my life is in Gateshead. Yet the Government tell me to move to another part of the country every four weeks or lose my benefit."
My constituent then goes on to say—this is a message for the youngsters of Tyne Bridge—
"First they took our future, then they took our jobs, now they want our homes."
That is what the Government are doing to the Tyne Bridge area.
The by-election on Thursday will allow the people of Tyne Bridge to say what they feel about Tory party policy and about the Government's policies since 1979. As I said earlier, the people will decide and send their message via the ballot box rather than the brick. I have no doubt that on Thursday the people will do just that and sweep Dave Clelland in with a massive majority.
6.52 pm
The Parliamentary Under-Secretary of State for Employment (Mr. Alan Clark): I recognise the depth of feeling and concern with which the hon. Member for Jarrow (Mr. Dixon) has spoken and which affects hon. Members who represent constituencies in the northern region. I have been in the Chamber throughout the debate and listened to all the speeches. I shall do my best to deal with as many of the points raised as possible in the time left to me.
There is general recognition that the region's problems are deep-seated and long-standing and that they have their origins long before the Government took office. The region has depended on traditional industries that have suffered setbacks over the past 20 years. World recession, technological change and market shifts have led to more than 200,000 jobs being lost. There has had to be a fundamental change from the old industrial pattern to new technologies.
The hope for the region's future is to be found in the new technologies and the second industrial revolution. Many of my hon. Friends have given examples of how progress is being made and new jobs created on these fronts. For example, 16,000 people are now engaged in electronics and 5,000 in pharmaceuticals. The £3 million CADCAM computer centre in Middlesborough will bring a further 5,000 jobs to the region.
204
I realise fully that the flavour of the impending by-election has run through many Opposition speeches today. For that reason, the Opposition are more than usually averse to hearing good news. But a volume of good news has been cited by Conservative Members who represent constituencies in the area.
The hon. Member for Stockton, South (Mr. Wrigglesworth) was the first hon. Member to be called after the Front Bench spokesmen. He began with a rather prim reproach to Labour Members for couching their assault in terms of the impending by-election. He then moved smoothly and characteristically into a strongly party political by-election speech of his own. He argued for the establishment of new businesses and suggested, as an example, that a fashion designer might establish new jobs in the area. That is a perfectly reasonable argument. He followed that with certain ritual arguments about new technology, but rather spoiled his case because his crash programme for establishing that was conspicuously uncosted. He concluded by making a plea for re-establishing a manufacturing base in the area.
That was the customary alliance specification for doing something for everybody and pleasing everybody who might listen to his speech. It was, in fact, the most overt of all the by-election speeches made this evening.
My hon. Friend the Member for Tynemouth (Mr. Trotter) rightly drew attention to the advantages of the area in communications, industrial relations and the cheapness of land for industrial development, and he recorded his wish for a regional industrial executive for co-ordination. I understand that my right hon. and noble Friend the Secretary of State for Employment has agreed to meet my hon. Friend to discuss that matter.
The hon. Member for Carlisle (Mr. Lewis) made an extremely interesting point. He mentioned that in the 1930s there were many small family firms in the area and little unemployment. He recounted how the small firms had been swallowed up by the great combines and how small businesses had disappeared, resulting in an increase in unemployment due to their vulnerability to factors outside immediate local control. The hon. Gentleman will be pleased to hear that there are now 87,000 self-employed people in the region. That figure is more than 50 per cent. higher than when the Government took office and new business registrations are running at more than 5,000 a year. That figure, too, is rising and well exceeds business failures.
My hon. Friend the Member for Darlington (Mr. Fallon), in an excellent speech, rightly drew the distinction between public and private money. He, too, drew attention to the strengths of the area—its cheap land, space for development and its loyal and efficient work force.
The hon. Member for Wansbeck (Mr. Thompson) argued somewhat on the lines of my hon. Friend the Member for Darlington, for a regional dimension. He referred to the North-East County Councils Association and the excellent work that it has done. I have attended meetings of that association in London. It always couches its arguments in a most temperate and constructive way, and certainly played a part in Nissan's decision to go to Washington.
My hon. Friend the Member for Newcastle upon Tyne, Central (Mr. Merchant), also in an excellent speech, gave an interesting historical perspective on responsibility for the north's decline over many years. His catalogue of new jobs, however, was most impressive. It was significant

205
that the hon. Member for Jarrow tried to drown out my hon. Friend's recitation. That is a testimony to how uncomfortable the speech made the Opposition feel.
The hon. Member for Blaydon (Mr. McWilliam) at least made some attempt at a constructive argument, but when the unspoken question of where the money was to come from was asked, he replied that it should come from compulsory repatriation of sterling from abroad. I took that to be a slightly more exaggerated expression of the views which the shadow Chancellor formulated a month ago but which have since been discredited.
A splendid and robust declaration of war against the Cleveland county council was made by my hon. Friend the Member for Langbaurgh ( Mr. Holt), who revealed to the House the political gerrymandering that blighted the flourishing of enterprise in his constituency.
The hon. Member for Workington (Mr. Campbell-Savours) was flagrant about the amount of expenditure that he wished to see. He expected an extra £1 billion to be spent on the community programme and an enormous nation-wide increase in public expenditure, but with the scrapping of Trident and enormous job losses in that work force. The hon. Member for Newcastle upon Tyne, North (Mr. Brown) made a completely party political by-election speech with virtually no constructive elements in it whatsoever.
As I review the arguments of the Opposition, I find a depressing absence of any constructive solutions to the problems for which they are so ready to apportion blame. No solution has been offered which has not been tried before or is not tainted with the same inflationary and dirigiste dogma, the certain end result of which is to reduce the economic prospects not just of the region but of the whole United Kingdom and to undermine the efforts of those in the region who are seeking to attract new business and new jobs.
Many of my hon. Friends drew attention to the advantages of the area—communications, cheap land and lower housing costs. As for the qualities of the people, I can do no better than quote the words of the hon. Member for Hartlepool (Mr. Leadbitter) in the Adjournment debate on 22 October. He said:
"History has recorded the nature and character of the people. There are no doubts about their industry, tenacity and tolerance. There is an abundance of evidence of their adaptability and responsiveness to change."—[Official Report, 22 October 1985; Vol. 84, c. 270.]
In the end, it will be those very qualities that will pull the region out of its difficulties into sustainable growth and low unemployment.
I invite the House to support the Government amendment.
Question put, That the original words stand part of the Question:—
The House divided: Ayes 182, Noes 280.

Division No. 15]

[7.00 pm

AYES

Adams, Allen (Paisley N)

Barron, Kevin

Alton, David

Beckett, Mrs Margaret

Anderson, Donald

Beith, A. J.

Archer, Rt Hon Peter

Bell, Stuart

Ashdown, Paddy

Benn, Rt Hon Tony

Ashley, Rt Hon Jack

Bennett, A. (Dent'n & Red'sh)

Ashton, Joe

Bermingham, Gerald

Atkinson, N. (Tottenham)

Blair, Anthony

Bagier, Gordon A. T.

Boyes, Roland

Banks, Tony (Newham NW)

Bray, Dr Jeremy

Barnett, Guy

Brown, Gordon (D'f' mline E)

206

Brown, Hugh D. (Provan)

Jones, Barry (Alyn & Deeside)

Brown, N. (N'c'tle-u-Tyne E)

Kaufman, Rt Hon Gerald

Brown, R. (N'c'tle-u-Tyne N)

Kennedy, Charles

Brown, Ron (E'burgh, Leith)

Kilroy-Silk, Robert

Bruce, Malcolm

Kirkwood, Archy

Buchan, Norman

Lambie, David

Caborn, Richard

Lamond, James

Callaghan, Rt Hon J.

Leighton, Ronald

Callaghan, Jim (Heyw'd & M)

Lewis, Ron (Carlisle)

Campbell, Ian

Lewis, Terence (Worsley)

Campbell-Savours, Dale

Litherland, Robert

Canavan, Dennis

Livsey, Richard

Carlile, Alexander (Montg'y)

Lloyd, Tony (Stretford)

Carter-Jones, Lewis

Lofthouse, Geoffrey

Cartwright, John

Loyden, Edward

Clark, Dr David (S Shields)

McCartney, Hugh

Clarke, Thomas

McDonald, Dr Oonagh

Clay, Robert

McKay, Allen (Penistone)

Clwyd, Mrs Ann

McKelvey, William

Cocks, Rt Hon M. (Bristol S.)

MacKenzie, Rt Hon Gregor

Cohen, Harry

Maclennan, Robert

Cook, Frank (Stockton North)

McNamara, Kevin

Cook, Robin F. (Livingston)

McTaggart, Robert

Corbett, Robin

McWilliam, John

Crowther, Stan

Madden, Max

Cunliffe, Lawrence

Marek, Dr John

Cunningham, Dr John

Martin, Michael

Dalyell, Tam

Mason, Rt Hon Roy

Davies, Ronald (Caerphilly)

Maxton, John

Davis, Terry (B'ham, H'ge H'l)

Maynard, Miss Joan

Deakins, Eric

Meadowcroft, Michael

Dewar, Donald

Michie, William

Dixon, Donald

Mikardo, Ian

Dobson, Frank

Mitchell, Austin (G't Grimsby)

Dormand, Jack

Morris, Rt Hon A. (W'shawe)

Douglas, Dick

Morris, Rt Hon J. (Aberavon)

Duffy, A. E. P.

Nellist, David

Eadie, Alex

Oakes, Rt Hon Gordon

Eastham, Ken

O'Brien, William

Ewing, Harry

Park, George

Fatchett, Derek

Patchett, Terry

Faulds, Andrew

Pavitt, Laurie

Field, Frank (Birkenhead)

Pike, Peter

Fields, T. (L'pool Broad Gn)

Radice, Giles

Fisher, Mark

Randall, Stuart

Flannery, Martin

Redmond, M.

Foot, Rt Hon Michael

Rees, Rt Hon M. (Leeds S)

Forrester, John

Richardson, Ms Jo

Foster, Derek

Roberts, Ernest (Hackney N)

Foulkes, George

Robertson, George

Fraser, J, (Norwood)

Robinson, G. (Coventry NW)

Freud, Clement

Rogers, Allan

George, Bruce

Rooker, J. W.

Gilbert, Rt Hon Dr John

Ross, Stephen (Isle of Wight)

Godman, Dr Norman

Rowlands, Ted

Golding, John

Ryman, John

Gould, Bryan

Sheerman, Barry

Gourlay, Harry

Sheldon, Rt Hon R.

Hamilton, James (M'well N)

Shore, Rt Hon Peter

Hamilton, W. W. (Fife Central)

Short, Ms Clare (Ladywood)

Hancock, Mr. Michael

Short, Mrs R.(W'hampt'n NE)

Harman, Ms Harriet

Skinner, Dennis

Harrison, Rt Hon Walter

Smith, C. (Isl'ton S & F'bury)

Haynes, Frank

Soley, Clive

Healey, Rt Hon Denis

Spearing, Nigel

Heffer, Eric S.

Steel, Rt Hon David

Hogg, N. (C'nauld & Kilsyth)

Stott, Roger

Holland, Stuart (Vauxhall)

Thomas, Dafydd (Merioneth)

Home Robertson, John

Thompson, J. (Wansbeck)

Howells, Geraint

Tinn, James

Hoyle, Douglas

Torney, Tom

Hughes, Dr. Mark (Durham)

Wainwright, R.

Hughes, Robert (Aberdeen N)

Wallace, James

Hughes, Roy (Newport East)

Wardell, Gareth (Gower)

Hughes, Simon (Southward)

Weetch, Ken

Janner, Hon Greville

Welsh, Michael

Jenkins, Rt Hon Roy (Hillh'd)

White, James

John, Brynmor

Williams, Rt Hon A.

Johnston, Sir Russell

Winnick, David

207

Wrigglesworth, Ian

Tellers for the Ayes:

Young, David (Bolton SE)

Mr. Sean Hughes and

Mr. Ray Powell.

NOES

Adley, Robert

du Cann, Rt Hon Sir Edward

Aitken, Jonathan

Dunn, Robert

Alexander, Richard

Durant, Tony

Alison, Rt Hon Michael

Dykes, Hugh

Amery, Rt Hon Julian

Edwards, Rt Hon N. (P'broke)

Amess, David

Evennett, David

Ancram, Michael

Eyre, Sir Reginald

Ashby, David

Fairbairn, Nicholas

Aspinwall, Jack

Fallon, Michael

Atkins, Robert (South Ribble)

Farr, Sir John

Baker, Rt Hon K. (Mole Vall'y)

Fenner, Mrs Peggy

Baker, Nicholas (Dorset N)

Fletcher, Alexander

Banks, Robert (Harrogate)

Fookes, Miss Janet

Batiste, Spencer

Forman, Nigel

Beaumont-Dark, Anthony

Forsyth, Michael (Stirling)

Bellingham, Henry

Forth, Eric

Bendall, Vivian

Fowler, Rt Hon Norman

Benyon, William

Fox, Marcus

Best, Keith

Franks, Cecil

Bevan, David Gilroy

Fraser, Peter (Angus East)

Biggs-Davison, Sir John

Freeman, Roger

Blackburn, John

Fry, Peter

Blaker, Rt Hon Sir Peter

Galley, Roy

Body, Richard

Gardiner, George (Reigate)

Bonsor, Sir Nicholas

Garel Jones, Tristan

Boscawen, Hon Robert

Gilmour, Rt Hon Sir Ian

Bottomley, Peter

Glyn, Dr Alan

Bottomley, Mrs Virginia

Goodhart, Sir Philip

Bowden, A. (Brighton K'to'n)

Goodlad, Alastair

Boyson, Dr Rhodes

Gorst, John

Braine, Rt Hon Sir Bernard

Gow, Ian

Brandon-Bravo, Martin

Gower, Sir Raymond

Bright, Graham

Grant, Sir Anthony

Brinton, Tim

Gregory, Conal

Brittan, Rt Hon Leon

Griffiths, Sir Eldon

Brooke, Hon Peter

Griffiths, Peter (Portsm'th N)

Brown, M. (Brigg & Cl'thpes)

Grist, Ian

Browne, John

Ground, Patrick

Bruinvels, Peter

Grylls, Michael

Bryan, Sir Paul

Gummer, Rt Hon John S

Buchanan-Smith, Rt Hon A.

Hamilton, Hon A. (Epsom)

Buck, Sir Antony

Hamilton, Neil (Tatton)

Budgen, Nick

Hampson, Dr Keith

Bulmer, Esmond

Hannam, John

Butcher, John

Haselhurst, Alan

Butler, Rt Hon Adam

Hawkins, C. (High Peak)

Carlisle, John (Luton N)

Hawksley, Warren

Carlisle, Rt Hon M. (W'ton S)

Hayes, J.

Carttiss, Michael

Hayhoe, Rt Hon Barney

Cash, William

Hayward, Robert

Chalker, Mrs Lynda

Heathcoat-Amory, David

Chapman, Sydney

Heddle, John

Chope, Christopher

Henderson, Barry

Churchill, W. S.

Hicks, Robert

Clark, Hon A. (Plym'th S'n)

Higgins, Rt Hon Terence L.

Clark, Dr Michael (Rochford)

Hind, Kenneth

Clark, Sir W. (Croydon S)

Hirst, Michael

Clarke, Rt Hon K. (Rushcliffe)

Hogg, Hon Douglas (Gr'th'm)

Clegg, Sir Walter

Holland, Sir Philip (Gedling)

Cockeram, Eric

Holt, Richard

Colvin, Michael

Hordern, Sir Peter

Conway, Derek

Howard, Michael

Coombs, Simon

Howarth, Alan (Stratf'd-on-A)

Cope, John

Howarth, Gerald (Cannock)

Cormack, Patrick

Howell, Rt Hon D. (G'ldford)

Couchman, James

Howell, Ralph (Norfolk, N)

Cranborne, Viscount

Hubbard-Miles, Peter

Critchley, Julian

Hunt, David (Wirral)

Crouch, David

Hunt, John (Ravensbourne)

Currie, Mrs Edwina

Hunter, Andrew

Dickens, Geoffrey

Irving, Charles

Dicks, Terry

Jackson, Robert

Dorrell, Stephen

Johnson Smith, Sir Geoffrey

Douglas-Hamilton, Lord J.

Jones, Gwilym (Cardiff N)

Dover, Den

Jones, Robert (Herts W)

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Joseph, Rt Hon Sir Keith

Shelton, William (Streatham)

Kellett-Bowman, Mrs Elaine

Shepherd, Colin (Hereford)

Kershaw, Sir Anthony

Shepherd, Richard (Aldridge)

Key, Robert

Shersby, Michael

King, Roger (B'ham N'field)

Silvester, Fred

Knight, Greg (Derby N)

Sims, Roger

Knowles, Michael

Skeet, T. H. H.

Knox, David

Smith, Tim (Beaconsfield)

Lamont, Norman

Soames, Hon Nicholas

Lang, Ian

Speller, Tony

Latham, Michael

Spence, John

Lawrence, Ivan

Spencer, Derek

Lawson, Rt Hon Nigel

Spicer, Jim (Dorset W)

Leigh, Edward (Gainsbor'gh)

Squire, Robin

Lennox-Boyd, Hon Mark

Stanbrook, Ivor

Lester, Jim

Stanley, John

Lewis, Sir Kenneth (Stamf'd)

Steen, Anthony

Lightbown, David

Stern, Michael

Lilley, Peter

Stevens, Lewis (Nuneaton)

Lloyd, Ian (Havant)

Stevens, Martin (Fulham)

Lord, Michael

Stewart, Andrew (Sherwood)

Luce, Richard

Stewart, Ian (Hertf'dshire N)

MacKay, Andrew (Berkshire)

Stokes, John

MacKay, John (Argyll & Bute)

Stradling Thomas, Sir John

McNair-Wilson, M. (N'bury)

Sumberg, David

Major, John

Taylor, John (Solihull)

Malone, Gerald

Taylor, Teddy (S'end E)

Mather, Carol

Temple-Morris, Peter

Maude, Hon Francis

Terlezki, Stefan

Mawhinney, Dr Brian

Thomas, Rt Hon Peter

Maxwell-Hyslop, Robin

Thompson, Patrick (N'ich N)

Mellor, David

Thorne, Neil (Ilford S)

Merchant, Piers

Thornton, Malcolm

Miller, Hal (B'grove)

Thurnham, Peter

Miscampbell, Norman

Townend, John (Bridlington)

Moate, Roger

Townsend, Cyril D. (B'heath)

Monro, Sir Hector

Trippier, David

Montgomery, Sir Fergus

Trotter, Neville

Morrison, Hon C. (Devizes)

Twinn, Dr Ian

Morrison, Hon P. (Chester)

Vaughan, Sir Gerard

Moynihan, Hon C.

Viggers, Peter

Neubert, Michael

Waddington, David

Newton, Tony

Wakeham, Rt Hon John

Nicholls, Patrick

Waldegrave, Hon William

Page, Sir John (Harrow W)

Walden, George

Page, Richard (Herts SW)

Walker, Bill (T'side N)

Parkinson, Rt Hon Cecil

Waller, Gary

Parris, Matthew

Walters, Dennis

Pattie, Geoffrey

Wardle, C. (Bexhill)

Peacock, Mrs Elizabeth

Warren, Kenneth

Portillo, Michael

Watson, John

Powley, John

Watts, John

Prior, Rt Hon James

Wells, Bowen (Hertford)

Pym, Rt Hon Francis

Wheeler, John

Rhodes James, Robert

Whitfield, John

Robinson, Mark (N'port W)

Wiggin, Jerry

Roe, Mrs Marion

Winterton, Mrs Ann

Rossi, Sir Hugh

Winterton, Nicholas

Rost, Peter

Wolfson, Mark

Rowe, Andrew

Wood, Timothy

Rumbold, Mrs Angela

Woodcock, Michael

Ryder, Richard

Young, Sir George (Acton)

Sackville, Hon Thomas

Younger, Rt Hon George

Sainsbury, Hon Timothy

Sayeed, Jonathan

Tellers for the Noes:

Shaw, Giles (Pudsey)

Mr. Donald Thompson and

Shaw, Sir Michael (Scarb')

Mr. Peter Lloyd.

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 53 (Questions on amendments), and agreed to.
Resolved,
That this House recognises the particular problems the Northern region has faced in the transition from old to new industries and fully endorses all the Government policies which have taken into account these particular problems in creating the proper basis for sustainable growth and thus lower level of unemployment generally and, in particular, those policies

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providing special assistance to the Northern region and deplores the Opposition's continuing attempts to undermine the efforts of those in the region seeking to attract new businesses and new jobs.

Silentnight plc
Mr. Deputy Speaker (Mr. Harold Walker): Mr. Speaker has selected the Prime Minister's amendment.
7.13 pm
Ms. Clare Short: I beg to move,
That this House gives its fill support to the employees of Silentnight plc who are on strike; notes that the workforce of the company have shown great forbearance in the face of an aggressive and obdurate management, that the union agreed to forgo a claimed pay rise for three months in return for an undertaking by the company of no further redundancies, but that the company broke the agreement eight weeks later by declaring another 52 employees redundant and that the present strike was supported by a ballot of the workforce; condemns the company for refusing a union offer to submit the dispute to binding arbitration and for dismissing those on strike; further notes that the company's claim that it cannot afford a pay rise costing £210,000 in a year fits oddly with its ability to pay out dividends to family shareholders of £700,000; and calls upon the company to lift the dismissal notices and negotiate, and upon the Government to use its influence to bring an end to this dispute.
I begin by making it clear that my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), deeply regrets his absence tonight and has asked me to put on record for the House and the Silentnight workers his regret that his duties have taken him elsewhere.
We have chosen to debate this dispute partly because we and the Silentnight workers want a settlement of this six-month dispute. We believe that if the Government were willing, they could use their influence to settle the dispute. We do not accept the Government's amendment and their suggestion that they find the dispute regrettable. If they did, they could use their influence to bring the dispute to an end.
We also wish to debate the dispute because of its wider implications. We want to know whether there are the kind of industrial relations the Government are now seeking. We hear much about a new atmosphere in industrial relations and about management's right to manage. We want to know whether the Government intend to return us to 19th-century industrial relations and to the bitterness and conflict that we see in the Silentnight dispute. We are all aware of examples of this style of industrial relations from our own constituencies.
In my constituency there was a similar bitter dispute that ended some months ago at Kenwal Brothers in Middlemore road. It lasted 19 weeks. It was a small textile workshop with appalling conditions and illegal rates of pay. The workers learned that the rates were illegal and that there were such things as wages councils which were meant to protect them. They learned of their rights, and it was not because the wages inspectorate came to inspect the offices. The workers joined a trade union. The owner conceded the minimum rates under the wages council and shortly afterwards deliberately provoked a dispute which lasted 19 weeks.
At the request of the workers, I was involved in meetings with the owner. He told me that he deeply regretted the dispute, that everything that he had built up in his working life was now lost and that he would have to sell up. Once the mostly Asian women workers at Kenwal Brothers decided that they could not go on with their strike, the owner reopened his business and took on more workers, as I understand it, at illegal rates of pay. Again the wages inspectorate has not intervened. We have

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a strong sense of community in Ladywood, however, and the owner is finding it difficult to obtain enough workers. My hon. Friend could tell similar stories of a deterioration of industrial relations which the Government seem to describe as an improved atmosphere.
The Silentnight dispute has been going on for six months. It has caused enormous hardship to those who are on strike and has also caused the company's first loss. The half-yearly figures published in October showed an £828,000 group loss compared with a £1·1 million profit for the same period last year. The company, it seems, is willing to damage its financial interests as well as the livelihoods of its 346 workers, for purely ideological reasons.
The Government may wish to claim that the dispute has nothing to do with them. That is the implication of the amendment that they seek to move tonight. That claim does not stand up to scrutiny when we look at the record of the company, its involvement with the Conservative party and the record of Ministers and their entanglement with the company.
Mr. Robert Atkins: The what?
Ms. Short: I shall come to what I am implying. Mr. Tom Clarke, who is a chairman of the company, is a member of the Conservative party and was until recently president of the Skipton Conservative association. His links with the Tory party got him an OBE from the present Government for services to industry. It also got him a visit from the Prime Minister—certainly a Minister—in 1983, who described him as "Mr. Wonderful". We want to know from the Minister tonight whether the Government still consider him and his industrial relations policy wonderful.
Even worse, in the Adjournment debate on 6 November initiated by my hon. Friend the Member for Burnley (Mr. Pike), the Under-Secretary of State for Employment, the hon. Member for Rossendale and Darwen (Mr. Trippier)—we notice that he is not answering for the Government tonight and wonder whether that is some form of an apology—defended the management of the company and gave a misleading account of the dispute, taken, we believe, from a misleading company briefing published for the purpose of that debate. He made some wild and unsubstantiated allegations about violent conflict in the course of the dispute. Much of this was misleading and untrue. It is likely that some of it will be repeated this evening so my hon. Friend the Member for Burnley will deal with the allegations in some detail later.
Mr. Dave Nellist: My hon. Friend referred to allegations of violence or intimidation—at least, that was the implication of her words. Is she aware that, after the 5,000-strong rally on Saturday in Barnoldswick in support of the strikers, Mr. David Marshall, the regional official of the Furniture, Timber and Allied Trades Union, was attacked and injured by two men with sticks? If pickets had attacked management representatives, right hon. and hon. Members on the Government Front Bench and every Tory newspaper in Britain would have been talking about or reporting acts of violence and intimidation. When union officials are on the receiving end of sticks, there is total silence from Ministers and Tory newspapers.
Ms. Short: I was not aware of that, and I am grateful to my hon. Friend for having put the matter on the record.
In the Adjournment debate to which I have referred, the Minister cannot claim that he was being impartial about the dispute and expressing the regret that the Government claim in the amendment that the dispute has been continuing for some time. He made no attempt to encourage conciliation and a settlement. Indeed, he said that the Prime Minister was right to praise Mr. Clarke, and added:
"We need more people like Tom Clarke."—[Official Report, 6 November 1985; Vol. 86, c. 103.].
I shall tell the House what the local newspaper, the Lancashire Evening Telegraph—
Mr. D. N. Campbell-Savours: That is a good newspaper.
Ms. Short:—thought of the remarks of the Minister, the hon. Member for Rossendale and Darwen. Its editorial of 8 November reads:
"What kind of employment minister is the one likely to appear more responsible—one who seeks to end a strike or one who fans the flames of the dispute?
We ask this because of the apparently crass and partisan behaviour of Rossendale and Darwen MP Mr. David Trippier, No. 2 at the Department of Employment"—
I do not know whether the Minister is No. 2 in the Department—
"during the Commons debate into the bitter, 22-week dispute at the Silentnight works at Barnoldswick, where some 500 employees were sacked after striking over a pay claim.
For we believe Mr. Trippier comes out of it very badly—in seeming to take sides and so wasting the opportunity to use his office to get both sides together. He is sufficiently experienced to know that no dispute is ever solved by intransigence, but his line in the debate can only prolong that attitude.
If his stance were prompted by a belief that the public generally does support governmental moves to curb over-reaching trade union power, he has made the mistake of going too far into the realm of pure union-bashing, something which, we believe, goes beyond most people's idea of political responsibility.
So in declaring his support for this employer and saying that the country needs more like it, Mr. Trippier overlooks the fact that firms cannot thrive in the atmosphere of polarised industrial relations and that it is the duty of a responsible employment minister to promote the alternative."
We hope that tonight we may get a rather different attitude from the Department of Employment.
The history of the dispute is well known. There have been articles in The Guardian, The Times and the Daily Mirror and a programme on Channel 4. That is quite remarkable for a relatively small localised dispute. It is surprising that it received such strong national coverage. Perhaps the reason is that the injustice is so gross. It is a typical example of the shifting mood in industrial relations which the Government seem anxious to promote.
In January 1985, the company asked the workers to forgo a wage increase for between three and four months to avoid job losses. The workers agreed to that. In April 1985, the company reneged on the deal and declared 56 redundancies. The workers accordingly requested their pay increase. The company refused and said that it could not afford to pay it. The trade union made inquiries to ascertain whether that was true and undertook some research. It found that the claim was false.
It found, first, that from January 1984 to January 1985 the company made a profit of £595,000; secondly, that the Silentnight group of companies made a profit of £2·5 million; thirdly, that the chief executive of the company,

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Mr. Tom Clarke, received a £5,000 a year increase, bringing his salary to £50,000 a year; fourthly, that a family trust called Famco, which is composed of Mr. Tom Clarke and immediate members of his family, received £646,000 this year in dividends from group profits; and, fifthly, that it would have cost only £250,000 over 12 months to pay the members of the union their nationally agreed wage rise. These are the economic facts of the dispute.
In May, there was a ballot at the company on the refusal to honour the award. The result was that 352 workers voted for industrial action and 203 against out of a work force of 700. The ballot produced a 3:2 majority in favour of industrial action. The company remained obstinate and refused arbitration on a number of occasions. Despite what the company is putting out in its briefings and what the Under-Secretary of State, the hon. Member for Rossendale and Darwen, said in the Adjournment debate, the union declared itself willing to go to arbitration in the absence of any terms. It did so because it was not possible to reach agreement on terms. The union has been anxious throughout the dispute to go to arbitration and the company has refused to do so.
As a result of the failure to come to an agreement, a go-slow started on 10 June. Again, the workers were anxious not to strike. They decided merely to take some action to promote negotiations with the management. Immediately the go-slow started, shop stewards were summoned by the management and told that if the workers were not working normally in 10 minutes, they would be suspended and sent home. The result was that 200 were suspended. The remaining workers walked out. Three factories came to a standstill and, in July, 346 workers received dismissal notices. They are still on strike.
Those workers want—and we want—the Government to use their substantial influence with the company to arrive at a settlement and get the workers back to work. Are the Government willing to use their influence in that way? Is the Minister willing to say that he thinks that the dismissal notices should be withdrawn and that there should be negotiations? If he is not, we are forced to conclude that this is an example of the industrial relations that the Government are trying to promote and that this is what they mean by management's right to manage. If that happens, we know that there will be more and more bitter conflicts of this sort throughout the land which will bring benefit to no one.
7.28 pm
The Parliamentary Under-Secretary of State for Employment (Mr. Peter Bottomley): I beg to move, to leave out from "House to the end of the Question and to add instead thereof:
"notes with regret the recent industrial dispute at Silentnight plc.".
The hon. Member for Birmingham, Ladywood (Ms. Short) started by apologising for the absence of the hon. Member for Kingston upon Hull, East (Mr. Prescott). If the turnout in the Tyne Bridge by-election is reduced from that at the general election, I am sure that he would not want all the credit to be given to him. If that is where he is, I hope that the weather is not too cold or wet.
Mr. Doug Hoyle: The Minister is wet.
Mr. Bottomley: I listened to what the hon. Lady had to say—
Mr. Robert Atkins: Perhaps I should tell the House that my hon. Friend the Member for Pendle (Mr. Lee) would like to express his apologies for his absence. He has been very ill in hospital and has undergone a major operation. He has not yet returned to the House. I think that his apologies should be recorded as the Silentnight dispute affects him and some of his constituents.
Mr. Bottomley: My words have been taken out of my mouth, but I suspect that that may happen on several occasions this evening. I am grateful to my hon. Friend.
I am sorry but not surprised that some of the versions of the events preceding the dispute are not accepted on all sides. There are different points of view. As the hon. Lady acknowledged, with less elegance than I would have expected of her, the Government's amendment is neutral. We do not believe that to make such disputes matters of major party controversy helps their resolution. I do not think that it is useful if either side says, "We shall fight, fight and fight whatever the cost."
As the hon. Member for Ladywood has said, the House has had an opportunity to debate the matter. On 6 November, my hon. Friend the Member for Rossendale and Darwen (Mr. Trippier), the Under-Secretary of State, noted some of the facts. The report of that debate shows that some of the facts were disputed by the hon. Member for Burnley (Mr. Pike). We may hear more from the hon. Gentleman when he replies on behalf of the Opposition. Since the dismissal notices were issued, the company has said that it considers the dispute to be over. I am aware that many of the workers who were dismissed hope to bring their cases before an industrial tribunal, and we shall have to see what view is taken of these matters. I would not wish to anticipate or prejudice the tribunal's rulings.
It seems that there are three main areas where the facts are in dispute. During the early part of the year, when asking the work force to forgo any wage increase for a short period because of financial difficulties, the company said that it undertook to avoid any job losses if possible. The union claims that there was a no redundancy guarantee.
The union believed that the increases in the minimum rates provided for in the national agreement and finally conceded by the company after the ballot would be reflected in increases for all workers. The company believed that by that concession it had honoured the national agreement in full, and refused to extend the offer to pieceworkers.
Attempts have been made to put the matter to conciliation. I understand that the parties have not been able to agree to the terms of reference. The hon. Member for Blackburn (Mr. Straw) said on 6 November that the company had offered to put the matter to conciliation on
"terms of reference that were wholly impossible for the union to accept."—[Official Report, 6 November; Vol. 86, c. 102.]
I do not know what those terms were, but equally it could be said that the union could not accept conciliation on the terms offered by the company.
The hon. Member for Ladywood called on the Government to intervene and, in effect, impose the Advisory, Conciliation and Arbitration Service on the parties in the dispute. I remind the hon. Lady that it was a Labour Government who made ACAS legally independent of the Department of Employment. If I can

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put it this way, they privatised it, or hived it off. Now they want the Government to renationalise it by telling it what to do.
Although the Labour party cannot seem to make up its mind, the Government have no doubts. Arbitration and conciliation can play a useful role in problems where both the employer and the union wish them to be involved. Both sides in the Silentnight dispute have had an opportunity to take advantage of the services of ACAS. They have failed to agree on what basis ACAS should be involved, if at all. How would we be able to solve that problem by forcing ACAS on them, even if we could? Governments cannot force ACAS on a party, but there are lessons that we can all learn from the sad events that we have been discussing tonight.
Mr. Campbell-Savours: Is the Minister trying to dissociate himself from the actions of the company? Do I sense that he wishes to condemn the company for what it is doing? Will he be more forthcoming?
Mr. Bottomley: Yes, especially if it means that the hon. Gentleman will not intervene again but will wait to catch Mr. Deputy Speaker's eye to develop his own points.
We had a debate in which both sides of the argument were put. I do not believe that the Labour party was saying that all the right was on one side or that my hon. Friend the Under-Secretary of State was saying that all the wrong was on one side. Any reasonable reading of the debate will demonstrate that. I am trying to show those who are unfortunately involved in the dispute and those who may be involved in similar disputes that the solutions usually lie in their own hands.
In an industrial relations conflict, there are normally losers. Often the losers are on both sides of the argument. As many people have discovered over the years, it is better to resolve disputes before they become of interest to the House, the Morning Star or other newpapers. Once they become celebrated causes, things are normally lost on both sides.
We know that a ballot was held. I am glad about that. That is one of the few redeeming features of the sorry tale, even though the question on the ballot paper did not make it clear, as the Trade Union Act 1984 requires, that the industrial action proposed would involve the union members in a breach of their contracts of employment. The holding of a ballot can in no way protect workers from the consequences of following a course of action that cannot fail to put their jobs at risk. The Government's aim is to give union members the right to be consulted before taking that risk. In this case the union did not make its members fully aware of the possible consequences.
One of the lessons to be learned is that union officials have a duty to be open with their members and to lay all the facts and considerations before them.
Ms. Clare Short: They did.
Mr. Bottomley: The hon. Lady says in a quiet voice, "They did." She cannot deny that the question on the ballot paper called for support for action up to and including a strike. [Interruption.] The hon. Member for Workington (Mr. Campbell-Savours) should stick to the terms of our agreement and keep quiet until I have finished my speech.
I strongly believe that employees can and must be told the truth and be responsible for their own decisions. They
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are in the same position as employers. If union officials, whether lay or full-time officials, fail in that duty they may sacrifice their members' jobs at a time when many people would be grateful for any opportunity to be usefully and gainfully employed.
I could go on at length and develop a theme that I think is important—keeping unit wage costs competitive. I shall leave that to the end if hon. Members are interested. If the hon. Member for Workington wants me to deal with that, perhaps he will ask during his speech, if he catches your eye, Mr. Deputy Speaker.
It is important not only for unions to be open with their members but for employers fully to inform and involve their employees in the running of the business. Employee involvement, workplace participation, building up trust and shared information between employer and employee is not an optional extra; it is the best way of doing business. It is also one of the ways, when developed over the years, to ensure that when an employer says something employees know that it is meant, and vice versa. Unions should be clear, not only with their members but with the employers.
Successful concerns are usually the ones that properly use the full potential of the people they employ. The better informed the work force, the less likely it is to take any action that would endanger its own prospects or the future of the company, or both, because they are normally bound together. Increased awareness leads to an increased sense of responsibility.
The hon. Member for Ladywood has mentioned the wider implications. In a broader context, the Department of Employment has produced figures that show that the number of working days lost through strikes last month was the lowest for 10 years. That is good news for all of us. With inflation falling, national output increasing and the number of people in work rising steadily, there is the opportunity for industry to compete effectively at home and abroad. That good news must not obscure or overlay the truth. Strikes will always put jobs at risks, as has happened in this sad case. There are seldom winners, and there are often losers.
In this case, the workers have lost their jobs and the management has lost part of its skilled and experienced work force. I do not think it is any comfort to the management, employees or ex-employees that the business is now being discussed in this forum.
The dispute could be seen as a throwback to the bad old days of the 1960s and 1970s when unions thought that they could use power over employers, perhaps without thinking as deeply as they should or without due regard to the longer-term consequences.
Mr. Nellist: In defining this dispute in terms of robber baron trade unions holding power over healthy management, the hon. Gentleman should be aware that the union at Silentnight has been in existence for only 21 months. It was formed in February 1984 after months of attacks by management on the conditions and wages of the workers. It is not a plot by the union; it is the response of a work force that overwhelmingly admitted that in 1983 most of its members voted for the Government.
Mr. Bottomley: I shall respond to the hon. Gentleman in two ways. First, I think that he must have been listening to what I have said with his mouth rather than with his ears. I hope that he will refresh his memory tomorrow by

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reading the Official Report. Secondly, I acknowledge that the building and organisation of a union is seldom easy and that building a business is never easy. [Interruption.] The hon. Member for Workington interrupts again. He keeps making promises that he cannot keep. I suggest that he takes a course in business because he will discover that, both on the union side and on the management side, people saying things that they live up to is important. That may be one of the lessons to be learnt from the dispute.
The Government make no apologies for prodding the employers and the unions into the 1980s, reluctant though some may be to come along. We have given union members the right to be consulted before they put their jobs at risk by striking. The Labour party opposed giving union members the right to choose, and sometimes gives the impression that it is trying to obscure the consequences of their choice.
The dispute is also a throwback in another way. When the Government habitually intervened, in the days of beer and sandwiches at the 11th hour, both sides of industry came to believe that the Government could and would rescue them from the consequences of their actions. That belief fuelled bad industrial practices and irresponsible industrial acton. It would be damaging to recreate that atmosphere now when we have fought so hard to change it.
Last month, my hon. Friend the Under-Secretary drew attention to the success of Silentnight over so many years, saying that that was because of the virtues of management and of work of the people employed in the firm. I hope that the future holds the prospect of continued profitability for the company, with all that that will mean for its employees and the local community. In our concern for those dismissed—people are concerned—we must not allow ourselves to he stampeded into any course of action that might destroy the real achievement involved in building up and establishing an important business. That achievement stems from a sense of individual responsibility, not reliance on Government, good communications over many years between management and workers, which was acknowledged in the article in The Times by the hon. Member for Blackburn, and their voluntary partnership towards a shared aim—the continued viability of the company and their jobs. That joint approach depends upon the freely given consent of employers and their employees, and not on directions laid down by Government.
Our general approach is not to intervene in particular disputes. After the debate last month, I do not wish to endorse either side's case in the unfortunate dispute that we are discussing. Our role is to seek to provide a general framework that makes for good industrial relations and minimises the danger brought about by such disputes for all concerned.
ACAS is available to conciliate and arbitrate and I understand that it has been ready to assist at any time should it be invited by both parties to do so. This is the right approach because disputes such as that at Silentnight are best resolved by the employer and the workers concerned. I regret that they have not been able to settle matters themselves without the loss of jobs and all the attendant bitterness that that produces.
7.42 pm
Mr. Doug Hoyle: I am also sorry that the hon. Member for Pendle (Mr. Lee) is not here. I
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know that he has been seriously ill. I hope that he makes a complete recovery and is soon back among us. The company is in his constituency. He knows it well and was associated with it, and I wanted to ask him some questions.
I wanted to speak in the debate because from 1974 to 1979 I represented the constituency of Nelson and Colne, which is now Pendle. There is at least one of Mr. Clarke's factories in Nelson and Colne. I was well aware of Mr. Clarke's activities, particularly his political activities on behalf of the Conservative party. He was known for being anti-trade union. The last things that he wanted in his factories were trade unions. He is on record as saying that if any of his factories were unionised, he would close them. The unions had great difficulties in getting themselves established in the factories, and one must ask: was he not waiting for the chance to smash the unions and return to being a non-union company? The Minister did not address himself to that matter. If he makes any more speeches like the one he made, he will be known as the Uriah Heep of politics—
Mr. Peter Bottomley: The hon. Gentleman should know.
Mr. Hoyle: If I should know, at least I have sat at the feet of your father-in-law. I wish that you had taken a few lessons from him—
Mr. Deputy Speaker: He is not my father-in-law.
Mr. Hoyle: He is not your father-in-law, Mr. Deputy Speaker. I cannot go into your history, but I know that you have a proud record in many ways.
Unlike the previous Minister, the present Minister has not come out purely on the side of the employer. His was a more reasonable speech than that. He was not prepared to say that the company should go to arbitration, yet that followed from all that he said. He explained that ground rules have been laid down for trade unions, and they must hold a ballot before a strike. The union complied with that requirement. A ballot was held, and the ballot paper said that the union was asking permission from the members to take action leading up to strike action. The overwhelming majority of the employees supported the union. Given that the union did what the Government laid down, the least that the Minister could say to the employers, using his influence and that of his Department, was that they should go to arbitration.
Mr. Gary Waller: I should like to correct the hon. Gentleman. He said that the overwhelming majority of employees voted for action leading up to strike action. It is true that it was a majority of those voting, but does the hon. Gentleman accept that the number voting in favour was 301 out of the total number employed of approximately 850? In other words, it was just over one third of the total number of employees, not the overwhelming majority.
Mr. Hoyle: The figure that I have is that 540 out of 800 gave the union the mandate that it asked for. The ground rules were obeyed, but the Government still criticised the trade union. It is no wonder that one has the impression that the Government are purely anti-trade union. They are prepared to defend anti-trade union companies. That is what Mr. Clarke's company is.
Mr. Peter Thurnham: Will the hon. Gentleman give way?
Mr. Hoyle: I do not want to give way to too many hon. Members, but I always give way to those with knowledge of trade unions.
Mr. Thurnham: I should like to assure the hon. Gentleman that, in the opinion of trade unionists who voted Conservative at the election, the Government are not anti-trade union.
Mr. Hoyle: I can only say that not as many trade unionists will be voting Tory at the next election. They have learnt their lesson from the Government's actions. I am sure that many of those in Silentnight who voted for the Conservatives will not fall into that trap again.
The company said that it had a loss over the half year, but failed to explain that it would have cost just over £200,000 to settle the employees' claim. The company can afford to pay nearly £700,000 into a trust for the Clarke family. Indeed, Mr. Clarke is one of the highest-paid company directors in the United Kingdom. The company has been built up by the work force. Surely the rewards should be spread a little more evenly, some of it going to the employees.
Those of us who visited the two factories in Sutton and Barnoldswick noticed the different attitudes of the police. In Barnoldswick, there are good relations between the strikers and the police. Indeed, the police were commended. In Sutton, a small village in Yorkshire, we saw police with dogs trying to intimidate the strikers, although it is an official strike.
I hope the Government will think again, will see the justification of the strikers' case, and will say that the way the strikers have been treated is not good enough. The unions reached agreement with the employer that there would be no redundancies and that the employees would forgo a pay increase. When there was an announcement that there were to be rendundancies, 58 workers volunteered for redundancy. That was not good enough for the company; it would have only eight of those people. What happened later? When there was a go-slow the company said that the workers had to return to work and step up productivity. The company sacked 200 workers. If that was not provocation, I do not know what is.
Why do the Government take such a one-sided attitude to the dispute? It is said by some Conservative Back Benchers that the Government are not anti-trade union. If so, why do they not prove it? For once why do they not say that the employer is wrong? Why do they not point out in the House that the dispute should go to arbitration? If they do not, one can only reach the conclusion that there is one law for Mr. Clarke and another for trade unions. That is not the way to maintain good industrial relations.
Mr. Clarke's aim seems to be to starve the workers back to work and to smash the trade union. Is that what the Government want? They should come clean. We do not want any more statements such as we have heard about a little bit of this and a little bit of that. Let us have a clear statement that the Government will tell the employer that he should go to arbitration and let an independent arbitrator decide the merits of the case.
7.51 pm
Mr. John Watson: I am grateful for the opportunity to participate in the debate because Silentnight is one of the most significant employers in my constituency. In January, before the dispute began, the
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company was providing jobs for 930 people in South Craven and West Craven. Approximately 200 of those jobs were in Sutton-in-Craven in my constituency and the remainder were at Barnoldswick, customarily referred to as Barlick for those who do not know. That town used to be in Yorkshire when I had the honour to represent it in the House.
Mr. Michael Meadowcroft: Does the hon. Gentleman accept that although administrative boundaries may change, it does not mean that geographical boundaries change? Places which were in Yorkshire stay in Yorkshire. Anyone born in Barlick may still play cricket for Yorkshire.
Mr. Watson: I am tempted to follow the red herring offered by the hon. Gentleman. What he has said is correct. For certain important purposes, such as cricket, the boundaries of Yorkshire remain unchanged.
Following the vagaries of the boundary commission, Barlick finds itself in Lancashire where it is represented with distinction by my hon. Friend the Member for Pendle (Mr. Lee), to whom I spoke on the telephone earlier today and who will be back in his office on next Monday.
The impact of Silentnight upon the local economy in Craven has been enormous. Both Sutton and Barnoldswick have suffered from the decline of the textile trade generally since the war. In addition Barnoldswick has seen a large reduction in the number of jobs in Rolls-Royce. Craven is not a natural distribution centre for Britain, and we cannot usually offer generous regional aid, yet unemployment in Craven is no higher than the national average and it tends to be slightly lower than the regional average. In large measure that is due to the jobs provided by Silentnight.
The rise of Silentnight since 1950 has insulated the area effectively against the decline in other industries. It is illusory to believe that such growth was just a happy accident. It occurred largely because of the commercial and marketing skill of Tom Clarke. It would not have happened if the owners of the company had not declined to take any dividends until the company went public in 1973. It would not have continued if the Clarke family had not waived over £1 million worth of dividends since 1973 to support the capital base of the company.
Mr. Thurnham: My hon. Friend has spoken about the decline in the textile industry. Does not the example of Laura Ashley show that we are not short of entrepreneurs who can find growth opportunities and that there are plenty of opportunities if only people will look for them?
Mr. Watson: My hon. Friend is correct. Silentnight is an industry immediately adjacent to textiles. It has been an adequate replacement for the textile industry in my part of the country.
The dispute in the factory, uncharacteristic of the company's history, is of major concern to all in the community. I am sure hon. Members on both sides of the House will understand that my concern as a local representative is solely to try to ensure that the dispute is ended as quickly and amicably as possible. Therefore, I need to question what possible purpose can be served by the debate.
It will not have escaped the notice of the House that I am not a member of the shadow Cabinet, but few prizes need to be awarded for guessing the discussion which led to the motion being put on the Order Paper. I suspect that

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a sincere desire to end the dispute was probably not the most prominent factor. My guess is that instead the hon. Member for Kingston upon Hull, East (Mr. Prescott) will have given it as his opinion that it is a political opportunity to embarrass the Government.
Throughout the dispute I have had the doubtful privilege of hearing a number of speeches from Opposition Members. I do not make the allegation against all of them, but upon hearing quite a few of them, I have been left with the simple conclusion that they do not like successful people, rich people and particularly rich people who are friends of the Conservative party.
Mr. Campbell-Savours: I ask the hon. Gentleman the same question as I asked the Minister. Does he condemn what has happened? Does he condemn the approach adopted by Mr. Clarke? Does he feel it was wrong?
Mr. Watson: I am coining to the brief history of the dispute.
Mr. Campbell-Savours: We do not want the history; we want an answer.
Mr. Watson: The hon. Gentleman will have a full opportunity later to participate in the debate.
Some aspects of the management's handling of the dispute in the early stages left a considerable amount to be desired, but from the mid-point of the dispute I do not believe that such allegations can be made against the management of the company.
It is apparent that some Opposition Members like ballots for strikes which result in support for strike action; above all, they like to have an opportunity to embarrass the Government. I do not doubt that such sentiments are sincerely held, but they are unlikely to be of much constructive use in settling the dispute.
I have followed the dispute closely from the outset. As I have just acknowledged, I am forced to agree that in the early stages the management's conduct left something to be desired. The quality of communication with the employees was inadequate. Communication by management with the media was minimal. Areas of doubt were allowed to arise when positions should have been absolutely clear. However, what was very clear was the company's letter of 4 July to all employees. Similarly clear was the letter of 17 July. Those letters left the strikers in no doubt that employees who did not return to work on 22 July would be in breach of their contract and would be dismissed.
Of course, such information should have been included on the ballot paper. It was not. All credit should be given to the management for bringing that fact to the attention of its employees before the crucial date of 22 July. Originally there were 490 strikers. After 22 July there were still 350. Apparently the union had advised its members that the management was bluffing. Clearly that advice was incorrect.
Opposition Members have made clear the terms upon which they would like to see the dispute settled—all the strikers should be re-employed; a significant pay rise should be awarded; and only a small number of redundancies, all voluntary, should be allowed to take place. I honestly wonder just whose interest would be served by a settlement on those lines.
Of the 350 strikers, 100 have obtained jobs elsewhere. Presumably, they would have little interest in such a
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settlement. Of the 350 jobs previously filled by strikers, 200 have been filled by new employees. Many of them are now permanent.
Mr. Nellist: Scabs.
Mr. Watson: The hon. Gentleman says, "Scabs." Having honestly taken up an offer of employment, those employees would be out on the streets—
Mr. Nellist: Is the hon. Gentleman aware that pressure has been brought on unemployed workers by local jobcentres? They were told that if they did not accept the vacancies advertised at Silentnight they would lose their dole money. I would condemn pressure being put on workers to take such jobs, and I ask them not to do so. Will the hon. Gentleman ask the Government and the Minister why the jobcentres are being used as pressure points to protect that employer?
Mr. Watson: I cannot understand how the hon. Gentleman can regard that as pressure. By their own hand, the employees were dismissed in July. Their jobs became vacant and were advertised. I fully understand the attitude of a jobcentre manager who says that unless someone is prepared to fill such a job eligibility for social benefit would be lost. What about the 570 Silentnight employees who are not on strike? Would their long-term interests be served by a pay award higher than the company can afford to a work force greater than it needs?
Finally—and I ask this question with care — what about the Labour party's interests? There was a rally in Barnoldswick last Saturday which was attended by 2,500 people, most of them, apparently, from outside the town. Well over 50 per cent. of the people carried the newspapers, banners, badges and insignia of the Militant Tendency. One placard stated:
"Tom Clarke you rich scumbag we will get you."
The violence and picketing at the Sutton mill in my constituency has been alarming and dangerous to the residents of the village. For the Labour party to ally itself so closely with a cause fought with such tactics must call into question the validity of the current Labour campaign against militants within its ranks.
Industrial action against the company has not succeeded, and it is unlikely to succeed now. The most honest advice that can be given to the strikers who still sincerely hope for their jobs back is that such action can serve little further purpose. The only thing which will bring higher pay and more jobs at Silentnight is a return to the company's previous prosperity.
8.2 pm
Mr. Michael Meadowcroft: I say at the outset that my right hon. and hon. Friends will support the motion. I say that because, when I make some critical comments, it may well serve me in some good stead if those around me realise that I shall be supporting the motion. There is instinctive sympathy for the underdog. Having considered the facts of the case, there is no doubt that the balance of right and justice lies with those who are on strike and out of work.
It would not be wise to follow the hon. Member for Skipton and Ripon (Mr. Watson) and look for ulterior motives for this motion. One of the problems of politics is having to try to avoid looking at what is in people's hearts and minds and rather to listen to what they say. If

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the debate is to help the position in Barnoldswick or Sutton-in-Craven, it is desperately important to take on trust what people say and not to try to look for something behind what they say.
It will not serve the cause of the people involved in the industrial dispute if Conservative Members who offer some sympathy and who criticise some of the decisions are permanently barracked by Opposition Members. That is then seen as a sign of weakness. It is difficult to see what the debate can achieve if such entrenchment continues. It will do no good for the strikers and those involved in the dispute if we merely assert that one side is totally right and one is totally wrong.
The dispute seems to illustrate, only too vividly, the antiquity of many of our industrial relations procedures and the problems that exist out in the sticks in places such as Barnoldswick and Sutton-in-Craven. This kind of dispute and problem is repeated in many parts of the country. Such disputes are outside the ordinary processes of big business and the conglomerates, which in some ways are detrimental to the processes but which can often deal with them because they have the skilled personnel.
As soon as the dispute is taken over by people who want to make something of it, the position becomes entrenched. It ceases to be a matter which can be easily bridged. The second stage is the escalation of the dispute. There are those people who wish to make something more political out of it and try to say that the dispute illustrates all that is wrong between labour and management.
Thirdly, we have the exploitation of the dispute by those who wish to make political capital out of it. That is not just true of the far Left as the hon. Member for Skipton and Ripon said; it is equally true of the far Right. Any suggestion that the blame is all one-sided is to the detriment of resolving all the great difficulties that exist in this microcosm of what is wrong with our industrial relations.
The dispute illustrates vividly the danger of giving party accolades to those who may appear to be temporarily successful in business. We have seen that with the Government before, with Sir Freddie Laker. We now see it with Mr. Tom Clarke. If any lesson is to be learned, it is that we should take care when giving a pat on the head to such people.
I suspect that the dispute has a history of promises that could not be kept or were not intended to be kept. There is an argument about the terms of arbitration and a refusal to refer the matter to ACAS. The Silentnight management's refusal to refer the matter to outside independent arbitration stands out. I had expected to hear from the Minister rather more positive advice to the management to refer the dispute to ACAS. Even the Minister regretted that there had been a failure to refer the matter to arbitration.
I find intolerable the antipathy to unionism shown by Mr. Tom Clarke and Silentnight's management. History has shown that it is a benefit to us as an industrial nation to have good labour relations. I am sure that the hon. Member for Skipton and Ripon is aware of that from his experience of Waddingtons. We shall only have success as a nation if there are good relations with the trade unions and an acceptance of the legitimacy of having union officers inside a business to deal with the day-to-day
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problems that occur. I cannot accept the firm's apparent failure to accept unionism. I also find the company's lack of openness about its financial status reprehensible.
Mr. Peter Bottomley: Like most people, I regret that we are debating a particular company's dispute. I wonder whether the hon. Gentleman could help the House by supplying some information from those who are on strike and those who have been dismissed. He speaks from somewhere in the middle. Were they led to believe that the management was not in earnest when it said that if they did not return to work they would be dismissed?
Mr. Meadowcroft: I understand from those who are on the spot and who have advised me that the workers accepted at face value what they were told about the company's financial state. They then felt themselves betrayed by the dividend paid to the family. I suspect that that was one of the factors that exacerbated the dispute substantially. The workers felt that the financial status of the company was not on the table for all to see. I suspect that that was a running sore in the dispute, which has become worse ever since.
At first I, like the Minister, pondered whether this was a proper and helpful subject for debate. If we concentrate our minds on business relationships and trade union status, we may learn lessons from the debate which will be helpful in other disputes, even if they are not constructive for the Silentnight dispute. I suspect that Tom Clarke miscalculated the consequences of his actions regarding the financial openness of the company. In saying to workers, "We must have 52 redundancies, and you must forgo a pay increase because of the company's finances," and later providing huge dividends to his family, he must have wholly misconceived how the work force would respond. That has contributed greatly to the dispute.
The matter is not entirely one-sided. A newspaper report states:
"There was never any trouble until they got the union in. The strikers will tell you that."
That comes from 7 Days, which is a new Communist party newspaper. It was prepared to say that, and to examine the dispute carefully. The most balanced account of the dispute may well come from that newspaper. It is important to recognise that the matter is not one-sided, and that there are problems across the company floor. [Interruption.] I paused for response because it was bound to come.
What will happen now? How can the dispute be resolved? I share the anxiety of the hon. Member for Skipton and Ripon that it is not sensible to threaten to sack the new workers. One may call them names, say that they should not have accepted the jobs in the first place, or refer to the duress that they were under, but the solution to the dispute is not to sack those who have now been employed permanently. We should also bear in mind that a significant number of those who were originally on strike have found new jobs.
It is desperately important that both sides of the House should unite on one view, if on no other: we should recommend Tom Clarke and the management to refer the dispute openly and without strings to ACAS. The problem has been exacerbated, but one way to heal the rift may be to recommend that course of action.
We should learn that such conflicts benefit no one. Three hundred and fifty-two people have lost their jobs, and the profits of the company have turned to losses. No

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one has benefited. It is dangerous to believe that we can resolve such problems by legislation alone. I do not believe that we can pass laws which ensure good relations between management and the work force and change people's hearts and minds. Those in managenent must take workers into their confidence, and workers must trust management and be prepared to accept that they have a joint relationship which works co-operatively rather than adversarily. If we learn that lesson from the debate, we shall have learnt a great deal.
8.13 pm
Mrs. Elizabeth Peacock: During the past few months there have been many questions and early-day motions on the Order Paper on this subject, and we recently had an Adjournment debate about it. I am appalled at the way in which Silentnight or any other company, and Mr. Tom Clarke or any other family, can be and have been attacked recently. Some Labour Members have used the dispute to make attacks on a company and individuals who have absolutely no means of replying effectively.
Mr. Max Madden: Will the hon. Lady declare her interest?
Mrs. Peacock: I shall declare my interest in a moment.
I am also appalled that such attacks on a company can be made in the House, whatever the issue. Such action cannot be helpful either to the company or to those who have lost their jobs.
It is disgraceful that hon. Members should make attacks on members of a family who are not involved in the company. They may be shareholders, but they are not directors, with the exception of Mr. Tom Clarke. The members of the Clarke family cannot defend themselves. As Members of the House of Commons we may from time to time wish to take up issues on the affairs of a particular company or an individual, but we should not attack members of a family who are not directly involved in the issue.
At this stage I shall declare my interest. I have a Silentnight company in my constituency called Lay E Zee which has a large factory in Batley, I am the National Bedding Federation parliamentary consultant, and a small shareholder in Silentnight. I have not met Mr. Clarke or any member of his family during the past 40 years.
Mr. Nellist: Did the hon. Lady say that she was the parliamentary adviser to the National Bedding Federation, and that she has not met Mr. Tom Clarke for more than 40 years? Is it not a fact that Silentnight is the biggest single member of the National Bedding Federation? What sort of job is she doing on its behalf if she has not visited its largest company?
Mrs. Peacock: I have not met Mr. Clarke or his family for the past 40 years, and I have contact with the National Bedding Federation.
I am in a unique position in the House. Forty years ago, as a seven-year-old schoolgirl, I used to pass Mr. Tom Clarke and his wife in his corner shop repairing mattresses. He lived in a small, humble district of Skipton, which is where his large business started. I remind Labour Members that they do not hold the monopoly for humble beginnings. Many Conservative Members and company chairmen know only too well the problems and tribulations of a shaky start in life.
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Mr. Clarke may have been lucky, and he may have been in the right business at the right time, but he is an entrepreneur, who for many years has been able to back his judgment and build up a good, thriving business. Hon. Members should not forget that he had to work hard during those 40 years. An analysis of how the business has been built up shows clearly that it can be attributed to his entrepreneurial flair, and, more important, the willingness of the Clarke family to leave their money in the business year after year.
I do not intend to get involved in the rights or wrongs of the dispute. However, I wish to point out that 700 people at the firm are working hard to complete full order books and to put it back on profit before the end of the financial year.
There have been accusations that no pay rise was forthcoming and that the family shareholders received £700,000 in dividends. That is not correct. For the trading year 1984, workers at Silentnight received a 5·5 per cent. pay increase, or £5·25 across the board per week. In that period the interim dividend was 1p per share. The final dividend for that year was 1·75p per share, which makes a total dividend during that period of 2·75p per share. That was not an increase on the dividend paid the previous year, and it is hardly a great killing for investors. For the year 1985, while an increase in minimum rates of pay was agreed, no interim dividend will be paid. That is hardly a massive payout for the small investor. We need to invest in our manufacturing base.
It is interesting to note that Silentnight merchandise is today sold at prices similar to those in 1979, and that is hardly a massive increase of profit. Hence the need for product innovation and strengthening of the market.
It is also quite useful to note that any increases in minimum rates of pay do not automatically trigger off other increases. The Silentnight factory at Barnoldswick appears to be the only major company on the two sites that has had problems in this matter, even though it stance is in line with that of other manufacturers.
We must all have sympathy with those who were on strike and have lost their jobs. That cannot be wished on any individual or his family.
Mr. Campbell-Savours: I ask the hon. Lady the question that I have asked two previous Tory speakers. Does she condemn the management for what it has done? Does she believe that what it has done is in any way wrong, or does she support it? The National Bedding Federation has a number of members, and many of Silentnight's competitors have condemned what has happened.
Mrs. Peacock: As my hon. Friends have said, the hon. Gentleman will have his opportunity to take part in the debate.
Mr. Campbell-Savours: What is the hon. Lady's position?
Mrs. Peacock: The important point to me is that this business exists at all and—
Mr. Campbell-Savours: What is the hon. Lady's view?
Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman must not keep shouting questions from a sedentary position.
Mrs. Peacock: The business has developed over the past 40 years to provide employment.
I know Barnoldswick and Sutton-in-Craven well and, as my hon. Friend the Member for Skipton and Ripon (Mr. Watson) said, Silentnight has created jobs in an area that has seen a decline in the textile industry. Silentnight has grown over the years and provided employment for people in areas that badly need employment.
We should not forget that the main reason for the growth of Silentnight is that the Clarke family has had faith in the bedding industry, in the marvellous work force in the districts, and in the company, and has left its money in the business. I would go so far as to suggest that over the years the family could have sold those shares to an investment company in the City and lived a life of ease and luxury, but it did not do so. It chose to invest in the local work force.
It is grossly unfair of Labour Members to attack a family in this way when its members cannot reply. It might interest the hon. Member for Workington (Mr. Campbell-Savours) to know that the National Bedding Federation was not aware of the debate taking place and no approach was made to me. Britain depends on entrepreneurs for our manufacturing industry and we need those who are prepared to work hard and to develop the business and jobs. The sooner that Labour Members get that into their heads, the better.
8.22 pm
Mr. Dennis Skinner: We should make it clear that Labour Members have good reasons for wanting to raise this issue. Unlike Liberal Members, we are not in a quandary as to what to do at the end of the debate.
Mr. Meadowcroft: I am not in a quandary.
Mr. Skinner: The hon. Gentleman is already intervening. I can tolerate the heckling, although his hon. Friends do not like it. He seems to spend his time hiding away from the leader of the SDP, reading Communist literature and finding himself unable to speak clearly on behalf of a group of workers who, in the main, are on low pay.
The hon. Member for Skipton and Ripon (Mr. Watson) said that he could not understand why the Labour party had tabled this motion for debate. There are several reasons for this. In the first place, we are dealing with an area of Yorkshire and an area in Lancashire that are, by and large, areas of high unemployment. When we talk about the real issues in Britain today, we cannot avoid talking about the misery of the dole queue. These two factors, in areas where hitherto there were many textile mills and other forms of employment, are now experiencing a factory owner who is exploiting the situation. As there is high unemployment, especially among the Asians, he is carrying out the Thatcherite policy right down to the letter.
Secondly, we are concerned because, as these are areas of high unemployment, the almost natural corollary is that they are areas of low pay. The Labour party has to be seen, even if the Liberal party is not, to make it plain to the rest of Britain that we are concerned about those people who are not getting £170 a week as average wages—that is the figure that is usually trotted out by the Treasury Bench—but about people who have difficulty in making ends meet even when they are in work.
The third good reason why we should argue that it is proper and right for a debate to take place on this subject
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is that these workers have carried out trade union legislation to the letter. The Under-Secretary of State for Employment claims on most subjects to be a wet, and he did not know how to disguise that fact when he made his opening speech. He now shakes his head to say that the unions did not carry out the legislation to the letter. I can tell him that the unions have carried out the letter of the law much better than some of his friends in Johnson Matthey plc, including his relatives.
The unions have carried out the law to the letter and they have been penalised for holding a ballot. If any trade unionist should be listening to the debate or reads our words in Hansard, I suggest that if he should ever want to strike, and carry out the Tory legislation to the letter and have ballots, the chances are that the Prime Minister and all those on the Treasury Bench will trample him and his union into the ground just the same.
The Government will call on one of their Mr. Wonderfuls. Mr. Clarke happens to be an example of this, Eddie Shah was another—the Prime Minister used to meet him after conferences. She thinks well of those in charge of Grunwick, and of Freddie Laker and of all the others. She has a champion in the United States—she is about the only woman in Britain who has the nerve to call Ronald Reagan her champion, but he represents values similar to those set out by Mr. Clarke. They are the values of a philosophy that is already dead—the idea that somehow or another monetarism is working. The Government back Mr. Clarke because he is one of that dying breed that is trying to give the impression that it is possible to operate market forces and to use workers like pawns on the chessboard.
Mr. Watson: This dead and buried philosophy has provided 930 jobs in my constituency over the past 25 years. What would the hon. Gentleman have put in their place?
Mr. Skinner: Many people in similar occupations are having difficulty in using their ability to bargain. They are also representing their case because while they are allowed to join the trade union under the Tory party legislation, with wages policies based on the mass reservoir of unemployment, the Prime Minister and the Government are saying, "We will give you the freedom to join a trade union, but, by God, do not exercise any power when you have done so." That is why the hon. Gentleman has to toe the Prime Minister's line. He has no choice because if he does not he is out on his neck.
We are proud to be able to represent these workers, because it is a small union. It is not one of the giants but a little union, the membership of which consists of a few people producing furniture. It would like to have many more members, but while the Conservative Government have been in power, factories have been closed all over the country. That does not mean that the Labour party will not support that union, however small it may be. Even if the Liberal party does not know where it stands, the Labour party knows that it has a duty to tell people that this small union, which has members on low pay in an area of high unemployment, has a right to be heard in Parliament.
That is why my hon. Friend the Member for Burnley (Mr. Pike) moved an Adjournment debate on this matter a few weeks ago. He was castigated by the Under-Secretary of State for Trade and Industry. That is why this

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dispute is being raised twice in the course of a few weeks. The Labour party wants this dispute to be known about by the electorate.
At Barnoldswick on Saturday last I had one of the most pleasant surprises of my life. I have taken part in most demonstrations in Britain. On Saturday last 5,000 people invaded that little town. It was a pleasure to see them. They came from every part of Britain, including Tory marginal constituencies. They recognised the values that I have tried to explain. The demonstration at Barnoldswick had not been greatly advertised. I had not been billed as a speaker; if I had, there would have been 10,000 demonstrators. It was wonderful to see those people at Barnoldswick. The few people who were still out on strike after 26 weeks probably thought before last Saturday that they were on their own and that they were isolated. However, hordes of people from the trade union Labour movement made their way to Barnoldswick to take part in that demonstration. They recognise what this dispute is all about. That is why we must maximise our vote this evening.
We want this matter to be raised outside Parliament. We want the British people who have not yet heard about this 26-week strike to know all about it. However, although hon. Members are not supposed to talk about it, there are some absentees from the press gallery. I can see only three or four members of the press up there. The role of the media is despicable. It supports the Tory Government in all industrial disputes. Its role in supporting the Tory Government over this dispute is even more despicable. There is the classic ingredient of small Davids fighting a mighty Goliath who put £700,000 into his own pocket but who refused to hand out about £200,000 for a wage increase.
The Under-Secretary of State said at the beginning of the debate that the Government will wipe their hands of this affair and will have nothing to do with it. The Government say that they do not interfere in disputes of this kind. I am pleased that my hon. Friend the Member for Hackney, South and Shorditch (Mr. Sedgemore) is in the Chamber. He knows that the Government interfere when it suits them. The Government say that they do not interfere in the industrial economy, although they are smashing it to smithereens. However, when it comes to bailing out banks like Johnson Matthey the Government do not need to put down amendments. They say to the Treasury, to the Bank of England, and to all those who represent their values, "Go and bail out that bank. It's in trouble." Then someone asks, "Is Johnson Matthey a pit? If it is, close it." But the Chancellor of the Exchequer says, "No, I think it is a bank." So the Prime Minister says, "Save it. Even if it is an uneconomic unit of production, it does not matter; save it. Even though it has no reserves, like a pit, save it." The Under-Secretary of State has had the cheek to come to Parliament, to slobber all over the Treasury Bench and give the impression that this Government do not interfere. But they interfere when it suits them. They used £1 million of taxpayers' money to bail out Johnson Matthey, but they do not have the guts to intervene in this dispute and treat these families decently before Christmas.
Mr. Bottomley: Does the hon. Gentleman say that the Advisory, Conciliation and Arbitration Service was set up to do what the Government told it to do, or does he believe
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what his right hon. Friend the Member for Blenaeu, Gwent (Mr. Foot) said: that it ought to do its work at the request of the employers and the unions concerned?
Mr. Skinner: If this Minister had the guts—he has not—he would see to it that a call was put through to ACAS to ensure that three or four weeks before Christmas something is done about workers who have been on low pay for donkeys' years and who have now been on strike for 26 weeks. Little kids are involved. Some would call it child abuse by Mr. Clarke and this Government. He would ask ACAS what it was going to do about it. He could say to ACAS that it has a machinery and an appeal procedure. When Johnson Matthey asked for help because all its money and all the Caribbean holidays had gone, the Government stepped in and bailed it out by using taxpayers' money.
We are not asking the Government to use taxpayers' money on this occasion? We are asking them to do the moral and decent thing: to give these families a chance before Christmas. The Prime Minister sheds no tears for them. This woman, who is supposed to be the architect of the family unit, is not bothered about all the little toddlers whom I saw in Barnoldswick on Saturday. There are no tears and no sweets for them at Christmas. The Labour party will put that right.
One of the reasons for the debate is to highlight this matter for the nation. We want to ensure that each of those families, notwithstanding what the Government and Mr. Clarke have done is fed—not just at Christmas but until this dispute has reached a decent and honourable conclusion. It is only three months since the Government found £350 million of taxpayers' money to bail out the Export Credit Guarantees Department which had been fiddling for donkeys' years. I do not say that under privilege; I have said it outside Parliament and I shall repeat it there.
This Government have the cheek to say that they do not intervene. A few weeks ago they bailed out the European Community with £252 million of taxpayers' money. There is a litany of Government intervention over many years, using taxpayers' money to do so. We are not asking the Government for money. This dispute is about wages. The Government showed their hand when these people went on strike. They were forced into it. This Government marched their troops through the Lobby to give an average increase of 17 per cent. to all those who are on top salaries, but it was impossible for £200,000 to be allocated between about 800 workers.
The Government talk about freedom. They have hijacked the word. There should be freedom for those who work in these two factories. They have done everything according to the law, yet they have been kicked and battered by their employer, with the connivance of the Government. This is the latest example of the Government's attack upon the trade union movement. Their treatment of the workers at GCHQ was bad enough, but the mineworkers and many others have suffered under this Government.
I call upon hon. Members and those outside Parliament to recognise this dispute. I call upon the trade union movement to take action and to feed these families. I call upon every local authority that is under Labour control to black all the firms that go through the gates of that factory. There are plenty of them. There must be a commitment that a future Labour Government will stop the grants that

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are given to Mr. Tom Clarke. I bet some other bedding manufacturers would not be altogether unhappy if they heard that.
Yes, we must be selective, like Mr. MacGregor. If the other side can be selective, what is wrong with us doing the same? Yes, 26 weeks is a long time in a family's life with a little union to support them. The Minister can do a job for himself today if he wants. He can be smart and clever. He can just hope that the vote will be successful so that he can move on to another day and the matter can be forgotten, or he can do something decent for a change. He can get on the phone tomorrow morning and speak to the people at ACAS. He can say that there is an opportunity. He can tell them to settle the dispute before Christmas. He would not be intervening in any great way if he did so. He would just be acting decently for a change. Why does he not do it? He should act like a Minister instead of acting like the Prime Minister's puppet.
8.40 pm
Mr. Dave Nellist: I do not speak as a constituency representative of any of the workers involved in the dispute, but I met and had discussions with the leaders of the strike committee a couple of months ago and I have followed the weekly reports in Militant which contained interviews with strikers and regular details of the problems that they are facing.
The immediate cause of the dispute was mentioned by my hon. Friend the Member for Birmingham, Ladywood (Ms. Short). It was the management's refusal to honour an undertaking on redundancies and the refusal to give a rise on basic rates for piecework. The hon. Member for Batley and Spen (Mrs. Peacock), who speaks in the House on behalf of the National Bedding Federation, said that the workers had been given a £1·25 pay rise. It is because they were offered only 55p as opposed to £1–25 that a work to rule was begun in June. If the hon. Lady worked out the cost of 700 workers in Silentnight receiving £1·25 a week, she would arrive at the figure of £210,000 to which many Labour hon. Members have referred.
Twelve months ago the management at Silentnight sacked 88 workers. At the beginning of this year it gave a guarantee that if the work force postponed for three to four months the acceptance of a wage rise there would be no further redundancies. That guarantee was broken in the summer.
Despite attempts by Tory Members to portray the opposite, the work force is not naturally inclined to militancy. Most of the workers at Silentnight said that before the start of the dispute they voted Tory in the general election. They formed the union branch only 21 months ago, in February last year, after successive annual cuts in their wages. Many of those sacked had worked in the firm for more than 10 years. Many had worked there for between 20 and 25 years. One worker, Trevor King, has worked there for 27 years. Only a few weeks ago he was rewarded for his loyalty to the firm by being presented by the management with a tankard. He sent the tankard back. The last thing that he wanted after 27 years of loyalty to a firm was to be insulted with a tankard when he and his colleagues were forced into the street by a strike to
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defend their wages and working conditions. That was the attitude of workers before the strike, but those attitudes are very different now.
The workers have taken up all the constitutional alternatives on offer. They have had a secret ballot which produced a majority of 151 in favour of a work to rule—354 in favour and 203 against. On 22 July Clarke responded by sacking over 500 workers. ACAS was involved, but there seems to be no sign that the management intends to climb down.
In addition to the points made by my hon. Friend the Member for Bolsover (Mr. Skinner), there is another little message that we should like to send from the House of Commons to the management of Silentnight. The dispute has widespread support among working-class people and their families throughout Britain. Reference has already been made to the 5,000 people who supported the workers in Barnoldswick on Saturday 30 November in a march and demonstration. On that occasion the regional organiser of the Furniture, Timber and Allied Trades Union, Mr. David Marshall, was attacked and injured by two men with sticks. Had that been an attack on a member of management by pickets, the Press Gallery would have been full of people looking for quotes from Tory Members about violence and intimidation, yet nowt is being said about that attack on Mr. Marshall.
Mr. Waller: Emotions have run high in the dispute, but I condemn any attack on a trade union leader or member by anybody. Will the hon. Gentleman also condemn the well-documented cases of strikers having attacked people who have been at work? Will he do that without leaving any room for doubt?
Mr. Nellist: When the hon. Gentleman makes his speech—
Mr. Waller: Answer.
Mr. Nellist: The hon. Gentleman has asked me a question. At least he should allow me to use my own words to answer it rather than the ones that he wishes to put in my mouth. When the hon. Gentleman makes his speech, he can bring forward any information or allegations that he wishes to present and they can be the subject of debate. I have raised the documented question of an attack on a regional full-time official of the trade union and put forward the perfectly proper argument, having sat through all the debates on the miners' dispute, that if it had been a picket attacking a manager, the Press Gallery and Tory Benches would have been full and there would have been talk of violence and intimidation. Instead there has been silence on the attack on Mr. Marshall.
Mr. Waller rose—
Mr. Nellist: I shall move on now in order to allow the hon. Gentleman time to make his own contribution.
On Saturday 30 November, 5,000 people marched in support of the Silentnight work force. Many earlier demonstrations had taken place beginning with a demonstration of 1,000 workers on 27 July.
As has been said, during the dispute many unemployed workers in the area have apparently been told that their dole will be stopped if they turn down one of the 500 jobs now being classed as vacant at Silentnight. When the Minister replies, he should say whether that has Government approval. Are the jobcentres being turned into Government organisations for scab labour to break

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official trade union disputes? If he were to say that, Labour Members would not be unduly surprised. That is precisely the role of the mass unemployment which the Government have planned over the past six years. It is a political weapon to cow the mood and morale of trade unionists in order to attempt to force them to accept drops in their living standards. Another reason why we would not be surprised is the clear link between the Government and the Tory management of the firm.
We have already heard how the chairman of the firm, Mr. Tom Clarke, when visited in 1983 by the Prime Minister, was described by her as "My Mr. Wonderful". I can imagine why that would be. Anybody who can amass a personal fortune of between £50 million and £60 million and then refuse to pay workers a decent pay rise would be described in that way by the Prime Minister. It is no surprise to hear that she said that Britain needs hundreds of Tom Clarkes. That is precisely the Victorian attitude that she tries to develop in Britain—screwing everything out of workers and being hell bent on attempting to smash trade unions. It is the old idea of the master sitting at the table and the workers begging at the gate.
That is the sort of attitude that the Prime Minister, the Government and Mr. Tom Clarke would like to bring back. Hon. Members may think that that is a little sharp or excessive, but why have the dividends remained at the £1·2 million which were distributed last year to the shareholders of Silentnight? More than half went to the company called Famco whose shareholders are Tom Clarke, with 766,255 shares; Joan Clarke, Tom's wife, with 349,000 shares; Peter Clarke, Tom's son, with 183,000 shares; John Clarke, Tom's son, with 174,000 shares; and Mrs. J. Burns, Tom's daughter, with 124,000 shares.
The total dividend, at £644,771, was three times the amount that it would have cost to honour the wage agreement that the parliamentary spokesman for the National Bedding Federation has assured the House was on offer to all the workers of Silentnight. One third of the family dividend would not only have made sure that the dispute would not have occurred, but would have given the workers what their parliamentary representative said was on offer to them.
Mrs. Peacock: If the hon. Gentleman will check in Hansard tomorrow the statement that I made, he will see that I said that the 1984 rise was 5·5 per cent., or £5·25 across the board, and that the dividends announced in February and July of this year applied to trading in 1984.
Mr. Nellist: That is right. The dividend announced in February of this year was £1·2 million, over half of which went to members of the Clarke family. As I said, one third of that would have paid all 700 workers at Silentnight the wage claim for 1985 of £5·25 that they had been told was on offer.
Another connection should be mentioned, and I appreciate that the hon. Member for the area, the Under-Secretary of State for Defence Procurement, the hon. Member for Pendle (Mr. Lee) is in hospital. I understand from reports on television and in the Daily Mirror that he has 2,000 shares in the company. Perhaps through the columns of Hansard I may ask the same question that has been asked of all Conservative Members who have taken part in the debate: does the hon. Member for Pendle approve of the actions of the management of Silentnight?
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Does he intend to divest himself of those 2,000 shares, or does he intend to profit from the sacrifice and upset of the families of the workers at Silentnight?
Mr. Campbell-Savours: Give the money back.
Mr. Nellist: The hon. Member for Pendle had a preface, as it were, to the dispute that we are discussing in that in 1979 he received a letter from the then joint group managing director of Silentnight. The management was asking the hon. Member for Pendle whether he would support the urgency of withdrawing payments from the families of strikers. The managing director said in a letter to the hon. Member for Pendle:
"The Conservative Government is bound to have some problems with the unions, if only out of bloody-mindedness, and a lack of finance available to the families of the moderates would help stiffen their resolve to get back to work and influence the militants. From a strategic point of view, this particular move could very well be taken earlier rather than later."
One should not be accused of being paranoic in thinking that perhaps the management of Silentnight, in conjunction with the local Tory MP, was planning in advance to attack the conditions of workers in that firm and was planning in advance for the financial and political support that it would need from the present Tory Government to make sure that penalising the workers on strike would be such that they would be forced through starvation back to work.
The hon. Member for Pendle replied that he thought that the management of Silentnight was "absolutely right" and added:
"We must get through our more controversial legislation in the early stages of this Parliament. My impression at the present time is that we are going very cautiously on the whole trade union front, but I take your point about withdrawal of payments to the families of strikers."
There was a clear implication there that the Tory management of the firm and the local Tory MP were for several years preparing to attack the work force of Silentnight, making sure that legislation to penalise the families of workers forced into such action went through.
Mr. James Hamilton: Do I take it from my hon. Friend's remarks that the Conservative Member for the area is in receipt of 2,000 shares? If that Tory Member is a junior Minister, my hon. Friend is making an extremely serious accusation, one that w ill have to be looked into.
Mr. Nellist: I believe that it would be outside the bounds of order for me to comment on such an allegation; perhaps a breach of procedure would be involved. I understand that the hon. Gentleman in question has 2,000 shares in the company. That has been reported on television and a statement to that effect appeared in the Daily Mirror six weeks ago. He has not renounced either the shares or the accusation that he owns them.
I do not know what the benchmark or bottom line is in relation to recording those shares in the Register of Members' Interests. When I looked in the Library this evening, they were not mentioned in that document. Perhaps it is for the registrar of that register to contact the hon. Member concerned.
Mr. Watson: To clear the name of the Minister, my hon. Friend the Member for Pendle (Mr. Lee), it is perhaps necessary for me to point out that he indeed owns 2,000 shares in the company concerned but that he bought them personally, that he bought those shares before he became

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the Member for the constituency concerned, that he was not given the shares, as has been implied, and that the implication of what the hon. Member for Coventry, South-East (Mr. Nellist) is saying is that no Member of Parliament should ever hold shares in any constituency company, nor should he reply to any correspondence that he may receive from such companies.
Mr. Nellist: Being a relatively new entrant to this place, it was clearly not I who set the rules applying to Ministers and shareholdings. Those rules were set long before I got here. However, I am grateful to the hon. Member for Skipton and Ripon (Mr. Watson) for confirming that the hon. Member for Pendle has 2,000 Silentnight shares, as was reported in the Daily Mirror.
The Silentnight strike is now official. It also has the backing of the TUC conference in September, and I look for increased support from TUC-affiliated unions to aid those workers. The management attitude is not only hardening the attitude of many Silentnight workers. I notice that 70 production workers at Lay E Zee, the firm in West Yorkshire to which reference has been made, a subsidiary of Silentnight—previously a non-union firm—have now joined the Furniture, Timber and Allied Trades Union because of the attacks on their brothers and sisters at Silentnight.
Mrs. Peacock rose—
Mr. Nellist: I will not give way because I wish to complete my remarks.
Enormous support is being generated throughout the country as a result of strikers travelling to factories, trade union meetings generally and Labour party meetings. Rochdale Labour party raised £1,000 in the first three months of the dispute for Silentnight strikers and their families, and many thousands of pounds have been raised in collections elsewhere.
Crucially, this dispute is not just about money. I agreed wholeheartedly with the remarks of my hon. Friend the Member for Bolsover. Indeed, I had intended to spend the last few minutes of my contribution making a similar appeal for the collection of toys for the kids at Christmas and for clothes and money for the families of the strikers at Silentnight.
But, with respect to my hon. Friend—though I support him wholeheartedly—he will agree that all the mechanisms for keeping the strike going, honourable though they are, in the final analysis are less important than increased industrial support to end the strike as soon as possible with victory for the work force.
With that in mind, I am pleased to report that not only dockers at a number of ports, such as Hartlepool, are questioning the timber imports for Silentnight from Sweden, and not only are most drivers who have crossed the picket lines non-union—the company is spending a fortune hiring one-man operated hired vans from as far away as Aberdeen and Stevenage—but the strike is now affecting the share price of the company. A few weeks ago it went down to 29p.
With all the publicity in the past few weeks about that fellow T. Boone Pickens from across the water and the corporate raiders and sharks, it occurs to me that the lower the share price of Silentnight, the more attractive the company may become to some City financiers. They may
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say, "This bloke Clarke is running what would otherwise be a reasonably good company. Why do we not take advantage of the driving down of the share price, take the firm over, sack the scabs, re-employ the workers and return to the profits that the firm has made in the past?" That is a tempting proposition for some of the City sharks.
From February to August of this year the company has lost £820,000 compared with a profit of £1·1 million in a similar period last year. The Silentnight management is devastating the company.
The dispute will be won. I spoke of national support, but there is more than that. Manchester north-west region and the Royal Arsenal Co-op—the co-ops are the biggest customers of Silentnight—and most of the co-op associations have already blacked Silentnight beds. I hope that the many local Labour parties will contact their co-ops to ensure that similar resolutions are passed.
Discussions on the dispute take place not only nationally, but internationally. During the past 10 days, the Sri Lankan trade unions have been discussing the need to black the fibre essential for the production of Silentnight beds. Dockers in Sweden have agreed to black timber. Today, I heard that Bekaert, a major multinational in Belgium, following approaches from its trade union organisation, agreed during the weekend to stop supplying Silentnight with its important mattress ticking. The trade union movement is gearing up, not only nationally, but internationally. Workers are coming to the support of the families of Silentnight. The more effective the blacking, the sooner the strike will end.
I appeal to those listening and to those who will read the debate in the columns of Hansard not to allow to fail the sacrifice of the hundreds of families who are fighting a classic example of a Victorian stalwart employer. Adopt a family in the run-up to Christmas. Send money, clothes and toys. Crucially, trade union solidarity from the Transport and General Workers Union and the Union of Shop, Distributive and Allied Workers is needed to bring this Tory-supporting gaffer, clone of Ian MacGregor, to his knees. Tom Clarke is not a fit steward to run a company such as Silentnight. He cares nothing for the workers of the company. For him, profit is god.
The workers of Silentnight have created the wealth in the company. The Clarke family converts that wealth into the dividends that they receive from their share ownership. The Clarkes are filching the wealth that the workers of Silentnight create. Labour unreservedly supports those workers in their struggle against that management.
9.2 pm
Mr. Peter Pike: It has been said that we should not be having this debate tonight, but I do not accept that. It is important that this issue should be debated again. I regret the fact that the matter needs to be debated, because I would have hoped that the Government would have taken action to try to get both sides together to resolve the dispute. Our main concern is the position of the 346 strikers and their families. We wish to see them back at work, reinstated, and an acceptable resolution of the dispute.
With Tom Clarke as chairman of the company, there will be no resolution of the dispute unless pressure is brought to bear and someone decides that action has to be taken. We do not accept that the Government cannot

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intervene. We do not accept the view that they should not say to ACAS, "Try to get both sides together and resolve the dispute."
We must remember that one company within the group has received Government assistance. That highlights the fact that the Government will give financial assistance to companies without asking how those companies use it. A few weeks ago, the Under-Secretary of State for Trade and Industry told me:
"Information about some of the grants made by the Department is published quarterly in 'British Business'. For reasons of commercial confidentiality, it is not the usual practice to give any further information about grants to particular companies. 'British Business' of 22 June 1983 recorded an offer of regional selective assistance of £350,000 to Lay E Zee Ltd., a subsidiary of Silentnight Holdings."—[Official Report, 29 October 1985, Vol. 84. c. 462.]
The answer implies that that is not necessarily the entire picture and that other grants may have been paid to the company which the Minister is not prepared to disclose.
The hon. Member for Leeds, West (Mr. Meadowcroft) mentioned an article in 7 Days, which stated that the strikers claimed that there had been no problem before the union became involved—
Mr. Don Dixon: Where is he now?
Mr. Pike: As my hon. Friend says, there is no Liberal or SDP Member in the Chamber. That is not unusual when important matters are being debated.
The article in The Guardian last Friday made it clear that a major reason for the growth of trade union membership was that there were problems before the trade union became involved. The workers at those factories could not take action to resolve those problems, and the membership increased rom 28 to 500 in 1984, when there was a two-week strike over that year's pay settlement. I know for a fact that there have been problems on that site for many years. Indeed, a common feature of each annual pay increase has been that part of the increase was immediately recouped by setting new piece rates and time rates. With many trade unionists, I believe that, if we accept pay rises, they should be consolidated and fully effective on all elements of pay settlements. When I have been involved in negotiations, I have never been happy about increasing some elements of pay but saying that the increase does not apply to others.
Whether the Minister likes it or not, the ballot slip showed clearly that it related to the 1985 pay settlement. Although management and the unions may have different views on that, it is clear that that is what the dispute is about.
Several initiatives have been taken to resolve the dispute. My right hon. Friend the Leader of the Opposition tried to involve ACAS through my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). Unfortunately, he was unsuccessful. A few weeks ago, the trade union members at Silentnight met Labour Members, following which a letter was sent to the Prime Minister on 13 November asking her to meet a delegation of hon. Members to discuss the problem at Silentnight and hoping that she would recognise the problem, try to influence matters and get both sides together. It is remarkable that the only reply that they have received to date has been from the Prime Minister's Parliamentary Private Secretary. It states:
"In the Prime Minister's absence from the office, I am writing on her behalf to acknowledge your letter of 13 November which I will bring to her attention as soon as possible."
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That is disgraceful. We need some action to get matters resolved.
Mr. Waller: Does the hon. Gentleman believe that efforts made before this Government were elected to resolve disputes by calling in the parties to No. 10 Downing street proved notably successful, or does he accept that, since that policy was abandoned, we have had fewer disputes and they have been resolved far more quickly?
Mr. Pike: There have been fewer disputes under this Government because, since 1979, when the Tories defeated the Labour Government on a platform of returning to free collective bargaining and the removal of pay policies, they have used the worst possible weapon against the British working people—unemployment.
I was a trade unionist and I worked in a factory until 1983. I worked shifts, so I know what factory workers think and I appreciate their situation. At Silentnight, 346 workers are out on strike. The Opposition want to remedy that unacceptable situation.
In the Adjournment debate on 6 November, the Government chose the hon. Member for Rossendale and Darwen (Mr. Trippier) to reply. I do not know why they chose him as the matter seems to be within the brief of the Minister dealing with the matter today, who was in the House on that day and could presumably have replied to that debate. I can only assume that the hon. Member for Rossendale and Darwen was chosen to reply in an attempt to influence the political situation in north-east Lancashire—an attempt which failed, because the response from the Minister was appalling and the debate did not have the desired result. The Minister's reply to that debate was extremely provocative and in no way conciliatory. Reference has already been made to the comments about it in the Lancashire Evening Telegraph later that week.
A large part of the Minister's reply on that occasion was based on a Silentnight press release issued the previous week. The Minister denied that, but I had a copy with me and could have quoted word for word certain sections of his speech. The Minister was provoked at one stage to say that most of his information came from ACAS, but I am sure that ACAS would wish to dissociate itself from a large part of what he said.
In his reply to that debate the Minister said:
"I listened carefully to what the hon. Member for Burnley said at the outset of his speech. It is with genuine sadness that I and he has raised this Adjournment debate at a time when my hon. Friend the Member for Pendle (Mr. Lee) the Parliamentary Under-Secretary of State for Defence Procurement, who knows more about the background to the strike than the hon. Gentleman or the hon. Member for Blackburn will ever know, is in a hospital bed recovering from a serious operation."—[Official Report, 6 November 1985; Vol. 86, c. 105.]
In opening that Adjournment debate, I extended my good wishes to the Minister in hospital. We all regret that he is still ill. We hope to see him back in the House soon, but in all honesty I must say that it is absolute nonsense to allow the fate of the Silentnight strikers to await his return. On that basis, I could argue that because my hon. Friend the Member for Blackburn (Mr. Straw) is now in hospital recovering from a minor operation we should not have had the debate today as I know how much he would have wished to participate. North-east Lancashire seems to be a distress area for hon. Members, as the hon. Member for

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Hyndburn (Mr. Hargreaves) is also out of action. I am sure that the whole House hopes that all three hon. Members will soon return.
I cannot accept that the Under Secretary of State for Defence Procurement knows more than my hon. Friend the Member for Blackburn or myself about the dispute. I am prepared to accept that he may know more about Silentnight's position in the dispute than either myself or my hon. Friend, but that would not be surprising as he is a shareholder in the company and has been a paid consultant for the industry in the House. If the hon. Gentleman was earning his money as consultant to the industry, it is only reasonable to assume that he would have had some knowledge of the industry. In my view, however, he has no idea whatever about the position of the trade union in the dispute. He has made no effort to meet the trade unionists or to do anything on their behalf. Very early in the dispute, he met Tom Clarke on behalf of the union, but when he came back he simply shrugged his shoulders and said that it was not possible to make any progress. If a member of the Conservative party who has a close relationship with the chairman of the company cannot make any progress, one realises the difficulties involved.
Mr. Campbell-Savours: In many Conservative associations in the Lancashire area—especially in Bury, Bolton, Rossendale, Hyndburn, Accrington, Blackburn, Burnley, Todmorden and Sowerby—members are divided about the Government's attitude to the dispute. Many believe that the Government should intervene. They will be studying the Hansard report of today's debate because they were expecting condemnation from their Members of Parliament, some of whom are present, and from the Minister. The Minister may indeed already have expressed that condemnation in his earlier remarks.
Mr. Pike: I agree with my hon. Friend. Members of the trade union who were at Burnley town centre collecting for the strikers confirmed that many Conservatives had made donations. Conservatives are probably telling their local Members of Parliament they they are already likely to have great difficulty holding their seats at the next general election because Labour will almost certainly win Pendle, Hyndburn, Rossendale and the rest, but that if the Government do not change their line on the dispute and try to achieve a sensible solution it will be a waste of time to fight the next general election at all.
Even if the Government fail to take any action to resolve the dispute, the hon. Member for Pendle (Mr. Lee) and the hon. Member for Skipton and Ripon (Mr. Watson), who was present earlier in the debate, could have approached Tom Clarke and tried to act as intermediaries if they were genuinely concerned about their constituents, who have now been on strike for nearly six months. During an extremely difficult strike at a factory in my constituency just after the general election in 1983 I was asked by the union to act as an intermediary. Although I clearly had some relationship with the trade union side, I was able to go back and forth between the two sides and within a week we achieved a compromise package. I do not deny that certain people on both sides were not fully satisfied with the agreement. Nevertheless, the package was accepted and the dispute was resolved. In the present dispute, the two Members of Parliament do not have that relationship
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with the trade union but they have a relationship with the management. If they were truly concerned about their constituents they would have tried to bring the two sides together to resolve the dispute.
We have been told on several occasions that to settle the pay claim in full would cost between £205,000 and £215,000 in a full year. Yet the family took £644,000 in dividends. The hon. Member for Batley and Spen (Mrs. Peacock) may say that that is irrelevant, but it is impossible to claim to trade unionists that their pay claim cannot be met when such massive dividends are taken by shareholders.
Mr. Nellist: The dividends taken by the family amount to three times the sum needed to settle the dispute. Yet the family, in the shape of Tom Clarke, claims that it cannot afford to meet the pay claim. Tom Clarke and his family have a personal fortune of between £50 million and £60 million. Is it not rather odd for a managing director to claim that he cannot afford to pay the workers when he has that amount of money himself?
Mr. Pike: That is exactly the point that I intended to make. We accept that Tom Clarke, his family and the family trust own 52 per cent. of the company as well as having massive capital wealth. It is amazing that they can say they cannot afford to pay out the full settlement that was claimed in this dispute.
We accept that the profits of the company, in the results published to May of this year, show a pre-tax profit of £2·233 million which was down on the previous year's figure of £5·239 million. I accept that, at the present, it is losing money but the management has to accept responsibility for its present position. The hon. Member for Skipton and Ripon referred to the fact that dividends were not paid from 1945 to 1972. That is irrelevant and misleading, because the company's structure as it is now did not come into being until 1973. To judge whether the hon. Gentleman's statement is fair we would have to analyse what payments were made within a personal capacity prior to that date. We do not believe that the company paid £60 million since 1973—the money has been accumulated over many years. One cannot look at that factor in isolation.
Mr. Thurnham: I congratulate the hon. Gentleman on his appearance on the Front Bench. If Opposition Members think they know how to run this company better than the present management why not help those out of work because of this dispute to start up on their own and do better?
Mr. Pike: I shall not waste my time responding to that point. I accept that this company was built up from small beginnings. It was started just after the war in Tom Clarke's back yard with his wartime gratuities. This does not give Mr. Clarke the right to go back to Victorian-style management—as if it were the 1880s rather than the 1980s—and follow a policy of scant regard towards his employees. We cannot accept that and I do not believe that the Government should do so, although I do fear that this type of management is epitomised by the policies of the present extremist Right-wing Government.
Tom Clarke has said—this has been referred to already—that he would rather see the factories close if he was unable to smash the unions. That is a different view from the trade unionists. Even now, after six months,

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when one would expect the trade unionists to be bitter, they would like their jobs back and they would like to see those factories in full production.
The management may claim that it is getting many goods out of the factory. I was at the factory in October when there was a demonstration outside. There were vehicles going backwards and forwards and in the space of about 10 minutes it was made to look as though there were many goods coming out of the factory. The same vehicle passed us three times. In that time, it could not get around the corner and it certainly would not have had time to deliver anything.
The management may not wish to admit it, but it is getting a high percentage of return of goods produced at the present time. At the end of the day, the one thing that a customer wants when buying goods is quality as well as goods at the right price. If the management is prepared to send out sub-standard products then that company will not survive.
I wish to refer to some items that were in the company press briefing given out a few weeks ago. The first concerns the ballot.
The company said in its press release that the unions
"did not report to their members that the management had reviewed financial information with ACAS and the Union which showed the company was losing money."
The union conveyed as much information to its members as it was permitted to do. When it met the representatives of ACAS with the company's management, the trade unionists were told, "This information is confidential and you cannot convey it to your members. It is for your information only." They were able to divulge only a small amount of the information. More important is that, when the trade unionists received the information, it left them even more convinced than before the meeting began that the company was able to pay their wage claim. Far from proving that the company was losing money and was unable to meet the terms of the pay offer, it convinced the trade unionists that their demand was fair and reasonable.
The company claimed also in its press release that the
"Union did not spell out the position under current legislation that … if they were to be dismissed"—
that is, the workers—
"they would not be entitled to unemployment benefit, and were likely to have recourse to an Industrial Tribunal."
That follows on very much from the argument advanced by the Under-Secretary of State for Employment, the hon. Member for Rossendale and Darwen, in the Adjournment debate on 6 November when he referred to the ballot. He said:
"the question on the ballot paper did not make it clear, as required by the Trades Union Act 1984, that the industrial action proposed to the membership would involve them in breaching their contracts of employment. Furthermore, the ballot paper referred generally to the 'action of the company in refusing to honour the 1985 pay award for the bedding trade' which is a highly partial account of what the strike action, which eventually followed, was about."—[Official Report, 6 November 1985; Vol. 86, c. 104.]
The Minister's statement and that of the company highlight the folly of the Trades Union Act 1984. If the relevant question is put to trade unionists in the way that the Government suggest, it will be seen as biased and an attempt to produce the result that the Government want. That cannot be fair. The parallel is if the Tory party were required to face the next general election by declaring that if elected a Conservative Government would introduce
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further cuts in housing expenditure, increased prescription charges once more and many other measures that would generally be unpopular. Clearly that would be nonsensical.
The Tory party wants ballots only if they will produce the answer that it wants. It looks only for the right result from its point of view. Over the weekend, the Paymaster General referred to the Transport and General Workers Union and the way in which it appoints its national executive. It is a pity that the right hon. and learned Gentleman did not refer to the other place and explain that its members are unelected.
The Under-Secretary of State, the hon. Member for Rossendale and Darwen, alleged that violence had taken place on the picket line when he replied to the Adjournment debate on 6 November. I have visited the picket lines at both factories on a number of occasions. I have seen no evidence of violence on the part of the union. The Government and the management regret that the trade unionists who are involved are sound and sensible people who have put their case clearly, concisely and properly wherever they have been throughout the country. Their case has been well presented, and they have received tremendous support.
When I have been on the picket lines I have seen acts of confrontation on the part of some of the drivers of Silentnight vehicles who have been passing through the factory gates. Some of the drivers of the buses that have been bringing in the scab workers who are still there have been guilty of deliberate provocation. These drivers have provoked the strikers deliberately by stopping their buses in front of the strikers' hut. I have seen the police, especially at Barnoldswick, speaking to these drivers. I have heard them say, "Move on. You are trying deliberately to cause a disturbance."
Within the past few weeks a driver jumped out of a Silentnight vehicle, armed with a stick. Another man left the vehicle with a chain wrapped round his fist. They were moved on from the Barnoldswick factory almost as soon as they got out of their vehicles. They were not allowed to do anything. The position was not the same at Sutton-in-Craven, where a caravan which was used by the pickets was deliberately broken up. The police stood by and watched that happen. That is a fact. They refused to intervene. Another picket's house was broken into and all his windows were smashed by people who are currently working at the site. It took over 45 minutes for the police to respond.
I do not condone violence from any side. I never have done and I regret that violence. Let us make it clear that if there is violence at the moment all the signs of that violence are on the side of the people who are working, not the trade unions.
The debate today has been different from the Adjournment debate a couple of weeks ago. The significant difference is that Conservative Members who have spoken have been unable fully to justify the company position. I hope that the Government will recognise that the most important priority is to get the workers back to work. My fear is not only for the workers, who will be out of work for a long time unless something is done, but if the management win, it will be a clear signal that the Government take no action to try to resolve such disputes. It will be a clear sign to similar management throughout the country as a whole. The Government will be telling managers that they can act in that way and they will support them. I hope that, even now, the Government will

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step back from that and use their powers to obtain a reasonable and acceptable settlement. We want both sides round the table and ACAS involved. I do not believe that the Government can wash their hands of the matter.
After the Adjournment debate, the Lancashire Evening Telegraph displayed the headline, which has been referred to on more than one occasion:
"This is not the way, Minister".
I hope that the reply given to the debate tonight does not allow the same comment to appear in the press again.
The amendment moved by the Government seems to put the dispute into the past tense. It calls it the "recent industrial dispute". It is the existing dispute. It is still there and it is not resolved. The Government's amendment does not recognise that. In all sincerity, I hope that the Government recognise that something must be done. The dispute must be sorted out. We want those workers back at work and a return to sanity and good trade union-management relations.
9.32 pm
Mr. Peter Bottomley: I join the hon. Member for Burnley (Mr. Pike) in sending our best wishes to those not among us who would have been here if illness had not kept them away. The hon. Gentleman mentioned my hon. Friend the Member for Pendle (Mr. Lee), my hon. Friend the Member for Hyndburn (Mr. Hargreaves) and the hon. Member for Blackburn (Mr. Straw). The hon. Gentleman is also right about trying to get people to reach agreements themselves. The Opposition have been split, between those who genuinely want settlements in such disputes—
Ms. Clare Short: Nonsense.
Mr. Bottomley: The hon. Lady says, "Nonsense." Some people would like to keep the dispute running so that they can continue to appeal nationally and internationally. When people read the speech of the hon. Member for Coventry, South-East (Mr. Nellist), especially people in Barnoldswick, they will wonder whether he is on the side of conciliation all the way through or whether he prefers to exploit a situation that has had the tragic effect of some people going on strike and others losing their jobs.
Mr. Madden: The Minister represents a Department which, before the establishment of ACAS, had a proud record of mediating and resolving industrial disputes. I hope that he does not spoil that. What the Minister said earlier was in marked contrast to what was said by the then Under-Secretary of State for Trade and Industry when he spoke in reply to the Adjournment debate. We understand that the Minister cannot require ACAS to do anything. Will he give an undertaking that he will contact ACAS urgently and ask it to contact the parties to see whether terms can be agreed to get a settlement? Will the Minister give that undertaking here and now, and not spoil his earlier excellent contribution when he condemned the way in which the management of the company has conducted the dispute, particularly in its early stages?
Mr. Bottomley: I have not condemned the management, and I have not condemned the unions. I have tried to spell out some of the facts. The hon. Gentleman will be fully aware that it is not necessary for me to ask ACAS to see whether it can get agreed terms. If it helps, I shall say now to the House, and people on both sides of
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the recent dispute and in ACAS, who may be listening, that I hope that it is possible for people on both sides to come together and for ACAS even now to try to get a way forward that can be agreed. I hope that even if the dispute is a past dispute, some of the people who have lost their jobs will find employment.
I want to go a stage further. I want to ask the Opposition whether they are willing to accept the amendment tabled by the Government as a way of showing that they are not keen to take only one side, as their motion does. It states:
"That this House gives full support to the employees … who are on strike".
I know that the Labour party is split, but if hon. Members believe that it is better to try to create an atmosphere that allows people to start talking about the terms on which they would come together, I suggest that they have consultations during the next 25 minutes on whether they are willing to accept the Government's amendment, in order to give a freer field to those who might be able to bring the two sides together. I understand that the Labour party is split and that many hon. Members would have preferred it if the strike had not taken place. When it did, I am sure they would have preferred the union to take people back to work when they realised that the strike was not going to have the desired result. Even now people believe that creating the right atmosphere would be better than to go on with the motion which, by its own words, is totally one-sided.
Ms. Clare Short: We in the Labour party are proud to say that we support the workers in the dispute. The management has been absolutely intransigent. It has refused arbitration, yet the Minister says that he thinks that arbitration is desirable. We are saying that we want a settlement. The workers want their jobs back. If Mr. Clarke was a decent employer, he would negotiate. We are asking the hon. Gentleman, as a Minister representing the Tory Government, to pick up the phone, speak to his Tory friend and tell him to negotiate a settlement of the dispute.
Mr. Skinner: Go on. Do a Johnson Matthey and bail them out.
Mr. Bottomley: The hon. Member for Bolsover (Mr. Skinner) has made various references. I am tempted to go on with the Tea Room conversation and inform the House of some of our conversations in the Television Room during the Olympics before last. If the hon. Gentleman provoked me really far, we might discuss our behaviour in a car at Battersea power station on an occasion or two. It is just as relevant to the debate as what the hon. Gentleman is alluding to, but I might be able to keep quiet about it, unless I had his permission to speak in public. I return to the point that I was trying to share with the Opposition—[Interruption.] In parentheses, I should like to say that I do not think the hon. Gentleman needs to advertise either his services or mine.
The Labour party has said that it gives full support to the one side in the recent dispute. I want it to accept the Government's amendment. Unless Labour Members believe that there is no point in trying to help the employees and ex-employees, the management and the owners to come together under agreed terms of reference, they should drop their motion and accept the amendment. The hon. Member for Burnley is aware—
Mr. Campbell-Savours: It is not the "recent" dispute.
Mr. Bottomley: "Recent" could be interpreted as the start of the dispute, if that helps the hon. Gentleman.
If the hon. Member for Burnley wants to provide an atmosphere in which people can start talking about talking to each other, it helps to take the partisan nature out of the debate. My contributions to the debate follow those of my hon. Friend the Under-Secretary in the previous debate.
Various facts and differences of view were set out then, some of which have been repeated by Labour Members tonight. I have tried to do as the hon. Member for Blackburn requested, when he said that he wanted an even-handed approach—he has got it—to strikes and industrial relations law. He went on to call for strengthened conciliation and arbitration. The first part of the role of ACAS is advice, then there is conciliation and, finally, arbitration, if the parties agree to it. The hon. Member for Blackburn wanted a climate in which the use of such machinery was encouraged. The speeches of the hon. Members for Bolsover and for Coventry, South-East were not conducive to creating such an atmosphere. It might have been better if the parliamentary interests had been awake and started talking before July.
It is commonly accepted that at the time of the ballot just over 60 per cent. of those who voted were for strike action. I want to get the wording of the ballot paper absolutely right:
"Following the action of the Company, in refusing to honour the 1985 Wage Award for the Bedding Trade, it has been decided following pressure from the shop floor, through the Shop Stewards Committee to hold a Ballot to indicate the wishes of the membership whether or not to get involved in a course of Industrial Action.
Please answer the following question below, by putting a cross in the box of your choice.
Do you wish to take industrial action up to and including if necessary strike action?"
Ms. Clare Short: What is wrong with that?
Mr. Bottomley: If one wants to be precise, it does not provide the reminder about breaching the contract of employment.
After that ballot, when the vote went in favour of taking action up to and including strike action, my understanding is that the offer was made to meet the national award. I believe that is common ground.
Ms. Clare Short: After they had voted for a strike.
Mr. Bottomley: That is what I said. I am glad the hon. Lady is still with us in following through part of the dispute.
After the ballot and after the company had agreed to meet the national award, there was a dispute about whether the company should or would provide the follow-through so that the agreement applied to piece rates as well. When the company said that it would not, the strike continued. Many unions, and perhaps even members of the same union, would have considered very seriously at that stage whether or not a continued strike would be successful. The hon. Member for Burnley, with his experience, knows that there are times when continued action leads to a better result, times when it does not, and times when people have to make judgment about whether they should continue on strike.
Mr. Nellist: Does the Minister accept that in the summer the workers at Silentnight were being told that the company could not and would not carry through the pay negotiation because it could not afford it? At the same time
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the workers knew that the chairman of the company was worth £50 million. It is not surprising that the lads and lasses at Silentnight should say, "He can afford it, and we will have it." A company worth that amount of money says that it cannot afford the pay rise. It is the chairman of that company who is responsible for the action that occurred thereafter, not those who stuck by the decision of the union.
Mr. Bottomley: Where the hon. Gentleman misleads himself is that, although the workers may have said that they would have the pay rise, they did not get it and now some of them have not got their jobs. If he was one of those who advised them to stay on strike, he must take responsibility for the fact that people who would otherwise be working now are not. That is one of the points I have been trying to make.
The hon. Member for Coventry, South-East keeps referring to people being worth a lot of money. He has a choice. He can talk about someone who has built up a business that is worth a lot of money and employs many people, or he may talk about a pop star who is worth millions but employs nobody. If the pop star supports the Labour party and if the chairman of the company supports the Tory party, who is to say that one is doing better or worse than the other as regards employment?
Mr. Hoyle: The Minister must agree that pop stars are not under scrutiny here tonight. An anti-trade union company is under scrutiny. What is the Minister's view of the fact that the company will not go to arbitration although the union has said that it would go without preconditions? What will be the Minister's advice to the company and to that Conservative party supporter, Mr. Clarke?
Mr. Bottomley: The union is now willing to go to arbitration without preconditions because it is working uphill. The union may feel itself responsible for the fact that the strikers do not have their jobs. If the union had shown more interest in a solution or negotiation, we should not be discussing the dispute.
Reference has been made to someone being a Conservative party supporter.
Ms. Clare Short: At last.
Mr. Bottomley: The hon. Member for Warrington, North (Mr. Hoyle) is vice-president of the Association of Scientific, Technical and Managerial Staffs. He was elected after a contested ballot. I believe that 1·6 per cent. of the union's membership voted for him. I may have the figure wrong, and I shall be corrected if that is the case. He is a leading officer of a union which is affiliated to the Labour party. The union does not claim that more than 30 per cent. of its members pay the political levy. From the published figures, it seems that nine out of 10 of the union's members do not pay the political levy although the donation made to the Labour party is for 30 per cent. of its members.
Ms. Clare Short: How is that relevant?
Mr. Bottomley: The hon. Lady asks how that is relevant. It has the same relevance as saying that a company chairman is a supporter of a different political party. I suggest that the hon. Member for Warrington, North should give that matter some thought. The hon. Gentleman and the hon. Member for Bolsover spoke about the condition in which the strikers and those who have

247
been dismissed now find themselves. He waxed fairly loudly about those people who might be starving and in need.
Mr. Hoyle: Will the Minister give way?
Mr. Bottomley: Not at the moment.
All those involved in the dispute had a responsibility to give advice early in the dispute. When people strike, they are sometimes successful in forcing a business to pay more than it can afford. If that business fails and they all become redundant, they will not have champions in the House of Commons asking about the children, the wives and those who are unemployed, because the matter is dead. The Labour party is only having the debate because the business is surviving. It is doing a bad service—
Mr. Skinner rose—
Mr. Bottomley: I shall not give way.
It is wrong for hon. Members to suggest that people should have their cases raised when the business survives, not when it fails.
Mr. Skinner rose—
Mr. Bottomley: I shall not give way for the moment. Just because I am not shouting at the hon. Gentleman in the way that he shouts at us does not mean that I do not feel as strongly as he does.
It has been suggested that the past few years' industrial relations legislation has somehow caused the dispute. The only difference that industrial relations legislation has made to this dispute is that a ballot was held—it might have been held anyway—which gave a clear answer to the question on the ballot paper. That is important. Legislation passed since 1979 and that passed by the Labour Government has not required employers to settle for what a union has asked. Neither did previous legislation deny an employer the right to dismiss those who did not return to work. If the hon. Member for Burnley wishes to say that I am wrong on that, I shall willingly give way to him.
References have been made to the absence of my hon. Friend the Under-Secretary of State, the hon. Member for Rossendale and Darwen (Mr. Trippier). I have not made a great song and dance about the absence of the shadow spokesman on employment, who presumably suggested this subject for debate, going, presumably, to Newcastle, and leaving it to others to speak for him.
During the debate we heard a good speech from my hon. Friend the Member for Skipton and Ripon (Mr. Watson), who raised the issue that the union—[Interruption.]
Mr. Speaker: Order. It is intolerable that the Minister should be subjected to a barrage from other hon. Members. He has a right to make his speech.
Mr. Hoyle: On a point of order, Mr. Speaker. I agree with you completely. Why does the Minister not address himself to the subject of the debate, which is why the company is not prepared to go to arbitration?
Mr. Speaker: Every hon. Member has a right to make his speech in his own way.
Mr. Bottomley: My hon. Friend the Member for Skipton and Ripon asked whether the union advised its
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members at the company that the management was bluffing. He asked what the union was saying to the employees when they were advised that, if they did not return to work, they would be dismissed.
There is also the question whether the people allegedly speaking on behalf of the workers talked or listened to the majority of the work force, which is still at work. Let us leave aside the question of those who may have filled some of the jobs that were previously held by the strikers, although I do not normally hear people referred to as scabs if they enter the House as Labour Members in the place of others who have failed the reselection test. That seems to be all right for members who are tribunes of the people, who can bawl and shout, but it is different for others. Perhaps the hon. Member for Burnley can speak for the workers who have stayed at work during the dispute and are still at work.
Mr. Pike: When the Minister gives a figure for the number of people at work, he must take account of the fact that they are not all production workers. A large number work in other areas, and they are in a completely different position. The pay issue under dispute is not applicable to those workers. For that reason, the figures are largely distorted. The purpose of the debate is to find out whether the Government recognise that there is a dispute. Their amendment seems to imply that they take the company view that the dispute is over. If the Government accept that there is a dispute—we can argue all night about the wording of the motion—are they prepared to help to resolve the dispute and get the people back to work?
Mr. Bottomley: The hon. Gentleman is aware that if the debate is taking place on the basis that some people believe that there is still hope that discussions might help those involved, there is a great deal to be said for a little deliberate ambiguity. The use of the words "recent dispute" provides that cloak under which discussions might take place.
Mr. Skinner rose—
Mr. Bottomley: I shall come to the hon. Gentleman's speech in a moment, but I ask him to contain himself for a while.
I am grateful to my hon. Friend the Member for Batley and Spen (Mrs. Peacock) who put up with a great deal of normal good-natured abuse from Labour Members. She reminded us of financial facts. It is important that both the management and the unions see the importance of putting financial facts across at all times.
Mrs. Peacock: I hope that, in the time left to him, my hon. Friend will devote some moments to commenting on the Silentnight subsidiary companies, which have experienced no such problems, and the rest of the National Bedding Federation, which has accepted similar terms.
Mr. Bottomley: My hon. Friend has provided me with the opportunity, as someone who has spoken neither to the company nor to the union because I would not speak to one without the other, to say that if Silentnight had been paying only the national minimum, there would not have been a dispute. If the company had agreed after the ballot to pay the minimum award, that would have been the end of the matter. The dispute continued only because the company was paying more than the basic minimum.
The hon. Member for Leeds, West (Mr. Meadowcroft) talked about exploitation of the dispute. He mystified most

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of us because he said that he would vote for the motion if it were not withdrawn, but started talking as though he regretted, as I do, the exploitation of those who are led to go on strike by those who, to use the word of the hon. Member for Bolsover (Mr. Skinner), "invaded" the town last weekend.
Mr. Skinner rose—
Mr. Bottomley: The hon. Gentleman used the word "invasion". Perhaps we can consult the Official Report together after the debate.
There used to be a series of articles in Labour publications devoted to explaining how it is exploitation of one person by another to build up a business in the way that this business was originally built up. For example, Labour Weekly used to be full of pages about how turning a wartime gratuity into a business that employed hundreds of people, paid taxes and national insurance contributions and exported was exploitation by one person of many others. Towards the back page, Labour Weekly also had an article on how to win £500,000 on the football pools, using Labour Weekly perm No. 46. Is the hon. Gentleman saying that it is wrong to build up a business that provides employment so that at least some Labour party members can criticise them? Is it not better to build up employment than to spend one's time pulling people out of jobs where they had the sort of work into which they now wish to return?
Mr. Skinner: Why does the hon. Gentleman not get round to the central question of the debate? On this issue, the Government are not prepared to intervene to settle a dispute in which families have been out for 26 weeks, whereas when Johnson Matthey plc ran into trouble—taking account of the fact that the Minister has relatives on the board of Johnson Matthey plc—they were prepared to move in with £100 million of taxpayers' money to bail out the company. Why are they not now prepared to look after these furniture workers, who have been hammered by one of their friends, Mr. Wonderful? Why does the Minister not turn his attention to that rather than talk about extraneous matters?
Mr. Bottomley: Is what I am saying extraneous when, as we were reminded in a report today, we need to create 1,200 jobs each day or 6,000 within five working days—roughly the rate at which we have been creating jobs in the past two years? For that, people need to find way of meeting customers' needs and of building up businesses in the way that this business grew. Unions need to be rather better at judging whether continued strikes lead to better terms and conditions or fewer jobs.
The sad truth in this dispute is that where there is political exploitation—which is what the motion is about—there is a smaller chance of getting the two sides back together. Speeches such as those that we have heard from the hon. Members for Bolsover and for Coventry, South-East, are not about conditions and opportunities for those who have been working in a company. I prefer the attitude of the hon. Member for Burnley.
I repeat what I said at the beginning. I hope that it is possible for those involved in the dispute to come together and to avoid such disputes in the future, and for politics not to come into future disputes.
Question put, That the original words stand part of the Question:—
The House divided: Ayes 167, Noes 262.

Division No. 16]

[10 pm

AYES

Adams, Allen (Paisley N)

Hancock, Mr. Michael

Alton, David

Harman, Ms Harriet

Anderson, Donald

Harrison, Rt Hon Walter

Archer, Rt Hon Peter

Healey, Rt Hon Denis

Ashley, Rt Hon Jack

Hogg, N. (C'nauld & Kilsyth)

Ashton, Joe

Holland, Stuart (Vauxhall)

Atkinson, N. (Tottenham)

Home Robertson, John

Bagier, Gordon A, T.

Hoyle, Douglas

Banks, Tony (Newham NW)

Hughes, Dr. Mark (Durham)

Barnett, Guy

Hughes, Robert (Aberdeen N)

Barron, Kevin

Hughes, Roy (Newport East)

Beckett, Mrs Margaret

Hughes, Sean (Knowsley S)

Bell, Stuart

Janner, Hon Greville

Benn, Rt Hon Tony

John, Brynmor

Bennett, A. (Dent'n & Red'sh)

Johnston, Sir Russell

Bermingham, Gerald

Jones, Barry (Alyn & Deeside)

Blair, Anthony

Kaufman, Rt Hon Gerald

Boyes, Roland

Kilroy-Silk, Robert

Bray, Dr Jeremy

Kirkwood, Archy

Brown, Gordon (D'f'mline E)

Lambie, David

Brown, Hugh D. (Provan)

Lamond, James

Brown, N. (N'c'tle-u-Tyne E)

Leighton, Ronald

Brown, Ron (E'burgh, Leith)

Lewis, Ron (Carlisle)

Bruce, Malcolm

Lewis, Terence (Worsley)

Buchan, Norman

Litherland, Robert

Caborn, Richard

Livsey, Richard

Callaghan, Jim (Heyw'd & M)

Lloyd, Tony (Stretford)

Campbell, Ian

Lofthouse, Geoffrey

Campbell-Savours, Dale

Loyden, Edward

Canavan, Dennis

McCartney, Hugh

Carter-Jones, Lewis

McDonald, Dr Oonagh

Cartwright, John

McKay, Allen (Penistone)

Clark, Dr David (S Shields)

McKelvey, William

Clarke, Thomas

MacKenzie, Rt Hon Gregor

Clay, Robert

McNamara, Kevin

Clwyd, Mrs Ann

McTaggart, Robert

Cocks, Rt Hon M. (Bristol S.)

McWilliam, John

Cohen, Harry

Madden, Max

Cook, Frank (Stockton North)

Marek, Dr John

Corbett, Robin

Martin, Michael

Corbyn, Jeremy

Mason, Rt Hon Roy

Crowther, Stan

Maxton, John

Cunningham, Dr John

Maynard, Miss Joan

Dalyell, Tam

Meacher, Michael

Davies, Ronald (Caerphilly)

Meadowcroft, Michael

Davis, Terry (B'ham, H'ge H'l)

Michie, William

Deakins, Eric

Mikardo, Ian

Dewar, Donald

Mitchell, Austin (G't Grimsby)

Dixon, Donald

Morris, Rt Hon A. (W'shawe)

Dobson, Frank

Morris, Rt Hon J. (Aberavon)

Dormand, Jack

Nellist, David

Douglas, Dick

Oakes, Rt Hon Gordon

Duffy, A. E. P.

O'Brien, William

Eadie, Alex

Park, George

Eastham, Ken

Patchett, Terry

Ewing, Harry

Pavitt, Laurie

Fatchett, Derek

Pike, Peter

Faulds, Andrew

Powell, Raymond (Ogmore)

Field, Frank (Birkenhead)

Radice, Giles

Fields, T. (L'pool Broad Gn)

Randall, Stuart

Fisher, Mark

Redmond, M.

Flannery, Martin

Rees, Rt Hon M. (Leeds S)

Foot, Rt Hon Michael

Richardson, Ms Jo

Forrester, John

Roberts, Ernest (Hackney N)

Foster, Derek

Robertson, George

Foulkes, George

Robinson, G. (Coventry NW)

Fraser, J. (Norwood)

Rogers, Allan

Freud, Clement

Rooker, J. W.

George, Bruce

Rowlands, Ted

Gilbert, Rt Hon Dr John

Sedgemore, Brian

Godman, Dr Norman

Sheerman, Barry

Golding, John

Sheldon, Rt Hon R.

Gould, Bryan

Shore, Rt Hon Peter

Gourlay, Harry

Short, Ms Clare (Ladywood)

Hamilton, James (M'well N)

Short, Mrs R.(W'hampt'n NE)

Hamilton, W. W. (Fife Central)

Skinner, Dennis

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Smith, C. (Isl'ton S & F'bury)

White, James

Soley, Clive

Williams, Rt Hon A.

Spearing, Nigel

Winnick, David

Stott, Roger

Wrigglesworth, Ian

Strang, Gavin

Young, David (Bolton SE)

Tinn, James

Torney, Tom

Tellers for the Ayes:

Wardell, Gareth (Gower)

Mr. Frank Haynes and

Weetch, Ken

Mr. Lawrence Cunliffe.

Welsh, Michael

NOES

Adley, Robert

Dorrell, Stephen

Aitken, Jonathan

Douglas-Hamilton, Lord J.

Alexander, Richard

du Cann, Rt Hon Sir Edward

Alison, Rt Hon Michael

Dunn, Robert

Amess, David

Durant, Tony

Ancram, Michael

Dykes, Hugh

Ashby, David

Edwards, Rt Hon N. (P'broke)

Aspinwall, Jack

Eggar, Tim

Atkins, Robert (South Ribble)

Evennett, David

Baker, Nicholas (Dorset N)

Eyre, Sir Reginald

Banks, Robert (Harrogate)

Fan, Sir John

Batiste, Spencer

Fenner, Mrs Peggy

Beaumont-Dark, Anthony

Fletcher, Alexander

Bellingham, Henry

Fookes, Miss Janet

Bendall, Vivian

Forman, Nigel

Benyon, William

Forsyth, Michael (Stirling)

Best, Keith

Forth, Eric

Bevan, David Gilroy

Fowler, Rt Hon Norman

Biggs-Davison, Sir John

Fox, Marcus

Blackburn, John

Franks, Cecil

Blaker, Rt Hon Sir Peter

Fraser, Peter (Angus East)

Body, Richard

Freeman, Roger

Bonsor, Sir Nicholas

Fry, Peter

Bottomley, Peter

Galley, Roy

Bottomley, Mrs Virginia

Gardiner, George (Reigate)

Bowden, A. (Brighton K'to'n)

Garel-Jones, Tristan

Boyson, Dr Rhodes

Gilmour, Rt Hon Sir Ian

Braine, Rt Hon Sir Bernard

Glyn, Dr Alan

Brandon-Bravo, Martin

Goodlad, Alastair

Bright, Graham

Gorst, John

Brinton, Tim

Gower, Sir Raymond

Brittan, Rt Hon Leon

Grant, Sir Anthony

Brooke, Hon Peter

Gregory, Conal

Brown, M. (Brigg & Cl'thpes)

Griffiths, Sir Eldon

Browne, John

Griffiths, Peter (Portsm'th N)

Bruinvels, Peter

Grist, Ian

Bryan, Sir Paul

Ground, Patrick

Buchanan-Smith, Rt Hon A.

Grylls, Michael

Budgen, Nick

Gummer, Rt Hon John S

Bulmer, Esmond

Hamilton, Hon A. (Epsom)

Butcher, John

Hamilton, Neil (Tatton)

Butler, Rt Hon Adam

Hampson, Dr Keith

Carlisle, John (Luton N)

Hannam, John

Carlisle, Rt Hon M. (W'ton S)

Haselhurst, Alan

Carttiss, Michael

Hawkins, C. (High Peak)

Cash, William

Hawksley, Warren

Chalker, Mrs Lynda

Hayes, J.

Chapman, Sydney

Hayhoe, Rt Hon Barney

Chope, Christopher

Hayward, Robert

Churchill, W. S.

Heathcoat-Amory, David

Clark, Hon A. (Plym'th S'n)

Heddle, John

Clark, Dr Michael (Rochford)

Henderson, Barry

Clark, Sir W. (Croydon S)

Hickmet, Richard

Clarke, Rt Hon K. (Rushcliffe)

Higgins, Rt Hon Terence L.

Clegg, Sir Walter

Hind, Kenneth

Cockeram, Eric

Hirst, Michael

Colvin, Michael

Hogg, Hon Douglas (Gr'th'm)

Conway, Derek

Holland, Sir Philip (Gedling)

Coombs, Simon

Holt, Richard

Cope, John

Hordern, Sir Peter

Cormack, Patrick

Howard, Michael

Couchman, James

Howarth, Alan (Stratf'd-on-A)

Cranborne, Viscount

Howarth, Gerald (Cannock)

Crouch, David

Howell, Rt Hon D. (G'ldford)

Currie, Mrs Edwina

Howell, Ralph (Norfolk, N)

Dickens, Geoffrey

Hubbard-Miles, Peter

Dicks, Terry

Hunt, David (Wirral)

252

Hunt, John (Ravensbourne)

Shepherd, Colin (Hereford)

Hunter, Andrew

Shepherd, Richard (Aldridge)

Jackson, Robert

Shersby, Michael

Johnson Smith, Sir Geoffrey

Silvester, Fred

Jones, Gwilym (Cardiff N)

Sims, Roger

Jones, Robert (Herts W)

Skeet, T. H. H.

Joseph, Rt Hon Sir Keith

Smith, Tim (Beaconsfield)

Kershaw, Sir Anthony

Soames, Hon Nicholas

Key, Robert

Speller, Tony

King, Roger (B'ham N'field)

Spence, John

Knight, Greg (Derby N)

Spencer, Derek

Knowles, Michael

Spicer, Jim (Dorset W)

Knox, David

Squire, Robin

Lamont, Norman

Stanbrook, Ivor

Lang, Ian

Stanley, John

Latham, Michael

Steen, Anthony

Lawrence, Ivan

Stern, Michael

Lawson, Rt Hon Nigel

Stevens, Lewis (Nuneaton)

Leigh, Edward (Gainsbor'gh)

Stewart, Andrew (Sherwood)

Lester, Jim

Stewart, Ian (Hertf'dshire N)

Lightbown, David

Stokes, John

Lilley, Peter

Stradling Thomas, Sir John

Lloyd, Ian (Havant)

Sumberg, David

Lloyd, Peter, (Fareham)

Taylor, John (Solihull)

Lord, Michael

Taylor, Teddy (S'end E)

Luce, Richard

Temple-Morris, Peter

McCrindle, Robert

Thomas, Rt Hon Peter

MacGregor, Rt Hon John

Thompson, Donald (Calder V)

MacKay, John (Argyll & Bute)

Thompson, Patrick (N'ich N)

McQuarrie, Albert

Thorne, Neil (Ilford S)

Major, John

Thornton, Malcolm

Mates, Michael

Thurnham, Peter

Mather, Carol

Townend, John (Bridlington)

Mawhinney, Dr Brian

Townsend, Cyril D. (B'heath)

Mellor, David

Trippier, David

Merchant, Piers

Trotter, Neville

Moate, Roger

Twinn, Dr Ian

Monro, Sir Hector

Vaughan, Sir Gerard

Morrison, Hon C. (Devizes)

Viggers, Peter

Morrison, Hon P. (Chester)

Waddington, David

Moynihan, Hon C.

Wakeham, Rt Hon John

Neale, Gerrard

Waldegrave, Hon William

Neubert, Michael

Walden, George

Newton, Tony

Walker, Bill (T'side N)

Nicholls, Patrick

Wall, Sir Patrick

Page, Sir John (Harrow W)

Waller, Gary

Page, Richard (Herts SW)

Walters, Dennis

Parris, Matthew

Wardle, C. (Bexhill)

Pattie, Geoffrey

Warren, Kenneth

Peacock, Mrs Elizabeth

Watson, John

Pollock, Alexander

Watts, John

Powley, John

Wells, Bowen (Hertford)

Raison, Rt Hon Timothy

Wells, Sir John (Maidstone)

Rhodes James, Robert

Wheeler, John

Robinson, Mark (N'port W)

Whitfield, John

Roe, Mrs Marion

Wiggin, Jerry

Rossi, Sir Hugh

Winterton, Mrs Ann

Rost, Peter

Winterton, Nicholas

Rowe, Andrew

Wolfson, Mark

Rumbold, Mrs Angela

Wood, Timothy

Ryder, Richard

Woodcock, Michael

Sackville, Hon Thomas

Young, Sir George (Acton)

Sainsbury, Hon Timothy

Sayeed, Jonathan

Tellers for the Noes:

Shaw, Sir Michael (Scarb')

Mr. Mark Lennox-Boyd and

Shelton, William (Streatham)

Mr. Francis Maude.

Question accordingly negatived.
Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 33 (Question on amendments), and agreed to.
MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.
Resolved,
That this House notes with regret the recent industrial dispute at Silentnight plc.

National Film Finance Corporation
10.13 pm
The Minister for Information Technology (Mr. Geoffrey Pattie): I beg to move,
That the draft National Film Finance Corporation (Dissolution) Order 1985, which was laid before this House on 19th November, be approved.
Mr. Speaker: It will be convenient to discuss at the same time the following motion:
That the draft National Film Finance Corporation (Transfer of Assets and Liabilities) Order 1985, which was laid before this House on 19th November, be approved.
Mr. John Gorst: On a point of order, Mr. Speaker. Would it be possible at this stage, before the Minister deals with these instruments, to inquire whether, in view of the fact that the British film industry is now the subject of takeover rumours, it would be more appropriate for the Minister, far from moving the orders, to withdraw them so that matters which are totally contingent for the realisation of these orders can be resolved first?
Mr. Speaker: That is not a matter for me. We frequently debate rumours in this House.
Mr. Pattie: The draft orders provide for the transfer of the assets and liabilities of the National Film Finance Corporation to its private sector successor, the British Screen Finance Consortium, and for the dissolution of the NFFC once that transfer has taken place.
When the Films Bill debates were taking place earlier this year we envisaged that there would be a straightforward dissolution of the NFFC, with BSFC becoming operational immediately afterwards. It subsequently became apparent that, if that route were followed, NFFC's accumulated tax losses, a valuable means of increasing the sums available to BSFC, would be lost. However, if it were possible to transfer NFFC's assets and liabilities to a subsidiary company—BSFC Limited—in advance of the corporation's dissolution, the tax losses would also pass to BSFC as long as there was no major change in the nature or conduct of the business within three years. This does not mean that BSFC would be receiving special tax treatment. Those arrangements are frequently used by companies in the public and private sectors. However, it would mean that BSFC would have the benefit of an NFFC asset, which would not be available to it if a straightforward dissolution took place.
We were keen to maximise the funds available for film production through the new company and decided that this was the route we would take. Unfortunately, that has considerably increased the documentation necessary to effect the transition from NFFC to BSFC and also the complexity of the transaction. In particular, six separate items of documentation relating to the arrangements had to be prepared; copies of each have been placed in the Libraries of both Houses. All the documents have been signed by the various parties, but their completion is dependent on the two draft orders being approved.
It might be helpful if I described briefly the various documents and the sequence of events that is envisaged.
The first document is a hive-down agreement, operative on 23 December, by which NFFC's assets and liabilities at that date will be transferred to BSFC. In return, NFFC will receive shares in BSFC and a sum of money sufficient
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to cover dissolution costs and the total funds not committed to film project by NFFC. Those funds are destined for the British Film Fund Agency for distribution to film producers under the normal Eady rules. The sum of money will not be paid at this stage; it will be left outstanding on loan account to be paid on demand later.
On dissolution day, scheduled for 30 December, the loan account and shares in BSFC will pass to the Secretary of State. The Secretary of State and BSFC will complete an agreement, under which BSFC will transfer the portfolio of film rights, received on the transfer of NFFC's assets and liabilities, to the Secretary of State in return for a licence to operate the portfolio, upon certain conditions. The purpose of the agreement is to protect the assets contained in the portfolio and to ensure that the licence may, if necessary, be terminated, and the portfolio returned to the Secretary of State. The Secretary of State will also at this stage, demand and receive from BSFC repayment of the loan account moneys which I mentioned earlier, for appropriate disbursement. The financing agreement, by which the Secretary of State agrees to provide £1·5 million a year for five years to BSFC on appropriate conditions, will come into operation. The Secretary of State, under a separate agreement, will exercise his option to transfer the shares held by him in BSFC to the consortium members. The agreement between the consortium members and the Secretary of State, by which they commit themselves to fund BSFC, will become effective. This agreement has been expressed in the form of a finance letter so that it can be altered more readily when—as we hope and expect—more investors join the original members.
Finally, as a measure of protection for the funds available to BSFC, the Secretary of State has agreed to indemnify the company in respect of acts, omissions and liabilities of NFFC which were incurred before the corporation's assets were transferred to the company.
The arrangements should be completed by 2 January and BSFC should be fully operational from that date.
It is also intended that BSFC will operate the Government's project development scheme, which will provide finance of £500,000 a year for five years for the earliest stages of film production and for short films. The detail of this contract is still under discussion between the Secretary of State and BSFC, but I can assure the House that it will fairly reflect the assurances contained in the memorandum of understanding which my hon. Friend the present Minister of State for Defence Procurement placed in the Libraries of both Houses during the Films Bill debates earlier this year.
I would like now to update the House on BSFC. Hon. Members will recall that the memorandum of understanding stated that there would be four participants in the consortium: Channel Four Television providing £300,000 for five years, Thorn-EMI Screen Entertainment Ltd providing £300,000 for three years, Rank Group Holdings Ltd providing £250,000 for three years and members of the British Videogram Association also providing £250,000 for three years. The current position is that Channel Four Television, Rank and TESE have contracted to meet their commitments. Unfortunately, however, not all of the appropriate commitments from member companies of the BVA have yet been secured. That is disappointing, but I have no reason to believe that it is anything more than a temporary setback caused by the nature of this participant's structure and the number of interests

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involved. As regards TESE, I am pleased to tell the House that all three of the companies which appear to be leading bidders have given assurances that they will take on TESE's commitment to the consortium. Therefore, whatever the outcome of developments with regard to TESE's future ownership, on which I am sure hon. Members will wish to comment during the debate, we are following closely proceedings to ensure that there will be no adverse impact on the consortium.
Mr. Gorst: Can my hon. Friend assure the House that, if there is a change in the ownership of TESE, the Secretary of State would be concerned to find that the British company was no longer a British company? Under the statutory instrument for the transfer of assets, the Secretary of State must satisfy himself to that effect. If the company that takes over TESE is American-owned, would that undermine the arrangements that are being made?
Mr. Pattie: My hon. Friend knows the procedures that will be followed in the event of a transaction during the next few days. The Office of Fair Trading would immediately set its machinery in progress and would submit advice to my right hon. Friend the Secretary of State. My hon. Friend's point would be considered by my right hon. Friend at that time.
Mr. Bryan Gould: I am interested in the Minister's answer. Do I understand from what he said that the question of whether BSFC remains a British company is not a matter of statutory definition but would fall within the more general considerations to be taken ino account by the Office of Fair Trading and would be relevant only in that sense?
Mr. Pattie: The hon. Gentleman must have misunderstood me. We are not talking about whether BSFC would be a British company. Unless I have misunderstood my hon. Friend the Member for Hendon, North (Mr. Gorst), I believe that his intervention was triggered by speculation, whether well-founded or ill-founded, in the newspapers about the ownership of one member of the consortium that will fund BSFC. I had addressed that point.
Mr. Gorst: May I clarify the matter for my hon. Friend? The draft statutory instrument uses the words,
"whereas the Secretary of State is satisfied that the Company is and will remain a British company."
It will not remain a British company in the moral sense, whatever may be the legal sense, if one quarter of it is American-owned. What my hon. Friend said in reply was that that would be for the Office of Fair Trading to consider, whereas the draft statutory instrument says that it is for the Secretary of State to decide. I do not understand his reply.
Mr. Pattie: I was simply dealing with the sequence of events should TESE be sold. I cannot anticipate my right hon. Friend's reaction to the advice that he might receive. I am seeking to make clear what the Government want to see happen.
A moment ago I said that the three companies which are currently involved and have given commitments, Channel Four television, Thorn-EMI Screen Entertainment Limited and Rank Group Holdings, have each given undertakings with specific figures and times to the BSFC. The Government have taken soundings from
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the three bodies involved in the current negotiations with TESE to ascertain whether they would be prepared to take on the liability, and they have all confirmed their commitment to do so.
Mr. Tim Brinton: Will my hon. Friend give way?
Mr. Pattie: I do not want to give way at the moment. I hope to have the opportunity to reply to the debate, but it would be helpful if I could proceed at this stage.
The internal structure of BSFC will be a board consisting of a chairman, a chief executive and representatives of each of the contributing organisations, including a Government nominated director.
I am pleased to be able to tell the House that Lord Barnett has accepted the post of BSFC chairman. Lord Barnett is well known in this House and the other place and I need say little about the personal qualities that he will bring to the post. BSFC participants consider that his paticular skills and expertise will complement those of their chief executive, Mr. Simon Relph, about whom I shall say more in a moment.
I am sure that hon. Members will also wish to know that Mr. David Berriman has been invited to be the Government nominated director to the BSFC board. Mr. Berriman is a non-executive director of Guinness Mahon and Co. merchant bankers, with a special interest in film finance. He holds a non-executive directorship in Cable and Wireless plc and was chairman of Satellite Television plc from its formation in 1981 until earlier this year. He is also a governor of the National Film and Television School and a member of the British Screen Advisory Council.
The BSFC board will lay down broad parameters for the company's operations—set out in guidelines for the chief executive—which must be approved by the Secretary of State. The board will not have an active involvement in individual investment decisions. These will be left to the chief executive, who will have responsibility for the management and efficiency of the organisation.
As hon. Members will be aware, Mr. Simon Relph was appointed BSFC chief executive earlier this year. Mr. Relph is an experienced independent film producer with an impressive catalogue of films to his credit and he follows a long and successful family tradition of involvement in the film industry. I was pleased to have the opportunity to meet Mr. Relph recently and was impressed with his plans for the consortium and the drive and enthusiasm that I believe he will bring to the post. I understand that he is already considering film projects and hopes to make BSFC's first commitments early in the new year.
The intention is that Mr. Relph will use the BSFC's funds selectively, providing "front" money to encourage others to invest or "end" money, which is often the hardest to find, to enable part-financed projects to go into production. Thus BSFC's funds will be used to maximum effect, increasing the number of low and medium budget British films available for audiences to enjoy. As I have said previously, the decision on which projects to support will be his, although the approval of the independent chairman, Lord Barnett, will be required if he wishes to invest more than £500,000 in any one film.
I hope that it will remove any lingering doubts about the manner in which BSFC will operate if I briefly outline

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some of the guidelines presently laid down by the board for the chief executive's use. These include the requirement that he should aim to foster the development of British films and film makers. As well as trying to secure a return on the funds put up by participants, the chief executive will aim to invest in films which provide opportunities for new creative talent or where the film makers may find it difficult to raise the whole of the funds required from other sources. He is also specifically charged with endeavouring to foster the availability of finance from other quarters. Finally, the chief executive will ensure that, subject to the objectives of the company being met, BSFC will act consistently with the long-term interests and well-being of the film industry in the United Kingdom.
I should like to take this opportunity to refer to developments in the industry since film matters were last considered by the House earlier this year. It is just over six months since the Films Act received the Royal Assent. Since that time, the Eady levy has been abolished and the quota and licensing requirements have also ended. These steps have been widely welcomed by the industry.
I am sure we have all been greatly cheered by the evidence of a continuing marked upturn in cinema admissions during this time. I think that most would agree that the British Film Year initiative has significantly contributed to the increase in cinema attendances and has been largely responsible for the higher profile that the industry has enjoyed this year. As hon. Members will be aware, the Government contributed £250,000 for BFY domestic events, including its most successful regional road show and the valuable film educational material that it has produced and made available to secondary schools. In addition, we were pleased to give £75,000 towards its overseas activities and I very much expect and look forward to a substantial BFY presence at the Cannes film festival next year.
Also encouraging has been the enthusiasm of the cinema sector in introducing experiments in pricing into a variety of locations and the large scale investment in the refurbishment of existing stock which is being carried out. The new development of multi-screen cinemas is another positive step for the future and I am sure that we shall all look with interest at the fortunes of the first of these developments, the recently opened 10-screen cinema in Milton Keynes.
I believe that the advent of BSFC will assist the production sector of the industry to sustain its recent success, and I invite the House to support the two orders.
10.31 pm
Mr. Bryan Gould: Behind the two orders, as I believe that the Minister admitted, lies a web of complexity far greater than many of us envisaged when we debated these matters during the passage of Films Bill. I welcome the Minister for Information Technology to these debates, but it is perhaps regrettable that the Minister who piloted the Films Bill through the House, who is present in the Chamber, was not at the Dispatch Box to introduce the orders.
The Minister for Information Technology will have been informed by his colleagues, especially those who took part in the Committee on the Films Bill, that the proposals to which the orders gave effect were strongly opposed in the Committee not only by the Opposition but by many Conservative Members, especially those with a
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particular interest in and affection for the film industry. Furthermore, the proposals were specifically and vehemently opposed by every organisation with a claim to speak for the industry. That is the background against which we must consider the order today.
It is right that I should begin by paying tribute to the National Film Finance Corporation. Tributes were paid during the Committee stage of the Films Bill when it first became clear that the Government were intent on doing away with the corporation, but I repeat them today because the purport of one of the orders is to bring about the dissolution of the NFFC.
Many people, including some of our leading producers, have made it clear that in their own personal careers they owe a great debt to the NFFC. Many people also agree that the British film industry as a whole is in the debt of the corporation, especially in view of the meagre resources with which it has had to contend in recent years.
The real problem, however, is not just the demise of the NFFC but the nature, role and function of the institution proposed to replace it. That problem in turn arises from a fundamental, almost philosophical difference between the Government and those who perhaps most persuasively claim to speak for the film industry. The latter group argued throughout the passage of the Films Bill, and would do so tonight, that the importance of film as an industry transcends its commercial significance.
Film is an important expression of British cultural life and it cannot be left to the vagaries of the market place and the pressures of commercial forces. We and many beyond our ranks have argued it is important that the Government and British society should recognise the continuing contribution of film and should express an interest in the survival and future expansion of the industry. That can be done only through a publicly financed and supported institution, such as the NFFC.
The Government's proposal is familiar. It does not appear in its usual guise, but it is privatisation. Privatisation is to be achieved by a slightly convoluted procedure, a side wind. The Government believe that the future of the film industry can be safely entrusted to commercial forces. That immediately focuses attention on a number of matters of concern which the Ministers' opening remarks did not allay.
We made it clear in Committee that there is an absence in the Film Act 1985 of anything approaching a statutory obligation imposed upon the successor body to pay attention to the continued good health of the British film industry. We are left with the frailty of a commercial contract, the difficulties of interpretation, enforcement and, as the Minister rightly concedes, the difficulties of parties to the contract changing identity by virtue of commercial reorganisations.
We are left with an unequal contract. I leave aside the point which I attempted to emphasise in Committee, that the participant companies are required, in return for the derived advantages, to do something which they would do anyway, if they are concerned about the future of the British film industry, and that is to produce British films.
That is the extent of the consideration which they are required to offer under this arrangement. The problem is that the commercial commitment is to last for three years. The Government, oddly enough, have agreed to maintain their commitment for five years.
The question which has occurred to us and other critics of this arrangement is what happens at the end of the three

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years if the British Screen Finance Consortium says that it gave it its best shot but the industry is in a parlous state, a terminal condition, and that nothing can be done to save it. If it withdrew and did not renew the arrangement, who will pick up the bits? Who is there to step into the breach that is left as a consequence of the demise of the only public institution capable of fulfilling its functions? Nothing we have heard tonight or on previous occasions has answered that question satisfactorily.
Mr. Brinton: The hon. Gentleman has talked about a possible three or five years, but in a sense are we not thrusting out into the dark? My calculations tell me that, in spite of the Minister's pious hope that things will go all right, if two of the major parties were to merge in the form of a takeover and the present partners were ruled out of court because of the Monopolies and Mergers Commission and British Videogram Association not coming to an agreement with its members, the NFFC would be left with one partner, Channel Four Television.
Mr. Gould: The hon. Gentleman is right. He addresses a problem which I shall take up later. In the financing agreement, which we were invited to consider, there is a yawning gap. There are three parties only and not the four that we were told would be involved. The Minister has explained that there are difficulties in getting the British Videogram Association into a position in which it can fulfil what I assume were undertakings. However, many months have passed. We were told that £1·1 million would be made available over at least the three-year period, but his contracting partners have come forward with only £85,000.
Mr. Chris Smith: Does my hon. Friend recall that during our discussions in Committee on the Films Bill, as it then was, the British Videogram Association suggested to the Government and the Committee that it would not be prepared to make any contribution if there were a danger of a levy being placed on blank tapes? Will he press the Minister on whether there is any remnant of that discussion in the present reluctance of the association to come up with the goods?
Mr. Gould: I am grateful to my hon. Friend. His excellent memory is correct. We put the issue to the Minister in Committee and he denied that any such thought was in anyone's mind. We watch with interest the reports that are starting to appear in the daily press to the effect that perhaps the Government are having second thoughts on a levy on blank tape. I wonder whether that is what the British Videogram Association is waiting for. I invite the Minister in his reply to comment upon that.
As I understand it, there are other peculiarities about the financial arrangements. Will the Minister confirm that the £1·5 million per year which the Government are committed to providing will be taxable in the hands of the recipients? Is that why the deal to write off the tax losses of the NFFC is so important? Will he confirm that that deal will last for only three years whereas the Government's commitment to pay £1·5 million will last for five years? Are we to assume that that sum will be taxable for the remaining two years and will be worth much less than would appear at first sight? Perhaps the Minister will comment on the £500,000 that is to be made available to
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the national film development fund. It may be that that money can be used for any given film, but that will be for only two thirds of development costs. If that is so, there has been a significant change in practice. It will mean that, far from the fund being able to absolve film producers from the difficult business of raising finance for development, they will still have to turn to private sources for finance, with all the attendant difficulties. I hope that the Minister will be able to tell us that that is not the position.
Our objection in principle to what is provided in the orders remains as strong as ever. Our difficulties with unresolved problems also subsist. However, there has been in the past few days a major new development. One of the parties to the BSFC—Thorn—EMI Screen Entertainment Limited—is in danger of being taken over. Perhaps "in danger" is the wrong term because Thorn—EMI seems extremely keen to sell. We must assume that the deal will go ahead with some purchaser.
The House will see that the timing of the development is extremely unfortunate for the Government. It underlines, highlights and emphasises all the doubts and difficulties that we felt about handing over the future of the film industry to commercial forces. These forces are subject to all the usual market pressures and the difficulties of maintaining commercial viability, and they change identity in unpredictable ways. The Minister must take account of the fact that TESE is vital to the British film industry. In some respects, it is half of the British industry as a distributor, exhibitor, a producer of films and the owner of a major film studio, a major film archive and an extensive film and video library.
The problem is compounded when we look at the list of potential bidders and realise that the leading contender, certainly the contender that has offered the most money, is an American company—Cannon. It is based in America, owned by two Israelis and operates internationally. It has no record of commitment to the British film industry. That is the relevance of the question of the hon. Member for Hendon, North (Mr. Gorst). Is the British Screen Finance Consortium, in which a major participant will be Cannon, a British company for the purpose of the orders? We need to know the Minister's answer, not that of the Monopolies and Mergers Commission.
Mr. Gorst: The problem is even more worrying than the hon. Gentleman has presented. If a takeover or a sale took place along the lines that the hon. Gentleman and I have been concerned about, it would not only be a question of British film making and whether it would be taking place at the level promised by the Government, but whether the cinemas would continue to exist. Even if the motives of the Cannon group are to remain in the cinema exhibiting side of the business, there is no guarantee that it will not close some of the cinemas which are in parallel with the people that it has taken over.
Mr. Gould: I hope to consider a little later in my remarks precisely the point that the hon. Gentleman has made. I agree with the concern that he has expressed.
For the moment, I want to concentrate on Cannon as a British film producer, having taken over TESE, as one assumes it might. On its record one is bound to conclude that although occasionally it might, for straightforward commercial reasons, depending on exchange rates and other factors, choose to use British technicians and

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facilities for the making of films, that is a different concept from the business of making British films. We made it clear in Committee that by "British films" we mean films that reflect British life and British themes and are a true manifestation of British culture. I would defy the Minister or any other hon. Member, looking at Cannon's record, to express any confidence that Cannon, having taken over such a large chunk of the British film industry, would be in a position to maintain, or would even wish to maintain, that concept of British films.
Mr. Gorst: I shall interrupt just once more because I think that my point is relevant. It was reported in the Daily Mail two days ago that the next film of one of the partners in that operation will be a
"modern version of 'King Lear' with a script by Norman Mailer and set in America, with Lee Marvin as the King who runs a conglomerate and Woody Allen as the Fool, his accountant."
If that is British in its content, I do not know what "British" means any longer.
Mr. Gould: I hestitate to offer any judgment on the value of such a project, but, however meritorious it is, as the hon. Gentleman says, it cannot be regarded as an expression of the British film industry.
Many interventions from both sides of the House have made it clear that the proposed takeover raises wider issues. For example, there is the well-founded fear, which has been the case in many recent takeovers, that part of the purchase price will be obtained through asset stripping. Perhaps the obvious asset to be stripped in this case is the Elstree studio. That would be an immense loss to the British film production industry. There is the matter of the destination of the extremely valuable film archive. Perhaps potentially the most worrying aspect arising from the deal would be the reinforcement of the distribution duopoly from which we thought we might have been escaping.
Without making too much fuss about it, Cannon has moved into second place already through its takeover of the Star cinema chain. The merger between Cannon and TESE would give the new body 57 per cent. of British cinema screens. On monopoly and merger grounds alone, that is sufficient to begin a large number of alarm bells ringing. That is what has happened. The industry has reacted to the prospect with horror. David Puttnam has described the proposed takeover as a disaster for the British film industry—
Mr. Jack Dormand: And Richard Attenborough.
Mr. Gould: Indeed.
The Film Industry Council of Great Britain, the membership of which reads like a roll of honour, has too. All the bodies that claim to speak for the industry have called upon the Secretary of State and the Director General of Fair Trading to make sure that the bid is referred to the Monopolies and Mergers Commission. The British Screen Advisory Council fears, as it says in its letter to the Director General, if the takeover takes place, the
"elimination of anything which could be called the British film industry."
I am sure that the Secretary of State will be aware of this. I draw the Minister's attention to the MMC report on film distribution in 1983, which said paragraph in 8.57:
"It appears to us unlikely that EMI or Rank"—
then the two major film distributors—
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"would seek to acquire cinemas, with the result that they increased their market shares in exhibition. But in the eventuality that they did, we believe that it would be detrimental to the public interest."
The report was describing an increase in market share by either of the then two leading operators. We are now considering the prospect of a much greater concentration of cinema ownership than anything contemplated by the MMC at that point, but which, even at its much lesser degree, it condemned as being detrimental to the public interest.
Therefore, I hope that the Minister will accept—perhaps he will say tonight that he does—that any bid by Cannon to take over TESE would cry out for reference to the MMC. I hope that that would happened.
It is conceivable, as the hon. Member for Hendon, North said, that, having taken over TESE, if permitted to do so, Cannon would seek to deal with the problem of excessive market share simply by closing down capacity. That might be one of the consequences, but it would be almost equally detrimental to the future of the British film industry. I hope that the Minister will not allow that to happen, or accept it with equanimity.
The proposed sale of TESE has arisen perhaps fortuitously for those of us who have criticised the Government's proposals, and perhaps unluckily in its timing for the Government. It is no doubt embarrassing to the Government to discover that the rock of the British Screen Finance Consortium on which they propose to build the future of the British film industry is quicksand. In another sense it is poetic—not to say filmic—justice. Having deliberately handed over the future of the British film industry exclusively to commercial forces, the Government are now compelled to live with the consequences. But we the critics of the Government are entitled to say not only, "We told you so," but that it is now the Government's responsibility not just to live with the consequences, but to ensure that the British film industry, particularly in British Film Year, does not have to die with the consequences.
Now, many of the Government's assumptions have turned out to be false. The British film industry is facing developments of an unpredictable nature and its very survival is at stake. Therefore, tonight is the wrong moment for the Government to propose the orders. I urge them to accept that some time should be given to see what happens to one of the major elements in the industry. We need to see the future shape of the British film industry; we need to know who the participants and the contracting parties to the arrangements will be.
For those reasons, I urge the Government at least to wait until the dust has settled. I urge the Minister to withdraw the orders. I believe that I do so with the support of many hon. Members on both sides of the House.
10.54 pm
Mr. Tim Brinton: I start by echoing the words of the hon. Member for Dagenham (Mr. Gould). The more one considers the scene of these few days, the more one doubts the wisdom of the two orders being passed by the House tonight. It seems to be the wrong moment in every way.
Before I continue, I must, as is traditional, declare my interests which conflict slightly with each other. I am the part-time chairman of Airtime Publicity (Newsflash) Limited, which has as one of its many clients Thorn-EMI;

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on the other side I am a member of the Association of Cinematograph, Television and Allied Technicians, and Equity, who seek employment in films. When the parent legislation was being considered, I was also a consultant for the British Videogram Association Limited, but I am no longer because I suspect that it did not like my views about a levy on films being shown on television. So I am free to express my views without any taint in that direction.
I started my contribution to the long debate on the British film industry about a year ago with a question—do the Government want a British film production industry? That question has still not been satisfactorily answered. We have had a compromise. I understand entirely the suggestion of the hon. Member for Dagenham that the British film industry should be publicly supported if it is to survive, but I do not go entirely along that line.
There was another method—of saying to the television authorities which show feature films that a levy should be paid. After all, it is not taxpayers' money; it is money raised by licence or by commercials on television. That levy should go as a contribution not necessarily to distributors or exhibitors but to film producers.
The proposed partners in the curious marriage of four produce as well as distribute and exhibit. But the main concerns of the two major partners—Ranks and Thorn-EMI, in my estimation—are the cinemas, distribution and exhibition. If we go back to the history of the Eady levy, we find that it was originated to help the film producer, but it tends to get syphoned away from the creative end of the market.
The position has been eloquently described by my hon. Friend the Member for Hendon, North (Mr. Gorst) and by the hon. Member for Dagenham. There is doubt as to whether there will be any partners within a week or two. I support the views put forward about the concept of the Cannon company coming in and buying up Thorn-EMI. Like many of my colleagues, I received a postcard today from David Puttnam. On the front of it, with some pictures, was written the word "Bodyline". I thought that was a description of what the Government were about to do to the British film industry, but it turned out to be an advertisement for his latest film.
The whole British film industry—trade unions, actors, producers, exhibitors and distributors—is fearful that this arrangement, far from just not working, may pull the whole castle down. If Cannon does buy Thorn-EMI, I hope my hon. Friend the Minister will reassure us that that must go to the Office of Fair Trading straight away.
I should like my hon. Friend to answer another question. What happens if the Rank organisation buys Thorn-EMI? Am I right in suggesting that if the British Videogram Association does not reach agreement, that strange financing unit will be left merely with Channel 4? That seems sad. Ironically there is one virtue about it; the level of funding suggested by the Government is so low that that is the size of product which the Government are thinking of supporting, not the true feature film.
10.59 pm
Mr. Clement Freud: The case against these orders has been eloquently made by almost all hon. Members but perhaps most eloquently by the hon. Member for Dagenham (Mr. Gould). The orders
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manage to create a structure beset with uncertainties and contradictions which will do little to foster the British film industry. It must have been noticed that no part of the British film industry welcomes them.
The orders are part of the central Government belief that everything goes better if it is private. It is clear that in this case that is an ill-considered belief. They fail to recognise any Government responsibility towards the industry.
The French Government have given £9 million to their film industry. The Minister's pride at having pulled £500,000 from the Treasury compares pretty pathetically with that.
Two sets of questions must be asked about the new body—finance and structure. The hon. Member for Gravesham (Mr. Brinton) mentioned the postcard that he had received from David Puttnam about "Bodyline". The Minister has six slips and a gully in the box beside him, but he has not been well served. The hon. Member for Hendon, North (Mr. Gorst) asked him about the nationality of the bidder. We might have thought that we would have had a promise that if it turns out to be non-British the orders will be withdrawn.
The Government input was described as taking the place of the abolished Eady money. They continue to claim that they are giving about twice the inadequate money that Eady gave. When considering that contribution we are forced to return to the point that we reached over and over again in Committee, which is that given that Eady was largely abolished because it was so inadequate, to double the amount does not make it adequate.
The claim should be examined more closely. There are a number of aspects to be examined—the tax incentives and the business expansion scheme, about which we heard so much. It would be interesting to know how many films have been made with business expansion scheme money. What representations has the Minister received about the rules governing the length of time for which the money must be committed and the number of interests that the company can have under the scheme. It appeared during the passage of the Films Bill—the Under-Secretary of State for Employment said that he would consider the points—that the business expansion scheme was irrelevant given the special nature of the film industry. I hope that the Minister can tell us about that.
The point has been made that the Government's contribution is subject to tax. The Government have said that they will put £1 million to £1·5 million into the new body for five years. By Government standards, if not by those of the industry, that may sound reasonably generous. The belief in the industry is that the amounts will be subject to tax. It seems insane to give money with one hand and take it away with the other. It also seems to be mean because it reduces the amount by nearly one third.
I should also like a reply to the question that the industry is asking—is the amount a loan rather than a grant? Section 5 of the Films Act 1985 provides that the Secretary of State may provide the money by loan, grant or guarantee. However, the document sent from the Minister of State's office which contains the agreement between his Department and the four contributors' solicitors specifies a loan. It states:
"The Secretary of State proposes to make available to the consortium funds of £1·5 million each year for a period of five years. This is presently intended to be in the form of a loan."

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That document is dated February 1985. The House needs clarification of that point. Why is the money to be a loan rather than a grant? Does that not undermine whatever confidence the industry might have had in the Government's commitment? It would be fair to announce the conditions of repayment. Why has the money always been described as a grant? Why should Britain be the only major country whose Govenment give no solid financial support to the film industry?
It is also fair to point out that the Government are misleading themselves about what can be achieved with the money. There is the point about basing the contributions on the pathetic Eady money. They may be misleading themselves that many films can be made with the money available because the BFFC has been active recently on a small budget. If the Minister studies the matter, he will realise that success has been achieved by saving its money for several years.
As many hon. Members wish to speak, I shall close with the possible take over of Thorn-EMI by Cannon. It is extraordinarily important to consider that from the point of view of both nationality and monopoly, and to remember that Cannon has shown no commitment whatsoever to the British film industry. It has not even given money to British Film Year, and it has no record of making good artistic films. There is a case for the take over to be referred on grounds of cinema share, which would rise to nearly 60 per cent. of the total, and the consequent impact on distribution practices, which have already been described by the commission as dubious.
As I have asked for the withdrawal of the orders, it would only be right for the House to compliment the Minister on his choice of Lord Barnett, whom we all respect and admire, and to welcome Mr. Simon Relph, a second generation film maker, who is equally acceptable. In view of our representations, I ask the Minister to think most carefully about withdrawing the orders now for the time being, if not for ever.
11.6 pm
Mr. John Gorst: I have not heard a word in the speeches after that of the Minister with which I disagree. I agree with them so much that I can cut my speech short. Every speech has been hitting the target. I hope that my hon. Friend the Minister will bear that in mind in his reply.
Nevertheless, I endorse the tribute paid to the NFFC's work over the years by the hon. Member for Dagenham (Mr. Gould). Indeed, I pay tribute to the reputation of those whom the Minister has selected as part of the upper echelons of the structure. However, I echo the hon. Gentleman when I say that the structure will be on shifting sands. I agree with all that he said about Cannon.
My hon. Friend the Member for Gravesham (Mr. Brinton) mentioned the possibility of a monopoly, but the third threat, of which not much has been made, is that about 60 per cent. of what is being sold by Thorn-EMI Screen Entertainment is library material. Other bidders—they have been referred to in press reports—will be extremely hungry to acquire the other assets, and will have no commitment to cinemas per se, or to making British films. That is another cause for anxiety, even if the concerns about a monopoly or foreign buyers do not arise. I hope that if the time comes, the Minister will consider
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that seriously. The major weakness of the structure is that it is being formed on a basis of which at least one quarter is up for auction before the operation starts.
I wish to drive it home to the Minister that in discussing the two orders we are doing worse than putting the cart before the horse. We are asking the cart and the horse to travel along a road which has not yet been decided, down a route and in a direction that we do not know, and without their having even the necessary sustenance with which to make the journey. This plodding, pleading and over long-suffering beast is the British film industry, which is now facing a botched up future, worse than anything predicted during the debates on the Films Act.
Mr. Freud: The horse and cart do not even have a valid tax disc.
Mr. Gorst: Perhaps it is in such a state that it cannot afford to buy one.
The House will recall that my right hon. Friend the Member for Mole Valley (Mr. Baker) scrutinised the film industry, and disappeared. He evaporated before the Bill ever came before the House. His position was then taken by my hon. Friend the Member for Kingston upon Thames (Mr. Lamont), who piloted and enacted the proposals that he had inherited. He then moved on to procure the defence of the realm.
Now we have my hon. Friend the Member for Chertsey and Walton (Mr. Pattie), who picks up the shreds and remnants of what they left behind them. One wonders whether he will be here in a year's time to give us further answers to the questions on which he will be replying tonight. I hope that he will be here, because I hope that he will give us satisfactory answers to the points that we are making. If he does he will deserve to be here to answer our subsequent questions and receive our thanks.
The important questions are those of monopoly, asset stripping and foreign ownership. My hon. Friend the Minister owes us answers on these points because they are absolutely central to whether the orders are approved or not. Today's statistics, like yesterday's promises and tomorrow's predictions on the film industry, will have to be good to take in those who have witnessed the Government's continued retreats throughout the past few years. There cannot be any secret about this. The only satisfactory immediate step would be a re-examination of the financing of British film making, and these orders are only a paltry aspect of that.
Although my hon. Friend the Minister made much of the small trivialities—for which small mercies we must be thankful—they are trivialities in relation to what is required. Some of my hon. Friends and Labour Members will remember that during the debates on the Act I said that what was being proffered to the film industry was less than the price of a tank. With his early experience in the Ministry of Defence, my hon. Friend will know that we need many tanks to have an army, and many films to have a film industry.
I hope that my hon. Friend will candidly admit that events are overtaking these orders. If he admits that, he will also appreciate that they belong to a situation for which they were never an answer, and, if approved, will come into effect to meet a situation that no longer obtains.
I draw my hon. Friend's attention to what his predecessor said to the House. In answer to me and the hon. Member for Dagenham, the Minister said:

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"I recognised the legitimacy of the point … about wanting to be assured that this was not just a commercial organisation but a body which would have regard to the cultural aspects of film making and would be a force towards underpinning that important aspect of our cultural life."
I remind my hon. Friend of the quotation from the Daily Mail that I read out during the speech of the hon. Member for Dagenham. Although one does not want to pre-judge the Cannon organisation and its plans, if it has any, for the British industry, the portent of that quotation will need to be carefully taken note of by any Minister.
My hon. Friend the Member for Kingston upon Thames also said:
"If anything went wrong with the consortium, or if we felt that it was not doing what was in the interests of the British film industry, the Government would be able to retrieve the assets." —[Official Report, 5 February 1985; Vol. 72, c. 801–7.]
I put it to my hon. Friend the Minister for Information Technology that that does not have to arise in the future; it has arisen now.
11.15 pm
Mr. Austin Mitchell: I cannot echo the remarks of the hon. Member for Hendon, North (Mr. Gorst) about putting the cart before the horse. Given the nature of the Minister for Information Technology's speech, the Government are putting the cart before the hearse. Another nail is being driven into the coffin of the British film industry. It is going out not with a bang but with an ideological whimper. We are confronted with the spectacle of yet another Minister being in the job long enough to throw a few more shovelfuls of dirt into the grave of the British film industry before he moves on to another portfolio.
The orders are a sad postscript to the Films Act 1985. It was a botched-up job even then. It has been made even messier by the transmutation of Thorn-EMI into a bottomless hole into which it is desperate to shovel money at any cost. The original mistake was that this Government assumed that the British film industry, which reflects our national life and our national character, can survive without the financial help that is given by Governments to the film industries of nearly every other advanced country. It could easily become a production outhouse for the American film industry, producing a mid-Atlantic culture that represents nothing.
The British film industry could become a production facility for films such as "Star Wars." Britain cannot have a film industry that reflects our stupidities, complexities and claustrophobia without Government help. The Minister boasted of providing £1½ million per annum over five years. It contrasts sadly with the £1 million per annum that was provided by the Labour Government in 1948 when the National Film Finance Corporation was established.
The new body is to produce films for television. This category excludes the industry's most recent and major successes. "Another Country" was financed by the existing body, as were "The Dresser", "A Private Function", "Local Hero", "Nineteen Eighty-Four", "The Company of Wolves", "Chariots of Fire", "The Killing Fields" and "Gandhi". If the British film industry is to concentrate on television films—which ought to be financed by television—it will not be doing the job that it ought to do.
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I do not object to privatisation. I do not mind gratifying the Government's prejudices if they will provide financial support for the industry. However, privatisation raises problems about the life of a private company, because of the possibility of a takeover and the portability of the private company, with control going overseas. The real problem is the provision of finance for a viable, healthy national industry. The Government offer no solution to that problem.
To all that has to be added the problem of Thorn-EMI. This company must have some kind of financial death wish. It demonstrated real incompetence by taking a major stake in a major commercial television contract and turning it into a financial disaster. It is desperately dredging around for money. It would have sold off the Thames Television contract if the Independent Broadcasting Authority had allowed it to do so. It has tried to raise money from the film libraries of both Thames Television and Thorn-EMI. These have become a profitable source of investment. That was demonstrated by Rupert Murdoch's takeover of Twentieth Century Fox in the United States.
There is a rich pot of gold there for exploitation which is now up for grabs, along with selling off the cinema activities for property development.
We have seen the growing crisis in Thorn-EMI, characterised by the comment of a Thames executive, "It did not actually want to sell Thames, but even your grandmother has a price." That is a reflection on its attitude towards the company. It must be emphasised that this takeover bid, and particularly the Cannon bid, poses real problems. While Thorn-EMI might have a death wish, all that Cannon has to offer is the death wish of gratifying the psychological prejudices of Michael Winner.
It is essentially a foreign company. It is not really a production house but a body of financial manipulators which sells the rights to films before it produces them. The takeover of the Star chain means that Thorn-EMI's screen share of 33 per cent. of audiences plus Cannon Classic's 24 per cent. makes a total share of 57 per cent. of audiences. In other words, the company, if merged, would be two and a half times the nearest competitor, which is Rank.
As my hon. Friend the Member for Dagenham (Mr. Gould) said in his powerful opening speech, the Monopolies and Mergers Commission warned in 1983 that it would be detrimental to the public interest to have such a concentration of audiences. It would be detrimental not only in terms of cinemas but in video distribution, where Thorn-EMI has 15 or 16 per cent. of the audience, and detrimental to the British film industry.
The new company, Cannon, is essentially an American-controlled company with no loyalty to the indigenous British film industry. It will remain what it is now, an American-based international group controlled by two Israeli citizens. There is a strong probability—because it will concentrate on its production base in California—that it will sell Elstree studios, the one remaining pride of the British film industry, to raise money for its other activities.
This bid for Thorn-EMI must be referred to the Monopolies and Mergers Commission, which, if its words of 1983 mean anything, will almost certainly refuse it. It cannot consistently accept such a concentration of power in the British film industry. The orders should be held up, otherwise the only appropriate words tonight will be some

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lines on the funeral of Sir John Moore at Corunna, words that are indeed appropriate, given the contribution of another John Moore to the death of the British film industry in his refusal to make the tax concessions that the industry needs:
"Not a drum was heard, not a funeral note,
As his corse to the rampart we hurried."
There has been a sound tonight. It has been the sound of a united protest from hon. Members about what is being proposed by the Government. That sound should be heard.
11.23 pm
Mr. Derek Conway: As a Light Infantryman, I welcome words concerning Sir John Moore being quoted to the House. Having listened to five hon. Members in what I would describe as a well-balanced Chamber speak against the Minister, I rise with some trepidation to advise him to stick with it.
While accepting the greater knowledge of my hon. Friends the Members for Gravesham (Mr. Brinton) and for Hendon, North (Mr. Gorst), I come to the debate, having served on the Committee which dealth with the main legislation, as a newcomer to the industry. While, therefore, I may see it without knowledge, at least I see it through unbiased eyes and not through rose-coloured spectacles. In that sense, I hope that, in his new role, the Minister will see through the smooth transition from the National Film Finance Corporation to the British Screen Finance Consortium.
While hon. Members on both sides have welcomed the appointment of Lord Barnett, who was a Member here before I was privileged to join the House, it sometimes causes me despair that it should be difficult for my party, when in government, to find those of its own philosophy to hold these allocations to quangos. But I am sure that Lord Barnett will prove me wrong. I wish him well.
In Committee on the Films Bill, my hon. Friend the former Minister for Information Technology—the hon. Member for Kingston-upon-Thames (Mr. Lamont)—was very supportive of the film industry. He had no qualms about saying in Committee that the Government wanted a successful British film industry. They did not want just an industry, but an industry that was part of our British culture, with films made in British studios about the British way of life. In that respect, my hon. Friend the Minister said tonight that the BSFC would project the well-being of the film industry in the United Kingdom. The NFFC provided start-up and last part finance, and I have heard nothing from hon. Members who oppose the orders to suggest that the BSFC will do anything different.
Mr. Gorst: Does my hon. Friend know the difference between crumbs and a square meal?
Mr. Conway: Indeed, but my girth is not expanding as rapidly as my hon. Friend's. No doubt I shall work on that as I spend more years in this place.
Hon. Members have been less than generous to the Government and, more importantly, to those who finance the Government—taxpayers and viewers—when dealing with their contribution to the film industry. But this move to privatise, albeit with substantial Government incentives, will still encourage the industry to raise funds.
On 11 December—it hardly seems a year ago that we were listening to some interesting but long-winded speeches as we approached the Christmas recess—my hon. Friend the former Under-Secretary of State for Trade
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and Industry, the hon. Member for Rossendale and Darwen (Mr. Trippier), who steered the Films Bill through Committee, said that the private sector contribution to BSFC was estimated at £1·1 million. He went on to say—the fact has not been disputed tonight—that the Government's contribution would be more than £1·5 million, with an additional £500,000 for the project development scheme of the National Film Development fund. That, in addition to the assured external funding, comes to rather more than some hon. Members have suggested.
Mr. Brinton: Is my hon. Friend aware that the total figure about which he is talking would not get near to completing one feature film, let alone fund 20?
Mr. Conway: I understand my hon. Friend's point, but the NFFC was involved in start-up and last part financing, and the BSFC will presumably do the same. The assured external funding, especially from Channel Four Television, which the hon. Member for Dagenham (Mr. Gould) suggested was for three years, but which we both know is for five years, and the three-year contributions from Thorn EMI and from Rank, are subject to some controversy. But we must not forget—
Mr. Gould: The hon. Gentleman said earlier that the figure of £1·1 million to be raised and contributed by the participants in the consortium was not disputed. But if he adds up the contributions of the three participants whom he has mentioned, they come to £850,000.
Mr. Conway: Yes, but we have not reached the end of the calculation, so perhaps the hon. Gentleman will bide his time. Then we have the generated internal income from the repayment of loans for previous film production. The NFFC's external funding since 1980 of £1·5 million will compare interestingly with the BSFC funding, which will be twice that, plus the NFFC's film portfolio of 800 films made since the 1940s, which, at its last estimate, was worth £200,000 per annum. But those who served on the Committee will recall that, taking into account repayments for the first three years at least, that would bring up to £600,000 per annum.
We are getting down to the nitty gritty of the financing. Although my hon. Friends were scathing about the amount of Government funding available, the fact is that more than twice the amount of help towards start-up and final part financing is now available.
The vagaries of day-to-day business are not appropriate to tonight's debate because the Secretary of State will still have the licensing power that will give the House the necessary safeguard.
The hon. Member for Great Grimsby (Mr. Mitchell) spoke of the concentration of audiences. It is a changing industry. Those of us who try to project into the future are not always right. Fallibility is not the prerogative of those who serve in this House. I hope that some of my hon. Friends, including the Minister, will have seen the programme on BBC 2 on Sunday, when Mr. Stafford, the managing director of ABC cinemas, was interviewed. He has managed to turn a dreadful loss into a substantial profit by responding to the demands of the consumer who wants to see the British culture that I hope we are here to support—not the demands of those with a vested interest in the industry or those out for more Government cash.

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I hope that my hon. Friend the Minister will stick with that and that the order will be supported by the House tonight.
11.30 pm
Mr. Chris Smith: In Committee on the Bill, many hon. Members on both sides of the House voiced a number of major worries about what would succeed the National Film Finance Corporation. Those worries have not been eased by what the Minister has said tonight, and they have certainly not been eased by developments during the past few weeks on the future of Thorn-EMI.
One worry that we expressed was the sheer lack of good funding for the future of the British film industry and the promotion of new films. Even if all four partners come together, even if the Government's contribution is at the top end of their prediction, the money available will be only £2·5 million in one year—compared with the £12 million that goes each year to Covent garden and the £29 million that goes to the four major artistic institutions in this country. I do not wish to remove a single penny from the amount that goes to those institutions, but it is a strange ordering of priorities when the entire funding for the promotion of new films and talent within the British film industry is only £2·5 million a year.
Secondly, hon. Members voiced a major concern that the time limit placed on the guarantees given by the four partners in the supposed agreement of the consortium was three years. That worry has not been removed by anything that the Minister has said tonight.
Thirdly, hon. Members expressed concern about the impact of the domination of the two major distribution outlets for films—Thorn-EMI and Rank. They would be dominant in the consortium involved in the promotion of new films, and especially in the promotion of small-scale, independent productions with a non-commercial flavour. The immediate conflict between the commercial interests of the distributors and the non-commercial interests of the film makers has not been resolved or lessened by anything that we have heard tonight.
Most important of all, we voiced our concern about the need to have a specifically British flavour in the British film industry. We wanted to remove our film industry from the domination not of American money but of north American culture. We want the British film industry to be a voice for the people and the cultural heritage of Britain. We now hear news of the possible takeover of Thorn-EMI by an American company. Thorn-EMI will have a leading role in the consortium if the order is approved. We cannot but express our concern about the future and nature of the British film industry in the light of those discussions.
It serves to underline the major point, made by my hon. Friend the Member for Dagenham (Mr. Gould), that the promotion of new film, new initiatives and new talent within the film industry should not be subject to the vagaries of commercialism. Public interest is not being served by the orders or by the Government's action in bringing them forward.
11.35 pm
Mr. Pattie: With the leave of the House, I shall reply to the debate. In coming to the Dispatch Box in this role, I have felt all the warmth of greeting of a Hammer films
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spectacular. None the less, hon. Members have trotted out the various objections that they expressed in Committee on the Films Bill. Among the more bizarre contributions was that of the hon. Member for Great Grimsby (Mr. Mitchell), who seemed to think that the BSFC would produce filss only for television. I must inform the House that the BSFC will have considerably more funds than its predecessor, the NFFC.
In case the House has forgotten that the NFFC has produced or has been the agent in producing an impressive catalogue of low and medium budget British films, I mention just three low budget films, all made for less than £1 million, which are currently achieving very good cinema audiences—"Letter to Brezhnev", "Supergrass", and "My Beautiful Laundrette". I understand that the latter was originally conceived as a television film, but is now the fifth most popular cinema feature in London.
The House and the hon. Member for Dagenham (Mr. Gould) may have forgotten, too, that the original legislation on the NFFC was the National Film Finance Corporation Act 1981 which expires on 31 December 1985. The NFFC then ceases to trade, so there is no question of the orders being withdrawn. Unless the BSFC is in existence, no support will be provided for the industry on New Year's day 1986. I am sure that the hon. Member for Dagenham would not wish that to happen.
Mr. Gould: The demise of the NFFC is a direct consequence of the Government's failure to renew its life as happened on previous occasions. Even with the earlier deadline of 23 December on which the orders are to take effect, the Minister still has a matter of weeks in which to try to resolve two questions—the continuing unwillingness of the British Videogram Association to play its part in the BSFC, and the precarious situation of Thorn-EMI, with the question mark over its participation in the BSFC. I put it to the Minister in good faith that it would be in the interests of the British film industry to withdraw the orders today to give the House time to see what is likely to happen to the future structure of the industry.
Mr. Pattie: I will not agree to do that, although I do not doubt the hon. Gentleman's good faith in the matter. As I told the House in my opening remarks, the three members of the consortium have undertaken certain sums for certain periods and all the bidders currently interested in TESE have undertaken to take over the liabilities.
Hon. Members seem to be assuming that a particular purchaser will be successful. There are two other possible outcomes—a management buy-out by the present company or purchase by Rank. Hon. Members have leapt to the conclusion that the third party will be successful. As the House would expect, the Government are watching the matter with extreme care and expect to receive advice and submissions from the Office of Fair Trading if a deal is struck. The Government will of course, consider that advice urgently and take action accordingly. The House need be in no doubt whatever about our commitment to the future well-being of the British film industry.
In their comments today and in their belief that the BSFC will be unable to do its job in raising finance the Opposition seem to have ignored that fact that the whole thrust of finance will be on a partnership basis. There will be Government finance in all good faith of £1·5 million per year for five years and the consortium will be able to raise additional finance itself. I am glad that the

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appointment of Lord Barnett has been welcomed. If he were in any doubt as to his and Simon Relph's ability and that of their fellow directors and members of the consortium to raise that independent finance, he would presumably not have accepted the appointment. I have a very high regard for Lord Barnett's capabilities and he is not the kind of person to be casting around for extra activities.
Mr. Gould: I happily concur in the Minister's welcome for the appointment of Lord Barnett, but will he confirm that Lord Barnett agreed to take on this onerous task long before it became clear that one of the major constituents was in the process of being taken over? I understood the Minister to say that he expected there to be a reference to the Monopolies and Mergers Commission in the case of the bid by Cannon and one assumes that the same would apply to a bid by Rank. If that is the implication of his remarks, it reinforces the fact that Lord Barnett's inheritance is an extremely dubious and confused one. Is not that a further reason for withdrawing the orders today?
Mr. Pattie: No, it is not. The hon. Gentleman is a past master, if not a genius, at attributing to me things that I have not said. I said that the Office of Fair Trading would consider any deal that was made and give us advice which we would consider, as the hon. Gentleman would expect.
I welcomed the speech of my hon. Friend the Member for Shrewsbury and Atcham (Mr. Conway)—I was glad to have some light infantry solidarity in the debate. My hon. Friend has been a shining light of perspicacity in seeing that what is needed for the well-being of the British film industry is that the House should accept the orders and that the BSFC should be established on 2 January. We look forward to that eventuality.
Question put and agreed to.
Resolved,
That the draft National Film Finance Corporation (Dissolution) Order 1985, which was laid before this House on 19th November, be approved.

NATIONAL FILM FINANCE CORPORATION
Resolved,
That the draft National Film Finance Corporation (Transfer of Assets and Liabilities) Order 1985, which was laid before this House on 19th November, be approved.—[Mr. Peter Lloyd.]

Basildon Hospital (Perinatal Services)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Peter Lloyd.]
11.42 pm
Mr. David Amess: For many people there is no experience quite so marvellous as witnessing the miracle of life. It is a fairly modern practice to allow dads to see the birth of their children—something that I was privileged to see some 18 months ago when my first son, David James, was born and four months ago when my daughter, Katherine Louise, was born. I well remember how excited I was and how glad that I was not in my wife's position as in every respect was aptly called hard labour.
My wife and I could not speak more highly of the excellent care at every level administered to our children and to her during their stay at Basildon hospital. We found a high degree of professionalism combined with a warm and friendly atmosphere—a view shared by the overwhelming majority of my constituents—and the hospital therefore has a special place in our hearts. Indeed, it is never really out of our vision as our house backs on to its grounds. My horror can be imagined when, some weeks ago, I was informed by Basildon and Thurrock health authority that it was proposing that Basildon hospital should lose its obstetrics, gynaecological, paediatric and special baby-care services.
These proposals were greeted by a storm of protests and anger by many of my constituents—a reaction which I share. At a time when so much good was happening in Basildon—unemployment over the past 12 months has fallen by 5·8 per cent.—the announcement was shattering. The authority's report recommends the centralising of services, which I am fundamentally against. In an ideal world I should like the status quo to be maintained, with two units and Orsett hospital brought up to the same standard as Basildon hospital in the provisions of services. Strong arguments have been advanced which show that that is not possible.
A special baby-care unit cannot be supported at Orsett because there are not enough deliveries to justify its existence. Babies are delivered at Basildon and Orsett hospitals and the paediatric department is based at Basildon hospital with minimum input to Orsett hospital. If a baby that is delivered at Orsett hospital gets into unexpected difficulties, there is unlikely to be a paediatrician nearby to give immediate help. High-risk babies are delivered at Basildon, but it is not always possible to predict problems.
The situation could be overcome by the provision of a 24-hour paediatric service at Orsett. That would require the appointment of at least two more paediatricians at Orsett hospital to provide cover. That is not possible because for a considerable time, there has been a complete embargo on new posts of this kind. The work load for two doctors at Orsett would amount to about one hour a day. They would have nothing to do for most of the time. No self-respecting doctor would apply for such a job. The Royal College of Physicians would not recognise such a post for professional training purposes, which would make it even less attractive.
Obstetric staffing is in a parlous state because of the lack of junior staff. The Short report, in chapter III. section 84, states:
"We regard the creation of a universally high standard of intrapartum care throughout the country as one of the major

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contributions to lowering perinatal and neonatal mortality. We agree with the planning guidelines proposed by the West Midlands RHA for improving their perinatal services, which are particularly relevant to the maintenance of good intrapartum care. We recommend, in accordance with these proposals, that as soon as possible every delivery suite should be provided with a minimum of 24-hour cover in obstetrics, anaesthetics and paediatrics, immediate access to a suitable operating theatre and proper facilities for the care of sick babies on site."
The Minister may wonder why I am detaining him to respond to the debate. The health authority has given us until 21 December to respond to its proposals. It will meet in January to reconsider its proposals in the light of comments that it has receieved. If it decides to go ahead with its proposals, we shall have to appeal to the Minister. I fully accept that there is little that my hon. Friend can do now, but I want clearly to establish in his mind and that of the Department the case for Basildon. It is both irresistible and overpowering.
Basildon hospital was built strategically in the centre of the district health authority and it is not yet 10 years old. It stands on an excellent picturesque site and is well placed. The hospital is especially accessible to all modes of transport. Basildon is the main centre of concentration of population in the district. Being a new town, there are many women of child-bearing age. In 1986, there will be 39,150 women in Basildon in the 15 to 44 age group. In Thurrock the number is much lower—27,200. By 1986, the population of Basildon will be 165,950; in Thurrock it will be only 125,600. Over 60 per cent. of the babies born in the area are to mothers who live in my constituency. Basildon's population is still increasing, but that is not the position in other parts of the district.
As a special baby-care unit has always been at Basildon, people from throughout the district have accepted that fact and are used to travelling to it. Any suggestion that the child development centre at Basildon should be moved will meet strong opposition. It is only two years old, and it was built with private money. Over £55,000 was raised, and half of that was raised by the Basildon Hospital League of Friends, to which I pay tribute.
The recruitment of special baby-care nurses and midwives is far easier in Basildon than elsewhere. I have it on good authority that few of the present staff at Basildon would be prepared to move to Orsett. The recruitment of professional staff at Orsett is known to be quite difficult.
The building of a skilled team to care for sick babies takes many years, and we would have to start virtually from scratch. The intensive care services for premature infants would virtually cease in the district and new-born babies with other than minor problems would have to be transferred to centres in London.
There can be little argument with the view that it is far easier to build at Basildon than elsewhere. We could build on top of the existing site or on the land to the south, which would easily provide scope for the expansion which would be needed in any reorganisation.
Any move must involve a building of some sort and at Basildon, from the point of view of hospital layout, there is less risk of any architectural damage. Money would be saved because of the extra theatres that are available at Basildon rather than at Orsett. The balance is six to four in Basildon's favour. We all appreciate how expensive it
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is to build and staff any new hospital theatre. When considering these matters it would be as well to remember that all antenatal facilities would continue at Orsett, apart from the inpatient service.
The only travelling involved would be on the few occasions in any woman's life when she delivers her baby. I take issue immediately with the suggestion in the health authority's report that hospital services should be sited on the basis of car ownership. That is no way to run a hospital. If transport is the problem, public transport will have to be improved. Buses could be run quite easily to help overcome the difficulty.
It is important to add that reorganisation would not prejudice the status of Orsett hospital in any respect as an acute hospital. It would be nonsense for anyone to suggest otherwise. The report advances a curious argument about the number of severely deprived in Orsett and the surrounding areas. That is an extraordinary statement. I represent the area with the greatest number of single-parent families in the south of England. Until the success that we have enjoyed over the past 12 months, I represented also the constituency with the highest number of people wishing to work who did not have jobs in the south.
The report talks about difficult access for the severely deprived, which is just not true. What is true is that my constituents would have a more difficult and longer journey to Orsett hospital. Is it right that the overwhelmingly majority of patients must travel from Basildon to Orsett because the people of Orsett are deprived?
In spite of Orsett's deprivation, 84 per cent. of people from Orsett get to the hospital by motor car and only 16 per cent. rely on public transport. In Basildon, 80 per cent. use cars and 20 per cent. use public transport. The people who are visiting will usually be husbands, after their wives have had their babies. If it is not the first child, the stay in hospital will be a short one.
A further point in the report that is worth mentioning is that part of the equation of centralisation at Orsett would be the sale of St. Andrew's. I have good reason to believe that the figure of £2·7 million that has been mooted is wildly optimistic. I apologise if I have given the impression that it is a "them and us" situation—Basildon versus Orsett. It is not like that. Basildon and Orsett are fine hospitals. I hope that I have demonstrated how completely unacceptable it would be to remove from Basildon the services that I have mentioned. It would be wrong to involve it in the jigsaw that the health authority presents.
The problems of the burns unit at Basildon are regrettable. I have had several letters on that subject from colleagues in neighbouring constituencies in Essex. The burns unit is a regional service supplying a facility to a wide area. Its site is not of the same significance as that of the maternity services. I hope that none of my constituents has to have treatment for burns, whereas I hope, and know, that mums in Basildon will continue to have babies.
I have been inundated with letters, telephone calls, petitions and lobbying from my constituents. If I had the time I would read out a selection of the letters, but suffice it to say that many have been deeply moving. Many mothers have said that they had their first baby in Basildon—we all know the anxiety that a first delivery can bring—and wish to have future babies at the same hospital.

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My constituents have responded to the proposals with controlled anger and in a responsible fashion. I have tabled early-day motion 100, and I hope that many hon. Members will sign it.
I pay tribute to the committee of KOMPASS which has worked with great dedication to keep the services at Basildon hospital. At 11 am on Monday 9 December a human chain of mums, babies and children—the children and babies will all have been born at Basildon hospital—will be formed from the town centre to link arms up to the hospital. A model of a baby will be passed from the town centre to the hospital as a symbol of our intent for the hospital to continue delivering babies. In just six weeks 25,000 signatures have been gathered for our petition—and Queen Victoria's name did not appear once. Next week I shall present a small sample of the petition to the House.
My final words to the Minister are, for humanity's sake, for pity's sake and for Basildon's sake, if intervention is necessary, please keep the services at Basildon maternity hospital.
The Minister for Health (Mr. Barney Hayhoe): I congratulate my hon. Friend the Member for Basildon (Mr. Amess) on choosing this subject for his Adjournment debate and on the personal as well as constituency interest that he spoke of in such moving and powerful terms. Clearly, the issue is of great concern to him and his constituents. I readily acknowledge the care and diligence with which my hon. Friend represents the views of his constituents on the matter, which is of considerable local importance.
I shall try to explain to my hon. Friend the present position in my brief reply, but if I find when I read the full text of his speech in Hansard that there are some further points with which I can deal, I shall write to him about them.
My hon. Friend made it clear that he understood very well that the proposal that has been put out for consultation—one emphasises that it is for consultation—to centralise maternity in-patient services on to one site in Basildon and Thurrock is part of a package of measures. If the community health council, which formally represents the views of the community, objects to the proposal, and if the regional health authority then supports the plans, it will come to me for a final decision.
My hon. Friend was kind enough to acknowledge this as well, because he well understands the procedures that have been established by the House for dealing with such important matters that arouse so much local interest and concern. It would not be appropriate for me to pronounce at this stage on the validity of the arguments either for or against the proposal that has been put out for consultation by the district health authority.
My hon. Friend concentrated on maternity services provision, but it should also be borne in mind that that is only one facet of the proposed reorganisation, which also involves gynaecology, paediatrics, plastic surgery, burns and geriatric services. My hon. Friend referred to the burns unit, to which I shall refer. The reorganisation also involves several hospitals and the closure of one hospital in Billericay. Therefore, the proposals are a wide-ranging package. My hon. Friend was entitled to concentrate on the elements of the package that are of particular interest and concern to his constituents. I take no exception to this. However, he will also recognise that the proposals
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intermesh and are largely interdependent one upon the other. In considering them, therefore, I hope that all concerned will look at the overall interests and needs of the many different patients, which must be kept in mind in trying to reach a balanced and sensible judgment on the package as a whole.
Central to my hon. Friend's remarks is one issue that is not unique to Basildon and Thurrock or indeed to the North East Thames regional health authority. It is recognised by people who follow debates on the subject and arguments across the country—the familiar question of where best to locate services in a district with several large population centres. All facilities cannot be provided willy-nilly in all the towns. That proposition is widely recognised in principle, although I fully understand that in practice objections will arise when a town is chosen for a closure or change in provision, which is seen to be disadvantageous. All facilities cannot be provided in all towns. That would not make economic or medical sense. Difficult decisions have to be taken and the proper balance struck.
The maternity services proposal was the main thrust of my hon. Friend's concern. He knows, and I hope understands, my position on the proposed changes. The proposal is out for consultation. Comments are required by 21 December. My hon. Friend has indicated that he will be presenting a petition to the House. The comments, the petition and all the other relevant factors will have to be considered by the district health authority. It will have to take account of all the points and the representations of my hon. Friend, of the committee which has been organising support for the hospital's maternity services and of the many others who will wish their point of view to be considered.
If the community health council objects but the district health authority and the regional health authority decide to proceed with the proposals, they will come to Ministers. As I said a moment ago, until that happens it is not appropriate for me to comment. I am left in the difficult position, which my hon. Friend fully understands, that cannot respond in favour of or against the proposition that he has put to me. I rather suspect that he did not think the miracle would occur that I would agree with him tonight, but that he was using very properly the procedures of the House through an Adjournment debate to make clear his deep interest in the matter.
I understand that the district health authority believes that mothers in the district will receive a better inpatient service if they and their babies are looked after in a hospital where there is adequate paediatric cover. My hon. Friend argues that it would be better if that were done at Basildon rather than at the alternative site of Orsett, if a choice has to be made between the two. I took my hon. Friend's point that he would much prefer no choice but the maintenance of the present facilities. The proposals keep outpatient clinics at both Orsett and Basildon for ante and post natal services. I am advised that there are genuinely problems for the district in providing sufficient obstetric and gynaecological staff at more than one hospital. That is a basic resource problem. A difficult and careful judgment must be made. It would not be right for me to preempt at this stage the decision which will have to be: made by Ministers.
Perhaps I should add that centralisation of facilities and staff is not necessarily due to any lack of money. All services cannot be provided at every hospital; waste of

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resources dilutes the experience needed to develop good expertise. No doubt my hon. Friend and I are totally at one in wanting a proper balanced judgment which will ensure efficient use of resources to the benefit of everyone concerned.
When the results of consultation are received, the health authority will weigh up all the factors to see what is best for the overall interests of all the patients. My hon. Friend referred to travel, an important factor which must be taken into account when one is trying to decide upon the location of any centralised inpatient maternity unit. The consultation process is taking place. The time for ministerial decision is not yet here and there is no absolute certainty that it will arrive. My hon. Friend has deployed his constituency case with the skill, passion and concern that I would expect from him. I can assure him that full account will be taken of that matter. He also spoke about the proposal to relocate the regional plastic surgery and burns unit at Basildon hospital. That is another proposal that has aroused considerable local anxiety and one upon which it would not be appropriate for me to comment in
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detail at this stage. My hon. Friend the Member for Billericay (Mr. Proctor) is also interested in that aspect of the matter.
I understand that the health authority plans to phase out old and inefficient hospital accommodation. It believes that the move to Basildon will improve facilities for burns and plastic surgery patients by rehousing them in modern buildings more suitable for the practice of modern medicine.
The health authority recognises that some patients will have to travel slightly further to attend the regional unit. It also appreciates that local people, who recently contributed towards improving facilities to make the unit what it is today, may have great difficulty in accepting an overall strategy which proposes a move.
I have no doubt that the health authority will consider the weight and strength of local opinion when reaching a decision on all those matters.
I can only repeat that my hon. Friend has deployed his case with force and skill. I assure him that full account will be taken of what he has said.
Question put and agreed to.
Adjourned accordingly at eleven minutes past Twelve o' clock.

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Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Birmingham.

Burglary: Prevention Measures
Baroness Sharples: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they are taking to encourage measures to prevent burglary.
The Parliamentary Under-Secretary of State, Home Office (Lord Glenarthur): My Lords, the Home Office is actively working to develop a range of measures to prevent burglary, including improved physical security measures and neighbourhood watch schemes. For example, the results of a property-marking demonstration project in South Wales published earlier this year showed a marked reduction in domestic burglaries in the project area during the evaluation period. The results of findings such as this and many other initiatives are disseminated to police forces and other local agencies concerned with the prevention of crime. We believe that a high proportion of burglaries could be prevented through concerted action by the police and the citizen.
Baroness Sharples: My Lords, I thank my noble friend for that reply. Can he say how successful the neighbourhood watch schemes have been and can he also say whether other agents or bodies, and possibly insurance companies, will be involved in helping in the fight against crime?
Lord Glenarthur: My Lords, certainly neighbourhood watch schemes are proving as successful as we hoped they might be, if numbers are anything to go by. They have increased from some 3,000 in January this year to approximately 7,200 schemes now. As regards bodies other than government taking part, yes, I think my noble friend is right: crime prevention is a matter for all sections of the community. We see a role for the building industry, architects and planners in providing more secure properties, and for the insurance industry in encouraging, through the introduction of premium differentials, house contents policy holders to improve their security.
Baroness Phillips: My Lords, may I ask the Minister when we are to have a debate in this House on crime prevention and the involvement of the community? We have discussed prisons and prisoners at great length, but, so far as I know, we have not discussed crime prevention during the last 12 months.
Lord Glenarthur: My Lords, that is a matter for the usual channels.
Lord Winstanley: My Lords, have the Government any comprehensive advice to offer regarding the installation and use of burglar alarms? What steps can be taken to minimise the nuisance suffered by suburban residents from the persistent, and presumably fruitless, ringing of burglar alarms?
Lord Glenarthur: My Lords, I should certainly be happy to give the noble Lord as much information as I possess, perhaps in writing. I realise that when these alarms go off they can be a nuisance to those living in the local community. I shall gladly find that information and let the noble Lord have an answer.
Lord Airedale: My Lords, will the Government urge the Central Office of Information to give publicity to that splendid advice which used to be given by Lord Chief Justice Goddard that, if people would only take the simple precaution of locking all the doors when they go to bed, they would stand a good chance of confining the burglar to the one room which he has broken into and they might thus escape being attacked in their beds?
Lord Glenarthur: My Lords, I think that the noble Lord puts his finger on a very good point. There are many precautions which individuals can take in their homes to make it difficult for burglars, and it is important that every one of us should adopt sensible and prudent measures to help the police and all those who try to prevent crime.
Lord Paget of Northampton: My Lords, is the noble Lord aware that it is not quite as simple a matter as that? The last time that I was burgled I was taking an after-lunch nap. The burglar came in through the kitchen skylight, walked through the room where I was napping, removed my notecase and went about his business. The police said that he did not leave a clue!
Lord Glenarthur: My Lords, I should have thought that that pointed more to the serious dangers of sleeping after lunch.

Power Stations: Conversion Policy
2.41 p.m.
Lord Henley: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what progress is being made in converting power stations to coal.
The Minister of State, Scottish Office (Lord Gray of Contin): My Lords, the Secretary of State for Northern Ireland announced on 22nd May that Kilroot power station was to be converted from oil to coal burning. I understand that the Central Electricity Generating Board has recently concluded that conversion of further oil-fired power stations to coal in England and Wales would not be economic. There are no plans for such conversions in Scotland.
Lord Henley: My Lords, I thank my noble friend for that Answer and especially for what he said about

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Kilroot power station in Northern Ireland. I wonder whether he can elucidate a little further as regards England? Would he agree that, with our vast stocks of coal, and with what we hope will be a decline in "Scargillism", a lot more could be done to encourage the use of coal for the generation of power?
Lord Gray of Contin: Yes, my Lords, I agree with my noble friend. I think that we should all like to see a trend towards coal instead of oil, but I must point out to my noble friend that the capital cost of conversion of stations to coal firing is very high indeed. For example, the estimated cost of converting two modern 660 megawatt units in the Isle of Grain station is about £675 million at March 1985 prices. So my noble friend will realise the difficulties which the CEGB is up against.
The Earl of Lauderdale: My Lords, do not the figures argue for pressing ahead with a British type of nuclear power?
Lord Gray of Contin: My Lords, my noble friend is correct. Seventeen per cent. of the supply to the grid is already from nuclear power.
Lord Ezra: My Lords, will the noble Lord indicate whether steps have been taken to convert the smaller coal-fired stations which might be taken out of service to combined heat and power? Was that not in fact one of the objectives of the recent energy legislation?
Lord Gray of Contin: My Lords, the noble Lord is correct. But in the view of the CEGB, which must be the judge in such matters, it is still not economic to proceed in the way that he suggests.
Lord Molson: My Lords, in apprehension of the coal strike, were not a number of power stations that had been using coal converted to oil? Is there an insuperable difficulty in reconverting them in new circumstances from oil to coal?
Lord Gray of Contin: My Lords, my noble friend raises an interesting point, but I cannot give him a specific answer other than to say that that must be for the judgment of the CEGB. It is, however, worth recalling that in a normal year oil-fired stations in England and Wales account for only 3 to 4 per cent. of electricity generated by the CEGB, and some oil burn is necessary to meet the demand at peak periods and to maintain a balanced output from the national grid.
Lord Stoddart of Swindon: My Lords, will the noble Lord tell the House what the total installed capacity of oil-fired power stations is at present, and what proportion of that capacity is used at any given period throughout the year? I hope that he will check his figures of £600 million for conversion from oil to coal. But does he agree that in any event it is far better to have the stations converted, instead of standing idle, so that they may at least partly earn their keep?
Lord Gray of Contin: No, my Lords, I am afraid that I cannot agree with the noble Lord on that issue. The figure that I quoted was £675 million for the
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conversion of two units on the Isle of Grain. I have no reason to suspect that the Department of Energy figures are anything other than accurate, but I shall have them checked. I do not agree with him; I shall try to recall the previous answers that I gave. In a normal year, oil-fired stations account for 3 to 4 per cent. of electricity generated by the CEGB. Seventeen per cent. of the supply to the grid is from nuclear power; and over 60 per cent. of the CEGB generating capacity is coal-fired. I am afraid that I cannot give him a more detailed breakdown.
Lord Stoddart of Swindon: My Lords, the noble Lord did not answer my question about the installed capacity of oil-fired stations.
Lord Gray of Contin: My Lords, I think that it is asking rather a lot to expect a Minister to answer every detailed question which springs to the fertile mind of the noble Lord at Question Time. I shall try to elicit the information, and perhaps I may drop him a note.

Commemoration of VJ-Day
2.47 p.m.
The Earl of Cork and Orrery: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why they allowed to pass without official commemoration the 40th anniversary of the ending of the war against Japan.
The Minister of State for Defence Support (Lord Trefgarne): My Lords, my noble friend the Lord President of the Council informed the House on 14th February that the 40th anniversary would be commemorated by two main events: a service in Westminster Abbey to mark the end of the war in all theatres of operation; and a pilgrimage to the Far East, which took place last month. On both occasions the war in the Far East and the sacrifices made were remembered, as they were on VJ-Day itself, when my noble friend the Lord President made a statement on behalf of the Government in recognition of the contribution made by those who fought in that campaign.
The Earl of Cork and Orrery: My Lords, I am obliged to my noble friend, and I accept the logic of regarding the two wars together as a single war, which indeed it was. But if that was the attitude of Her Majesty's Government, may I ask him to explain why it is that the commemoration of the ending of that war took place on 8th May rather than on 14th August, when it actually came to an end?
Lord Trefgarne: My Lords, a number of considerations caused us to decide on the day in question, not least the convenience of a number of people who had made it clear that they wished to attend.
The Earl of Lauderdale: My Lords, does my noble friend agree that there would have been no 40th anniversary if we had not used the bomb?
Lord Trefgarne: My Lords, I have a feeling that that question may be leading me rather far from the one on the Order Paper.
Lord Graham of Edmonton: My Lords, if I may use the peg that the noble Earl has given me, does the Minister agree that it is important to be reminded of the horrors of nuclear weaponry; and, although we should not encourage the perpetuation of international resentment and bitterness, should we not do our best to remember that war and, in particular, the manner in which it was ended? Can the Minister tell the House what consultations the Government had with those who would have wanted to be consulted and who may well have had something important to say before they decided not to commemorate specifically the war in the Far East? I am thinking particularly of representatives of the families which were devastated during that war.
Lord Trefgarne: My Lords, widespread consultations took place, some of which I conducted myself, particularly with those involved in the Far Eastern campaigns.
Lord Mellish: My Lords, is it not a fact that the 14th Army, which took the brunt of the last war with the Japanese, were known as the Forgotten Army? As one of those who served in it, I know a bit about that. Is it not a fact that the noble Earl, who has put down the Question, is on to a valid point? There seems to be a tendency in high circles not to take much notice of what happened in the Far East. The all-important war is regarded as being the European one.
Lord Trefgarne: My Lords, it is the case that some of those who served in the Far East came to regard themselves as the Forgotten Army——
Lord Mellish: My Lords, they were.
Lord Trefgarne:——but I was present at Brize Norton when the pilgrims left on their journey. I was happy to hear many of them say that they were forgotten no longer.
Lord Chelwood: My Lords, while this is a question perhaps of least said, soonest mended, is my noble friend aware that my noble friend Lord Cork and Orrery is indeed reflecting the views of a very large number of people who were involved in one way or another in the war in the Far East and whose feelings were very much hurt by what seemed at the time to be a very insensitive decision by the Government? Is my noble friend nonetheless aware that the presence at the very moving ceremonies at the cemeteries in Singapore and Rangoon of his Royal Highness the Duke of Kent and of the Secretary of State for Defence himself have done something to assuage those feelings?
Lord Trefgarne: My Lords, I am happy to hear the views of my noble friend on this matter. My noble friend Lord Gridley was also present, I know, in the Far East on this pilgrimage.
Lord Molloy: My Lords, will the Minister acknowledge the obligation that exists to the veterans and to
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those who gave their lives in the First World War and at various theatres in the Second World War including the Far East? Will the noble Lord consider getting in touch with the Royal British Legion—I have the privilege of being the president of the metropolitan area—who would very much welcome discussions with him to see if we cannot fix for the future some unified date on which everyone is remembered and everyone is honoured.
Lord Trefgarne: My Lords, we are, of course, in constant touch with the British Legion on this as on other matters. The noble Lord will know that the end of the Second World War and indeed the sacrifices made by many in a number of conflicts in this century and earlier are celebrated on a day normally in November. In addition, as the noble Lord will be aware, we have recently made available on a regular basis sums of money to the British Legion to enable it to arrange visits to various cemeteries around the world.
Lord Chalfont: My Lords, will the Minister accept that in spite of the very persuasive and logical arguments that he has put, there are thousands and thousands of surviving ex-servicemen from the Far East campaign who were deeply hurt by the decision to celebrate, or to commemorate, the end of the war in the way that it was done? For many of them, the war did not end until Japan surrendered. May I put what is perhaps a constructive question? Will the Government consider making some belated amends for what seems to many people to be a slight, perhaps at the next meeting of the Burma Star Association?
Lord Trefgarne: My Lords, I do not think that the question of belated amends arises. We have made clear that the various ceremonies and functions that we have arranged during the course of this year were designed to record the end of the Second World War in all its theatres. I do not accept that thousands feel as the noble Lord suggests. I have myself been involved in consultations with large numbers of them. That view is not at all prevalent.
Viscount Slim: My Lords, may I say to your Lordships' House that in my capacity as president of the Burma Star——
Noble Lords: Question!
Viscount Slim: My Lords, I have to make this known to your Lordships, as I think you will agree. Is it not a fact that the noble Earl should have raised this Question? May I say, as president, that there is deep feeling? We have done much to put it right. I have myself written to the Minister in another place to thank him. But we are not there yet.
Lord Trefgarne: My Lords, naturally, I accept what the noble Viscount says. Nonetheless, I believe that the Government's position on this matter is one that I can repeat to your Lordships with assurance.
Baroness Macleod of Borve: My Lords, may I ask my noble friend the Minister whether there is a memorial to those who died at sea? If not, is it envisaged by the Government that there should be?
Lord Trefgarne: My Lords, I am not quite sure what kind of memorial my noble friend has in mind. But, of course, the functions to which I have referred apply to the people lost at sea as much as to those lost in any other theatre.

DHSS Local Office Staffing
2.55 p.m.
Baroness Jeger: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what staff difficulties they are experiencing in local DHSS offices, especially in London; and what steps they are taking to improve services and amenities.
Baroness Hooper: My Lords, a comprehensive review of the department's complement requirements is now under way under normal arrangements. The first results will be available about the middle of next year. This is the appropriate and agreed means of ensuring that staff provision and workload balance. London and other inner city areas face particular problems. But complementing arrangements allow a margin to meet the requirements of turnover. Special difficulties can be, and are, dealt with by the exercise of judgment in the allocation of posts to individual offices.
Some offices and staff do face very heavy pressure. The Government are committed to supplying the right number of staff. But the real answer is and must be a more simple, straightforward social security system, which will be provided as a result of the Government's social security review.
Baroness Jeger: My Lords can the noble Baroness explain how claimants are to be treated fairly and justly when, during the last six years, there has been a loss of 10,000 jobs from her department and an increase from 2.5 million to 4.5 million in claims for supplementary benefit? Secondly, while the noble Baroness talks about a review coming out next year, can she tell the House what delay is taking place in the up-rating of benefits for this year? Thirdly, has the noble Baroness—I must ask her this question because it is very important—had time to read the review of her own department's chief adjudication officer in which he states that one in three of all supplementary benefit payments are wrong? He blames this situation on lack of training, on lack of staff and on the very great pressures that exist. I believe that the House deserves to have some response to that report.
Baroness Hooper: My Lords, the noble Baroness has asked a number of questions. Taking the last one first, in respect of the chief adjudication officer's report I would not wish to go much further than to say that I have noted it and am aware of it. My honourable friend in another place—I agree with him—has said that he welcomes the report, which confirms his view that the social security reviews are badly needed. As for what the Government have already done in relation to the difficulties over numbers and the endeavour to keep the workforce in line, I can mention
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that an extra 3,800 staff were introduced to offset the effects of the unnecessary Newcastle strike by computer staff. This led to a considerable backlog. An extra 1,900 staff have been introduced through the normal complement system mainly directed towards increased supplementary benefit work. An extra 733 staff have been introduced to match increased workload. This was done only a matter of weeks ago. It is important to remember that the streamlining of systems that has already taken place has introduced a considerable cut in the workload which therefore matches the reduction in the numbers of staff.
Lord Kilmarnock: My Lords, are the Government not aware of the cri de coeur placed by a civil service union in the national press saying that the situation has reached breaking point, that staff are now two-and-a-half years behind in dealing with pensioners' queries in some parts of London, and that in some local offices turnover of staff is as high as 60 per cent.? Are the Government not at all concerned about the condition of people who are, after all, their own employees?
Baroness Hooper: My Lords, we are indeed aware of this series of advertisements that have been placed to this effect. We are aware of the particular problems in certain offices and the Government have undertaken to review the position. They are conducting the normal review, as I have said. They are seeking through the complement system, which is after all a tried and agreed system, to meet the particular local requirements.
Baroness Jeger: My Lords, while appreciating that, may I ask whether the Bloomsbury office has to close at 11 o'clock every morning, instead of at 3.30 p.m., because by 11 o'clock it is overflowing with a workload that cannot be met until early evening? Surely this shows that that office needs some help.
Baroness Hooper: My Lords, I agree entirely with the noble Baroness that that office is one which has recently experienced considerable difficulties. Officials are urgently discussing with the Property Services Agency options to provide three or four integrated local offices in central London to take over the functions at present carried out in Bloomsbury area office, City and West End national insurance offices, and in Westminster ILO. When the necessary funding is available we look forward to our staff being much better accommodated and so able to offer an improved service to the public in the end.

Agricultural Holdings Bill [H.L.]
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I beg to introduce a Bill to consolidate certain enactments relating to agricultural holdings with amendments to give effect to the recommendations of the Law Commission. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Lord Chancellor.)
On Question, Bill read a first time, and to be printed.

Overseas Trade: Select Committee Report
3.1 p.m.
Lord Aldington Lord Aldington rose to move, That this House takes note of the report from the Select Committee on Overseas Trade (1984–85, H.L. 238).
The noble Lord said: My Lords, I have the honour to ask the House to take note of a report which has had an interesting reception: some shock, widespread relief that the facts and arguments have been clearly stated, and a good bit of controversy. There have in fact been five editions of this report, which I believe is nearly a record. I look forward to the debate and particularly to the maiden speech of my noble friend Lord Clitheroe, whose father I so greatly admired and whose friend and colleague I was so honoured to be both in politics and in business. I am very sad that the noble Lord, Lord Beswick, is ill and will not be here today. We were very fortunate to have him on the committee. The noble Lord worked very hard for us and helped us a great deal and I am grateful to him.
The report is about Britain's manufacturing industry in a highly competitive world and about the importance of its success to Britain's future. Our standard of living will depend on it as it has in the past. The report's message is addressed to the nation—all of it. The report sets out the facts and some history from which it draws its conclusions. Its concern is for the future; its warnings are about the future; but its message is urgent and for today. There is a serious problem which will not solve itself.
That message is a challenge, not a message of gloom and doom. Certainly there is a threat to our standard of living, a real danger, if we do nothing to meet that challenge. The committee has confidence that the challenge can and will be met and points the way in its recommendations. There needs urgently to be a change in national attitudes. We need, all of us, to give a higher priority to our manufacturing industry in education and training, in our economic understanding, in policies, and in esteem. The first essential is for public opinion to understand the realities. That has started in the public debate but the momentum has to be sustained. This debate will prove, I believe, that this House is a splendid forum in which to clear the decks for the opinion formers on great issues.
Lest there be an impression in some of your Lordships' minds that the report has had a poor reception, I can say that we have sought the comments of all those who gave us evidence, and that from outside the Government orbit there is a massive welcome for the report's analysis and conclusions. The main theme of the recommendations has been widely blessed. Some have added some useful criticisms of the details and some have reserved judgments on particular points. I would hope that all these replies could be published, as will be the considered comments of the Government that only became available yesterday—seven weeks after they issued those very immediate press statements "rubbishing" the whole report.
I am heartened, however, by the introduction to the Government's reply:
"The Government welcomes the report…as a contribution to discussion".
Faint praise, but what a change from the 13th November when, in the other place, the Chancellor of the Exchequer said that on the whole the report does not form a helpful contribution to the debate. That itself was a long way in improvement from the Mansion House speech when the Chancellor wholly rejected the mixture of special pleading dressed up as analysis and masquerading as evidence. Oh dear, oh dear!
A word about the committee itself. The Select Committee was set up in July 1984 by your Lordships in response to concern expressed about the trade balance of manufactured goods and the inevitable runoff of the surplus on the oil account. Our terms of reference need stating. They were:
"To consider the causes and implications of the deficit in the United Kingdom's balance of trade in manufactures; and to make recommendations".
We received written evidence from 118 persons with over 160 papers. We examined orally 39 distinguished witnesses. In addition, we thought it right to visit Japan, Germany and France to enhance our understanding of attitudes to manufacturing industry there. We received a valuable paper from Sir Oliver Wright in Washington about the United States of America in response to our inquiries. We offer our thanks again to all who helped us.
To complete a thorough study of this evidence imposed a heavy burden on my colleagues and particularly on those with regular duties in this Chamber. It was only possible because of the devoted support of the Clerk, Dr. Walters, and our adviser, Dr. David Mayes. The quality of the work of each of them is quite beyond praise, and I say this without any surprise because I am well aware of the high quality of those who serve the Houses of Parliament.
I must now ask the House to have in mind and in perspective the relevant facts about our manufacturing industry which have led to our conclusions. British exports' share of world trade in manufactured goods has declined steadily throughout this century, with some short pick-ups. The actual volume of exports of manufactured goods has risen substantially in the last 12 years, with some decline in 1975 and in the years 1980 to 1983. The volume is happily now at a record level. Our share of world trade had, however, fallen to 7·6 per cent. in 1984; it was 14·2 per cent. in 1964; and of course in earlier years much higher.
On the other hand, imports of manufactured goods into Britain have risen in the last 20 years by much more than have our exports. We show on page 8 a figure which sets out the way in which our exports as a percentage of imports have fallen from 220 per cent. in 1963 to under 100 per cent. in the 1983, and lower since. On page 9 we show the very sharp rise in the volume of imports in the periods 1975 to 1979 and 1981 to 1985.
Hence, the balance of trade in manufactured goods has changed from a surplus of between £1½ billion and £6 billion in each of the years 1963 to 1982, to a deficit in 1983 reaching nearly £4 billion in 1984. There is no sign of a significant improvement in 1985—despite the splendid export achievements. If one analyses the classes of industry, which we do on pages 17 to 20, one will notice that more modern classes of industry—for example, electronics—as well as the traditional classes are in deficit.
Manufacturing output in Britain continued to increase until 1973; but, after some ups and downs, it was nearly 12 per cent. lower in 1984 than it was in 1973 despite the two previous years of recovery; while in the rest of the European Community, the United States and Japan manufacturing output was substantially higher last year than it was in 1973.
Ministers keep on saying that output has risen by 11 per cent. since 1981–82. That is true and it is good; but we should look at the larger rises in the United States, Japan and the European community in that period. That can be found on page 13 of the report. In all developed countries value added in manufacturing as a proportion of gross domestic product has been falling, and in Britain there has been the sharpest fall. However, although manufacturing now represents only just over one-fifth of activity, it provides over 40 per cent. of our overseas earnings.
As Ministers have said, productivity has indeed improved, particularly in recent years; but so has the productivity of our competitors. Therefore, our relative productivity to that of other countries, though better than it was in 1980, is worse than it was in 1973.
Table 3.3 of the report shows some useful measures of competitiveness. In a common currency we have improved competitiveness since 1980 because of the fall in the exchange rate; but excluding the exchange rate there has, I am sorry to say, been no improvement because our labour costs have risen more than others.
The causes of the situation are analysed in Chapter 3 of the report. Of these, competitiveness, or lack of it, is the principal: price and non-price competitiveness. Events, the high pound and policies thought right for others reasons in recent years have accelerated the decline, and the valuable earnings from North Sea oil have masked the seriousness of it. However, the real cause is that of the longer term, and it is to competitiveness that the main theme of the report turns. The lack of competitiveness is responsible both for the decline in our share of world trade and for the increase in imports of manufactured goods.
However, we were impressed with the evidence that Britain has tended to devote a larger proportion of her resources to imports than other countries—there is a propensity to prefer imports.
We were of course concerned both with the trade balance and with the size of our manufacturing base. Indeed, the two are interrelated. We cannot sustain a growing industry unless it is competitive in the world, and we cannot repel import penetration unless output grows substantially.
We then carefully examined the argument that, despite the statistics and the facts that I have just given your Lordships, there is not a problem. That is a view held by some. How long will the surplus from North Sea oil continue? No one argues that the present large surplus of over £8 billion will last for many years; but will the surplus vanish in five, 10 or 15 years? We thought it would be prudent to base policies on lower rather than higher levels of production and so we assumed a balance to the oil account in 1990, giving five years for the other parts of the trade account to fill a gap of around £8 billion. Others may argue that there
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are not five but 10 years in hand; but given the formidable nature of the problem, even that period calls for urgency.
Some ask will the gap of £8 billion not be filled by other parts of the non-oil trade account—namely, by what are called "services"? However, we were told that the British Invisible Exports Council did not see the growth of invisible services as being to a major extent a substitute for decline in general industrial activity. My noble friend Lord Limerick told us that, and I am glad that he is present today. Services are of course very important to our economy, and quite a part of their growth is interrelated with that of manufacturing.
Then it is asked: as the oil surplus goes away, will manufacturing activity not automatically recover as though it were on a kind of autopilot? We discuss this question at paragraphs 75 to 79, and later in Chapter 4. We do not accept the autopilot argument any more than we accept that it was inevitable for manufacturing industry to decline as the oil surplus grew. The industrial base has been substantially reduced; and the time cycle required both for a large increase in capacity and for the development of new products has not been given proper attention by those who argue for what I call the autopilot. This theory fails altogether to take account of the many elements in competitiveness which urgently need tackling.
We also took note of the argument that the nation's accounts must inevitably balance, and that just as when the oil account is in surplus, other accounts must compensate, so when the oil account has no surplus, the other accounts will compensate for that too. Even if this determinism were correct, at what level would the balance be—high with a good contribution from manufacturing or low without it? Perhaps I may be allowed to remind your Lordships that in the latest international league table for gross domestic product per head of the population—the 1985 OFCD figures—we rank seventeenth. We want surely to be higher, not lower than that.
The committee also examined forecasts, assuming present policies, both of the whole trade account and of manufactured products. None of them gives comfort and the decade ahead forecast, given on page 41, shows a current account deficit of over £13 billion in 1990.
We need, as I have said, a greater manufacturing output and a favourable manufacturing balance to pay our way. Having considered all these points, we concluded decisively that there is a problem, and a serious one. It is so serious that if we do not start solving it at once, we risk a major social and economic crisis in the foreseeable future. I have found no reason to alter that opinion since July. The latest national institute forecast foresees low growth for our manufacturing industry, and the Chancellor's Autumn Statement forecasts only a small manufacturing growth this year and next. We cannot leave the nation's future to an imaginary autopilot. We have fallen behind in world competition and we have to seize control to catch up. Therefore, we call for urgent action.
We seek to point the way rather than produce a detailed costed plan. All our recommendations are directed to make manufacturing more competitive. Some will take time to bear full fruit; others, often by priming the pump, can have early effect. Increased

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Government spending is only recommended to match the help given to competitors by other governments, or in the case of the infrastructure to increase efficiency and reduce costs.
We put first the need for a change in the attitude of our nation towards manufacturing and those who work in it. I should like to read exactly what we said:
"All people—in governments and political parties, managers and the workforce, industry and financial institutions, the media and consumers—must recognise that their future prosperity depends on the success of manufacturing and trade and act accordingly".
That does not of course mean that other activities are unimportant. It means that manufacturing must be given a higher priority than it has been both by governments and by private people. "Vague", we are told. Yes, it is vague, it is general, but the message is clear and important. And some of those who say it is vague say so because they do not like it. "What is there special about manufacturing?" is a question that no Treasury would ask in France, Germany, or Japan.
Education has a crucial role to play in bringing about this recognition, as well as in the improvement of the skills and understanding of all who go into industry. We did not pursue this further because of the valuable work done by the Select Committee on Science and Technology, which has our full support. We also welcomed the steps being taken in this direction by the Secretary of State for Education, and made a few suggestions to him.
Industry itself has the key role both in improving its own efficiency and in attracting more support from public opinion and raising the esteem in which it is held, including in schools. Its leaders know this very well, and the reports of the CBI's recent conference are encouraging. That 1986 is to be Industry Year is timely. It has been proclaimed for decades that there is insufficient unity of purpose, and too adversarial a climate in industry. We say it. Nothing new; but still, my Lords, very true. Good men and good women are not going to be attracted into manufacturing in sufficient numbers, nor is investment going to be high enough, or fully used, unless that is corrected.
It is of course industry itself which has to tackle its own costs, both by increasing productivity, as it has been, and by ensuring that the advantages gained from that are not eroded, as they have been, by pay settlements throughout the enterprise paying no attention to the competitiveness of the product. Here I really would have thought that the Chancellor of the Exchequer would have cheered me, had he been listening! And he would cheer at what we say about more training in industry.
So, too, it is industry which has to improve quality control, design, delivery on time, reliability, service and all the elements of what is called non-price competitiveness for which Britain does not have the reputation she should have, despite the excellent performance of some. We spell all those points out in paragraphs that have been welcomed by industry, but have been neglected by those critics who seek to show that the report is only concerned with begging from the Government.
Certainly we make some recommendations for Government attention. First, we ask for the same change of attitude as for the nation as a whole. Their reply rejects this, though it backs the change of attitude
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by the nation as a whole. "Not my fault—yours" is the apparent attitude. "All of you chaps are doing badly. Only we are right". This, I have to say to my noble friends, reminds me of a much-loved lady in my family who died 30 years ago who was known as, "I am right, I know I am".
We are not asking the Government to do down other activities by giving manufacturing a higher priority, any more, I suppose, than the Government were deliberately doing down manufacturing by their exchange rate policy in 1980. Just look at what we said. We ask that the Government, all governments, should be mindful of industry's needs when setting their macro-economic policy, and should apply their policies consistently. We specifically welcome the control of inflation, the easing of burdens on enterprise—in which my noble friend who is to speak shortly has taken a lead—and the encouragement of new businesses.
We approve fully of the principle of support for innovation and for exports; and I was delighted to hear my noble friend the Secretary of State for Employment in his reply to my noble friend Lord Stockton speak warmly of the Department of Trade and Industry support for new technologies. I wondered when his right honourable friends were going to accuse him of cocooning industry with subsidies, as they have accused us! And come, come my noble friend, is this support not breaching Treasury writ and giving some priority to manufacturers! What humbug that Treasury nonsense is!
More seriously, we have to ensure that our manufacturers are competing on equal terms overseas and at home against manufacturers whose research and development and export financial terms are much supported by other governments. I repeat: we are behind in the race; we need our Government to do more to help in these respects, not less. Certainly it is right to try to get other countries to reduce their support or subsidies to their industries, but while doing that we should not weaken our support for our own industry.
We have something to say on the exchange rate, which in 1980–81 did much damage to competitiveness, and helped, with other policies, to reduce the industrial base in a damaging way. The evidence given to us indicated a general demand for stability of the pound exchange rate in whatever way seems best. There was also evidence that for some important products the pound is too high in relation to European currencies, particularly the German mark.
If industry needs a lower pound now, following continuing increases in pay, and therefore costs, in our view it would be wrong for the Government to base their future strategy on a depreciating currency, and we set that out in paragraph 80. I hope that the Government will attend to the exchange rate of the pound and the needs of our industry, as they have attended internationally to the exchange rate of the dollar to help the United States' manufacturing industry.
Whatever the other benefits may be, there is no doubt that high real rates of interest are a burden on industry, and that higher nominal rates increase costs, may delay investment, and damage competitiveness.
Interest rates need to come down pretty soon if industry is to compete better overseas. There is a special point affecting small businesses. There is a demand, of that we were clear, for some system of low rates of interest for small businesses.
Others will talk about investment. I am taking too much of your Lordships' time. However, I have to say that our record has been poor in investment. Recently there has been a welcome rise, and I am sure that the Government will agree that in part this is due to the bringing forward of schemes before the tax allowances run off, but evidence to us indicated that only a small part of recent investment in industry has been for expansion, rather than for improvement of efficiency at the present level of capacity. That has to be improved. The Government should consider again, we think, whether the tax régime should not deliberately encourage profitable investment; and we ask that financial circles should, on the evidence given to us, take more of a long-term view of industry's needs.
There was an important speech made by Mr. David Walker of the Bank of England a few weeks ago in which he talked about long-term attitudes in investment. Attitudes in Japan, France and Germany seem to be longer-term than ours. We know that to help this forward manufacturers would be wise to take their financial partners more into their confidence.
We discussed in a number of paragraphs the coordination of public policy towards industry. We assumed that the Government not only have, as indeed they do have, an industrial policy, but that they are willing to discuss its priorities with others. Sir Hector Laing, who by no stretch of imagination can be described as a "wet"—my noble friends might have noted that—called for some Government leadership here and for consultation with the CBI and the TUC perhaps, he said, through the NEDO organisation and the Council.
Sir Charles Villiers, who has studied this whole matter I think more than any, and whose excellent book Start Again—Britain helped us greatly, thinks that co-ordination should be inside the government structure. A number of people think that the Neddy Council can be just a talking shop. That is most definitely not what is wanted now. We hope that with a greater sense of purpose and a clear directive as to what is required the council, the little Neddies and NEDO, will bring a dynamic approach to the working-out and supervision of public policies aimed at the greater competiveness, growth, and success of manufacturing industry.
I have only one more point to mention. In paragraphs 210 to 220 we discuss import substitution and foreign sourcing. I note the Government's approval of these paragraphs. Evidence persuaded us that too many have lost the habit of buying British; whether cars, consumer goods or plant and machinery. There seems to have developed a subconscious bias against British products with some people. We were greatly impressed by the successes of Marks and Spencer in finding new British sources, and by the CEGB's success with their British suppliers, in each case without sacrificing quality. In advocating that buyers should use their critical judgments in
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favour of British products we have not gone protectionist. We are backing, thinking, British. We aim to turn any bias against British products to a bias for them.
Let me close as I began. This report shows that the decline of manufacturing industry has produced a serious problem, which will not solve itself. Maybe it will take time for people to accept the facts of the situation. There is no danger once they have The danger is that we do nothing till too late to avoid crisis action, which will in due course produce the improvement that can be achieved without a crisis. I hope that noble Lords will help us in getting the truth understood, and, of course, will help us by correcting us where we have been wrong. My Lords, I beg to move.
Moved, That this House takes note of the Report from the Select Committee on Overseas Trade (1984–85, H.L. 238).—(Lord Aldington.)
3.32 p.m.
Lord Bruce of Donington: My Lords, we on this side of the House should like to congratulate the Select Committee and in particular its chairman and its staff on having produced such a thoughtful, moderate and factual report. In Government circles the word "consensus" has become a dirty word. It is referred to in terms of blurring the issues, of fudging the philosophies, and so on.
This report, which is an all-party report, reveals how sensible men getting together round a table, hearing witnesses, discussing with one another the various issues involved, visiting other installations and other countries, can, at the end of the day, come out with an agreed report of very considerable incisiveness—sufficiently incisive to incur pre-emptive efforts by the Government, to which the noble Lord himself referred, to denigrate it in advance.
One thing should perhaps be made quite clear, because among the columnists and sometimes in the corridors of Westminster the word goes round that, after all, your Lordships' House is populated by people who they refer to somewhat disrespectfully as geriatrics. I am quite sure that none of your Lordships would remotely countenance such a suggestion. But for the avoidance of doubt and for the information of the public, who are not always so well informed, it should be said that the average age of the committee was 65½ years, as against the average age of the Cabinet which is 55; but we know that the Cabinet is as yet a little immature and will eventually grow up to have rather more sage attitudes. Suffice it to say that the age of every Member of this Select Committee was under the age of the noble Viscount, Lord Whitelaw (who, as we know, is eternally youthful) and below that of Sir Keith Joseph, who can be similarly described—much younger in both physical frame and mental agility than, for example, well-known septuagenarians such as Mr. MacGregor and President Reagan. So we can dismiss any allegation or any suggestion, which certainly would not be made in this House, that the minds that have been applied to this problem have been anything other than alert and businesslike and. as the reference books may show, have been backed by

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considerable business and professional expertise—quite as good as any of those admirable qualities within the Cabinet.
It was originally complained that the report somehow was made out of context, that it had not taken all the factors into account. It is not my purpose to recite any of the matters that are dealt with in the report, because so many Members of the Select Committee have their own contributions to make. We look forward with eager anticipation to the maiden speech of the noble Lord, Lord Clitheroe, and on the basis of his experience we know that he will be able to make a very useful contribution.
What then is the context? The context expressed in only a few heads is, first, that the non-oil deficit on the balance of payments has been running for the past two years at £ 11 billion and is currently running at a rate of £12 billion per annum. This, I am afraid, is an indisputable fact. I am relying not upon any publication by Militant Tendency, but on one by the Shell company itself, and I see that from this year the output of oil will progressively decrease. There is some doubt about when it will reach the point when we are no longer self-sufficient. The Shell report gives us two options—one of them based upon anticipated new discoveries. But the fact is that from next year onwards the oil contribution will begin to tail off.
Simultaneously with that we have to take note of the fact that manufacturing output in the United Kingdom is still 8 per cent. below what it was in 1979. As the noble Lord said, the manufacturing industry associated with the new information technology is running at an ever increasing deficit. That 25 per cent. roughly of our former manufacturing capacity as at 1979 has either been destroyed or disposed of. Investment in manufacturing industry has declined by some 20 per cent. It is still some 20 per cent. behind what it was in 1979. Simultaneously with that, as your Lordships well know, the infrastructure of this country in terms of roads, sewers and all the rest, needs some £20 billion spent on it to bring it up to anything like a reasonable standard.
I do not like to be too scarey about this, but to all reasonable men and women these are matters of the utmost gravity. That is not all, because production, manufacturing industry, service industry or whatever it may be, does not take place in a vacuum; it takes place within society as a whole, it takes place within the population as a whole. It is bound up immediately with people themselves—people with feelings, people with aims, purposes, or the absence of them, people trying to live their ordinary, everyday lives as human beings, not necessarily luxuriously, but in a way with which I am quite sure most of your Lordships would immediately concur. They are entitled to have the freedom to live a full life; not necessarily a luxurious life but, nonetheless, a full one.
Within that context, within the industrial context that I have already ventured to summarise to your Lordships, is the appalling fact that 3 to 4 million of our citizens are without any work whatsoever, with purpose denied them, with dreams denied them and with hopes eluding them.
Contemporaneously with that, since this has an effect in terms of what the economists call
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expectations, one is faced with the fact—it is a social factor and therefore an economic factor—that the rich are becoming richer and the poor are becoming poorer, and that 50 per cent. of the population own only about 4 per cent. of the country's disposable wealth. On top of that there is inner city decay, which has already been dealt with by a Church of England report of which we shall hear more anon.
The picture is not all gloomy. I am pleased to note those efforts of the noble Lord, Lord Young of Graffham, and the Government which have gone some way towards solving the education and training problem. This is a positive factor, albeit about the only sign of life emanating from the Government at the present time.
Within that context the prospect is grim. Perhaps I may read to your Lordships the prospect that is put forward by at least one firm of very reputable City stockbrokers, Laing and Cruickshank—observations that are endorsed by evidence already given to the Select Committee. They say:
"We have been unable to replicate the Chancellor's rosy view of all-round economic success—brisk growth, low inflation and a burgeoning current surplus".
The firm's economists forecast that,
"the growth rate of gross domestic product will fall from 3.9 per cent. this year to 1.8 per cent. next year and to 1.2 per cent. in 1987. Inflation will average 4.7 per cent. in 1986 but will be 6.3 per cent. in 1987".
I know that forecasts cannot always be relied upon, particularly some of those that adhere to the monetarist theory, which has now been abandoned. However, such a prospect would be daunting enough, even if the economy were at the moment in equilibrium; however, as the noble Lord knows, it is not. As the Select Committee report makes quite clear, the nation is in fact in peril, and that peril is there for all to see.
One matter is quite clear—and in this we endorse the report and, indeed, the observations that the noble Lord has been kind enough to make this afternoon. While to get out of this peril requires specific action on the part of the Government, it also requires the restoration of some sense of national purpose. It is not sufficient for us to blame everything on the Government, any more than it is for the Government in their present disposition to blame our peril on everybody but themselves; we are all in it together.
However, what is frightening is the reaction of the Government to these various matters and, in particular, to the report itself. We see in the press, from time to time, that whenever a report comes out which is remotely critical of the Government the Prime Minister is said to be "angry". It is entirely irrelevant to the future of the nation whether or not the Prime Minister is angry. For myself, I could not care less. It is not a matter for public comment, and I do not see why, through official spokesmen, we should periodically be treated to accounts of the Prime Minister's emotional state at a particular time.
I think the reaction of the Government can be typified most of all by the kind of attitude taken to the recent report of the commission appointed by the most reverend Primate the Archbishop of Canterbury. We—in particular those on the Bishops' Bench—should take that very seriously because,

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according to the Government, beneath every mitre there lurks a Marxist, and I should think the stage will next be reached when——
The Secretary of State for Employment (Lord Young of Graffham): My Lords, perhaps the noble Lord will excuse me, but I do not think that that remark about a Marxist was attributed to a Member of the Government.
Lord Bruce of Donington: My Lords, I shall stand on the record on that, and if the noble Lord can obtain authentic evidence to the contrary, he can produce it later.
Lord Young of Graffham: My Lords, in this country there is a presumption of innocence.
Lord Bruce of Donington: My Lords, I wish the Government would give the country some presumption of innocence sometime, instead of presuming that they themselves are always right.
From what I have just mentioned I have no doubt that it will be but a short step to hint that underneath every coronet there lies an incipient Communist; and, if one looks at the criticism in today's Financial Times, it seems that the abbreviation "FT" stands for "Fellow Traveller". There is no limit to the extension of the innuendos that are being put out by the Government.
The second reaction of the Government is not an emotional one; it is to minimise the contribution made to the British economy by manufacturing. The noble Lord has already dealt with that.
The third reaction to any criticism is immediate indignation. If we are to solve this problem, we must adopt a totally different attitude and so, indeed, must the Government. The Government at the moment are battening themselves down into the bunkers, hoping that something may happen, indulging in a frenzied attempt to sell off public assets in order both to balance the books and secure some benefit in any future election.
It is to this endeavour, not to British industry, that the Government's efforts are now directed. The effort that is required needs the same degree of consensus among the nation, including the Government, as has already been adopted by your Lordships' Select Committee. What is required of the Government more than anything is a purposeful and positive lead, untainted by any hectoring or any lecturing. It should be a lead of decent persuasion, based upon the arguments on the facts presented to them, including those that have been presented so well by your Lordships' Select Committee.
3.51 p.m.
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord Aldington, as I know is the House, for proposing a Motion today which raises issues of great importance. I look forward with all noble Lords to hearing the maiden speech of my noble friend Lord Clitheroe.
The Government felt that the weighty matters considered in the Select Committee's report warranted
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a written response. This was placed in the Library of the House yesterday and we ensured that each speaker in today's debate received a copy of this response. I hope that this has assisted your Lordships.
Some reports of Select Committees of this House have attracted less attention; but few have attracted more. I should like the House to be clear at the outset that there is much in the committee's analysis and in their recommendations with which the Government unreservedly agree. But we have serious misgivings about some parts of the report. Let me start by reviewing the committee's main recommendations, their call for action.
First—and I believe significantly first, as the noble Lord has said—is the need to change national attitudes, to recognise that our future prosperity depends on the success of industry. Yes. The creation of an enterprise culture is the most important goal we have. I also agree that the role of the education system is crucial. Indeed, it is precisely that viewpoint which has led to the development of such schemes as the two-year youth training scheme, TVEI and the encouragement of closer links between education and industry.
Second, the need to improve competitiveness. Yes, I endorse completely the committee's identification of the need to restrain pay settlements, to raise productivity, and to improve non-price competitiveness. And I would add, my Lords, that I do not think that industry today suffers from too adversarial a climate since so far this year we have had probably the lowest number of industrial disputes and strikes in any year since 1936; and the good sense of trade unionists and management should be recognised in that statistic.
Third, the need for consistent policies towards industry to create the right climate for growth and employment. Yes, I am sure your Lordships will recognise that no previous government has provided industry with such a consistent macroeconomic strategy. That consistency is important for industry, as is our priority of reducing inflation; for that provides the very bedrock on which they can plan. That strategy also aims to deliver lower taxes, although that depends largely on controlling public spending. That strategy also aims to reduce distortions in industrial decisions which had been encouraged by the tax system in the past to the detriment of employment. That strategy also aims to keep interest rates low but that needs lower inflation, too.
Fourth, the need to support innovation. Yes £430 million will be spent in this financial year by the Department of Trade and Industry to support industrial research and development and innovation. The combination of positive Government policy and industry commitment is bringing benefits in the Alvey programme and to users of new technology. Fifth, the need to attract high-quality entrants to industry. Yes, we support this aim and aim to encourage that through such policies as the "switch" and through programmes such as graduate enterprise, which will result in years to come in many more science graduates being in industry. Sixth, the need for investment. Yes, investment needs the spur of higher profitability. This year we expect to have the highest real rate of return in non-North Sea Companies in any year since 1973.

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The quality of investment needs to be improved. That relates to better management and a less distorted tax regime.
Seventh, the need to increase output by raising exports, and competing successfully against imports. Yes, we have introduced a new soft-loan facility to help exporters and to put them on a similar footing to competitors. We shall continue to seek more progress within the OECD towards multilateral control over aid to exports and to work to eliminate unfair practices in international trade. Initiatives by the private sector to substitute British goods for imports are of course welcomed. We recognise, as does the Select Committee report, that markets are now world-wide, competition to our industries is world-wide and we have to respond to the challenge of competition.
So, my Lords, I welcome many of the recommendations of the Select Committee. So why all the fuss when it was first published? Partly, because the Select Committee's report concentrated on manufacturing—as indeed, it was required to do so by its terms of reference—and the Government believe that the recommendations to which I have referred apply to the whole economy. I suspect that the committee would agree with that. Partly, there is a difference of emphasis. The report does not emphasise enough what has already been done. I believe it gives too much emphasis to problems which the Government regard as important but not as catastrophic.
I am afraid that I have to part company with the committee when they foresee
"A grave threat to the standard of living and to the economic and political stability of the nation".
Unless the Government intervene to enlarge the manufacturing base and stimulate the export of manufactured goods. I fear that I take exception to apocalyptic language of this kind which does scant justice to the very substantial achivement of our manufacturers themselves since the recovery; for manufacturing productivity is up by 31 per cent. since 1981, a rate which at last matches our rivals; output in manufacturing has increased by 11 per cent. since 1981, faster than our rivals in Europe; and manufacturing investment was up 15 per cent. last year with further substantial increases expected this year.
Indeed, I may say to the noble Lord, Lord Aldington, that if there were effects on accelerating the decline of tax allowances, then fixed capital investment in this country standing at £55 billion would expect to rise to £60 billion and £64 billion over the next two years, each achieving new records and the latter two years not having the advantage of accelerated tax allowances before. The real base of further fixed investment into this country is the control of inflation, and that the Government are demonstrating adequately. Further, on industrial profitability, with the rate of investment up, the net real rate of return for manufacturing companies at 6½ per cent. is the highest for any year since 1973. This year the volume of manufactured exports is at record levels. I would not seek to deny that British industry has problems, excessive wage settlements being among the worst.
I do not seek to deny that British manufacturers have performed poorly and, some would say,
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arthritically in the past. Indeed, it is precisely the fact that the Government have recognised and do recognise these problems which fashions our economic strategy. But I just do not accept that the successful continuation of manufacturing activity is at risk; I do not accept that the present climate of Government policy needs to be changed. On the contrary, I believe that our strategy is the route to prosperity and jobs. I further believe that the recommendations for action made by the Select Committee are largely consistent with the Government's strategy.
I do not recognise claims that this Government are operating on autopilot. We certainly do not believe that the Government should be the pilot—and look where governments have got in the past when that has been the case. Sensible economic decisions are best taken by those competing in the market place; but the Government do accept the responsibility for creating the right climate to make markets work better, to encourage and to support enterprise. For this is a Government who do recognise that our economy has deep-seated problems built up over many, many years—problems that cost us competitiveness, problems that weaken our industrial strength and problems that cost us prosperity and jobs. Our response has been, first, to tackle inflation so that industry is working in a climate which encourages growth and helps them to keep costs down. Of course, features of the economy such as low interest rates and stable exchange rates are desirable aims, but the route to them lies through lower inflation and responsible financial policies.
Our second response is to encourage enterprise to get the whole economy to perform better. We are adopting a whole host of measures to improve the supply side of the economy. This is a vital difference between our approach to these problems and that of previous governments. Many of the recommendations of the committee are in line with that approach. I hope that we can build on this report a strong national recognition that enterprise is the well-spring of prosperity. Indeed, we already see some of the benefits of government policies. We have now experienced several successive years of sustained growth with low inflation, and this combination will continue for the foreseeable future.
The nub of the committee's analysis appears to be that as North Sea oil output declines manufacturing output must take its place, and to achieve that we need to discriminate in favour of manufacturing now. Of course, we recognise that North Sea oil and gas output will decline. But that will not of itself precipitate a crisis: the decline in output will be gradual, unlike the build-up. We will remain broadly self-sufficient in oil at least until the mid-1990's, and oil will continue to make a very large contribution to the balance of payments well into the next century. We are going to have a long time to adjust—time in which to encourage enterprise and time we must use further to improve our competitiveness. For we recognise that there is much to do to raise our competitiveness, much to do to raise incentives and to encourage enterprise. We know that the recent problems of our economy have stemmed from a failure to adjust because enterprise was stifled and the state intervened to take the wrong economic decisions.

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Attempting to predict precisely how the economy will adjust over such a long period is an impossible and even dangerous exercise. Of course, we expect to see a resurgence in manufacturing, but using processes we cannot predict and producing goods we may not be able even to imagine. Of course, there is an important role for services, for services, too, contribute to the balance of payments and, more significantly than manufacturing, to employment. Of course, we will enjoy the benefits of overseas assets which have been steadily building up in recent years to provide a steady flow of income in the future. But the worst way to achieve such an adjustment would be for the state to discriminate now in favour of one particular sector of the economy: government's "second-guessing" of economic reality has provided few benefits in the past.
The last thing we all want is for the wrong diagnosis to lead people in panic to pour money into government support for manufacturing. That would be wrong for manufacturing and wrong for the country. There is no necessary link between an adverse manufacturing trade balance and the performance of manufacturing, and there is no necessary link between the performance of manufacturing and the performance of the whole economy. I say "necessary link" because many of the ills which have afflicted manufacturing in the past—excessive wage settlements, poor management and lack of enterprise—have afflicted other parts of our economy. But the solution lies not in discriminating further in favour of manufacturing, which makes up less than a quarter of GDP.
Further, the solution does not lie in spending ever more public money on manufacturing. I recall quite clearly in the early months of 1980 when I was within the Department of Industry that Jaguar was on the point of closing. Month after month the continued survival of Jaguar was a matter of speculation. No amount of Government money would have saved that company: its products simply did not sell. But with new management and a new application by the workforce. Jaguar, with the same technology, the same production line and the same product, went from strength to strength. Why?—because it delivered to time a quality product and a competitive product. In many ways the history of Jaguar in the last few years shows the way for the growth of manufacturing in this country, for we can only contemplate some of the white elephants of past government intervention in silence. Each concession to one sector is made at the expense of the rest of the economy as taxes rise or interest rates edge up. We already spend over £2 billion a year on support measures which go largely to manufacturing, and £2 billion in any one year is equivalent to 2p in the pound on income tax.
Those who ask for support to be given to manufacturing are arguing that services are intrinsically less useful in the economy, for help to manufacturing will burden the service sector. We need a healthy manufacturing industry and a healthy service sector. Both provide employment, both contribute to the balance of payments and both serve the needs of customers. The Government aim to increase the competitiveness and adaptability of the whole economy.
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I recognise that the report of the Select Committee makes an important contribution to identifying historic and long-standing weaknesses in our economy, particularly in manufacturing. I welcome many of their recommendations, which I believe are supportive of the general thrust of our strategy towards the whole economy. But I do not believe that the problems which they identify—and I quote—
"constitute a grave threat to the economic and political stability of the nation".
I see much that is urgent and much that should be done by manufacturers, for it is not government that produce quality; it is not government that deliver goods on time; it is not government that ensure that wage rises are paid for out of increased productivity. Money cures none of these problems. These are the problems which are indeed posing a challenge to our nation—a challenge which the Government recognised when they came into office, and a challenge which is best met by our economic strategy which has been so consistently pursued. My Lords, the enterprise of our nation is at long last meeting that very challenge.
4.9 p.m.
Lord Ezra: My Lords, I should like to begin by expressing appreciation not only of the important speech made by the noble Lord, Lord Aldington, in introducing this debate today but also, as a member of the Select Committee which served under his chairmanship and the first of its members to speak in this debate, to pay considerable tribute to the patient, sympathetic but at the same time firm way in which he led our deliberations and brought us to a clear conclusion.
This report has already stimulated a national discussion and it is right that we should be having a debate about it in your Lordships' House today. I hope that the discussion will not end here, but will go on for a long time, because it addresses itself to one of the fundamental issues which we face as a nation.
It was on 10th November 1983 that I asked an Unstarred Question, which was,
"to ask Her Majesty's Government what steps they are taking to stimulate non-oil visible exports".
I asked that Question then because we were beginning to change over from a historic surplus in our non-oil visible exports to a deficiency. I thought that the trend was a very serious one and, indeed, I recommended at the end of my speech that we should set up a Select Committee to look into it. I am delighted that that was done; delighted, also, that it has produced the report that it has and that I was able to participate therein.
I must admit that, like many, I have been somewhat puzzled by the Government's attitude to this report. There was, first the instant and critical reaction, then the more studied reaction which is now available and the speech which the noble Lord, Lord Young, has just delivered. So far as I can understand it, the Government's position is that they agree with most of the recommendations; indeed, they claim that they have already carried them out. What they apparently disagree with is the diagnosis.
Oddly enough, the businessmen who have been approached on this subject were virtually unanimous

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in saying that they thought that the diagnosis was what they particularly liked about the report; that it was clear, to the point, pungent and realistic. They thought it was time that we addressed ourselves to the real problems of the nation and came out with practical solutions to them. Indeed, I think the general feeling was: what is the point of putting our heads in the sand? Why do we not address ourselves to these problems and then seek, by joint and several action, to overcome them? That, indeed, is the positive purpose of the report.
There is not the slightest doubt that the Select Committee unanimously conluded that, as everybody knows, there has been over the years a progressive weakening of our manufacturing base, and that associated with that has been a decline in our manufacturing trade balance. The committee concluded that this trend, if continued, would be a threat to the well-being of the nation and that therefore, in order to eliminate this threat, urgent action as described in the report should be taken.
The Select Committee does not subscribe to the view, as the noble Lord, Lord Aldington, has clearly already stated and as we have stated in our report, that this would be solved by some automatic adjustment as time went on. We could not see how that could occur without human intervention. Indeed, this is not what other countries have done. This is what has worried us in particular, because we did not seek to address ourselves to the problems of Britain without considering what had happened elsewhere.
I must say that in Japan, Germany and France—countries which members of our Select Committee visited—they have attached particular importance to the revival and expansion of their industrial base by a whole variety of measures which are itemised in the report. It could be argued: yes, but these countries do not have the problem that we have with the oil. The oil has been of undoubted benefit to the country and as a result of it we have earned a great deal of money. It was explained to us at great length by the economists working for the Treasury that, if you make a lot of money in the export of one of your sectors, then it is only natural that some other sector will fall by the wayside. I am afraid that we were not at all convinced by that argument.
Nor, I may add, have the Dutch been convinced by it. Your Lordships may recall that some time ago there was much talk about the Dutch disease; about the fact that the discovery of masses of natural gas in their territory led to their becoming progressively uneconomic in world trade. The Dutch have tackled that problem—I was at an industrial conference in The Hague recently—and since 1980 they have worked to reverse that. While they are still benefiting from substantial exports of their natural gas, which will go on into the next century, they have recovered their industrial competitiveness and are now running a positive visible trade balance on their manufactured goods. So they do not subscribe to that theory. It is indeed, whichever way you look at it, a very peculiar theory.
We believe that we must do something to solve the problem and we have identified the things that need to be done. I know that the noble Lord, Lord Aldington,
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referred to a number of them, and my colleagues on the Committee will be mentioning others. But I should just like to dwell on three of the recommendations which we made as an indication of what we should do to solve this clearly identified problem. The first matter I should like to refer to is competitiveness, which is really the nub of the issue. The reason why we are not selling more of our goods abroad, and why people who live here are buying more goods from other countries, is our diminished competitiveness. But, having said that, I believe we must also accept that there is no simple answer to this question. There is no magic solution. It is not enough to say that if we get wages costs per unit of production down, we solve everything. That is indeed an important element, but there are many others and they all need to be taken into account.
The question of attitudes has been mentioned; not only attitudes of the rest of us, but the attitude of Government. Then there are skills and training. The noble Lord, Lord Young, has contributed substantially, as the noble Lord, Lord Bruce, quite properly mentioned, to improving the reserves of skills and training in this country. But we lag massively behind others. In our report, we state that in Japan there are four-and-a-half times as many engineering graduates per head of population as in this country. So we are way behind the others and we need to catch up fast.
Then there is investment. The noble Lord, Lord Aldington, referred to the fact that not enough investment is going into the creation of new capacity, new products and innovation, and that needs to be stepped up. Interest and exchange rates are a subject which kept on cropping up in all the discussions that we had with those who came before us. There is grave concern about the level of the real interest rates that we have to pay compared with our competitors. There was particular concern about the exchange rate, not only the fact that it is relatively too high but, even more important, its fluctuating nature. This is what concerned the business community almost more than any other single point that was mentioned. They could not plan ahead through not knowing where sterling would be standing with other currencies from one week to the next. So this is something to which we must devote a good deal more attention.
I now come to quality. Quality is something which in many cases has sold our competitors' goods in preference to our own. We must do very much more to get the quality of our products up. If we could go much more up-market we could be much more successful. The Government have fully supported the drive towards improved quality. This needs to be intensified even beyond that.
I happen to be president of the British Standards Institution and I am familiar with the work that has been done by that institution in evolving BS.5750, which is the standard which sets down the criteria on which quality management systems have to be introduced. The more we go into that sort of thing, which all lies to hand, the more we can improve the quality of British products.
Finally, there is the question of participation and profit-sharing. The more those who work in enterprises feel that they belong to enterprises, the more easily shall we be able to persuade people that

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you have to earn the money first before it can be shared out. So there are all these things to be done when we talk about competition, and I see no reason at all why we should not launch into a major campaign covering all those aspects.
I should like now to talk about export promotion. We have done in the past, and still are doing, a great deal to promote our exports. I have had personal experience of this because I served with the BOTB for 10 years and was chairman of one of their committees. I have been appalled in recent times at the constant reduction in the relatively limited amount of funds provided to the BOTB to do their job. Funds to the BOTB mean people; people mean skills, skills to promote our trade abroad in a variety of ways. Why are we penny pinching in this field? The noble Earl, Lord Jellicoe, thought there was a 50 to 1 return on what they were doing to promote exports. For every £1 spent by the BOTB we had £50 of trade. That was his view, and I believe it is correct.
I should like to refer as an example to exhibitions. We are falling behind in our activities in exhibiting our products abroad. I have recently had a comparison made with the efforts of Germany. They exhibit at virtually every major exhibition that is relevant to their products, and there is massive state support for doing so. Has this been a negative cost to Germany? Not at all. One needs only to look at their trade balance. According to the Financial Times of 27th November—therefore I am quite up-to-date—their positive balance this year on visible trade is likely to be very near £20 billion. Our negative balance is likely to be of the order of £5 billion. Next year the Germans are expected to reach £25 billion because they are pulling out all the stops to promote their exports. We can learn from their example.
Finally, I should like to talk for a moment about import substitution. The noble Lord, Lord Aldington, also referred to this. Although our exports are doing well, we are importing far more, and the stimulus given to the consumer goods sector is likely to add to that burden. So it is very important to have a systematic and determined campaign to try to substitute for imports home products and to do it on a thoroughly competitive basis. We were much impressed with the evidence given by the noble Lord, Lord Sieff. The noble Lord's experience was that there had been too little co-operation between seller, manufacturer and raw materials supplier. In other words, the seller had tended to go off on his own, the manufacturer on his own and the raw materials supplier on his own, instead of having a close link in that chain of British enterprises.
We had evidence from the Think British campaign. I happen to be involved in that movement. They estimated that if every British household increased its purchases of British goods by £3 per week on average in substitution for imports, the balance of payments would improve by £900 million, unemployment by 350,000 and £2½ billion more spending money would be generated. These facts may or may not be precise but they did their sums on the basis of very careful analysis. It reveals what prizes are to be had if we have a positive and determined approach to this question. In a recent debate initiated by the noble Earl, Lord Stockton, on 14th November, my noble friend Lord
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Young of Dartington made what I thought was a very positive proposal, which is no doubt being vigorously considered by the Government, as to how such a systematic and determined campaign for positive purchasing of British goods could be instituted.
That concludes my view of some of the things—and there are many others—which need to be done to translate the analysis made by the Select Committee into positive action. This is not a pessimistic report; it is a realistic one. It is pointing to one of the major problems which we face and which could get worse in time if not tackled. But there are remedies of a practical nature which involve not only government but all sides of industry and consumers as well. It is the mobilisation of a campaign to regenerate British industry which is now called for, and I believe it is for government to show that they understand the problem and to give a lead in its solution.
4.25 p.m.
Lord Clitheroe: My Lords, I ask your indulgence in rising to speak today and I thank noble Lords very much for their kind welcome. I am not practised at this art—in fact, I am a complete beginner—so I hope the House will bear with me. I should perhaps explain that I shall speak briefly and try to be non-controversial, though that is always difficult. I shall if I may explain why I wanted to speak today.
Some 40 years ago, when I was at school, I elected to go in for science rather than the arts. My housemaster at the time was shocked by this and assured me that it would afford no education. Five years later, at Oxford, I decided to choose industry rather than other more appropriate activities. The horror of my tutor was profound. I found I had streamed myself into a very different world, and from what I read in the press over the week-end things do not seem to have changed much for the better. Going into industry is still unpopular, and yet I confess I have never regretted my decision to follow that course. It has been most stimulating, challenging and exciting. However, that was my reason for wanting to speak today. For the past 30 years I have been involved with the management of an international group of companies. It has given me a good, if sometimes depressing, experience of our competitive position in this country in trade and industry compared with many of our competitors.
I have read your Lordships' Select Committee Report with great interest and much agreement and could be tempted to talk on many of the issues raised in the recommendations. Time does not permit this except perhaps for a few asides which include matters many of which have already been mentioned today such as the stability of fiscal policy. That is an important one. More important still, perhaps, is some stability in the exchange rate. I am very worried at the moment about the present trend because we are on the up (or is it the down?) end of the helter-skelter or the big dipper. It should be accepted, on another matter, that money for investment is available if the climate for investment is adequate and assured and if the profit-margin is adequate, too.
There are certain areas in which direct Government action in furthering our competitive position could be most helpful—for instance, in the combating of

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dumping; in the area of non-tariff barriers, although it is vital to avoid moving towards protectionism which is a risk we have seen recently in the United States; in support for research and development and lower interest rates. All these things could give us a fairer wind.
But the key to our problem in my belief, and I think in the belief of many of your Lordships, lies overwhelmingly in those paragraphs of the recommendations which refer to the need for a change of national attitude. On the whole, the severe shake-out that industry has suffered over the past four or five years is probably healthy rather than otherwise, if for no reason other than it has swept away many illusions.
Perhaps we now have an opportunity to see ourselves where we really are and to concentrate. The problem seems to me to be, in the first place, that industrial management in this country, unlike that of our competitors, has always been at the bottom of the pecking order of esteem. Industrial management here has not been a magnet for people of highest potential. It has neither the social "kicker" nor the financial "kicker" to ensure that, and such has been the case for many years.
Partly as a result of that situation we still have in many industries a union structure which is wholly unsatisfactory. I say "partly as a result" because that union structure is itself in part the direct cause of bad management and the reluctance of many people to enter into management. Here is something of a Catch 22 problem and while, to avoid offending your Lordships, I will not go deeply into what might be thought to be too controversial an issue, I have to say that union structure and union performance are issues in this great debate.
It is a truism to say that the complexities of management increase with the number of employees on any given site, so that with the less-than-perfect management that we have here, those parts of our industrial heritage which have suffered most are the heavy industries which are labour intensive. All in the country is not darkness and despair. In smaller units where fewer than 100 people may be employed the management skills needed are not so great and union problems tend to be less difficult. That part of the country's industry is in reasonable shape. In many cases, it is flourishing in the present economic climate better than at any other time in my experience.
However, the part of industry on which your Lordships' report focuses most strongly is the heavy, labour-intensive end, where we are least equipped to manage. In addition to historic weaknesses in management and union structures, public regard for industry in general is at an all-time low. Internationally, the Green movement is in the ascendant and primary and secondary productive industries are under heavy pressure from that direction as well. To expect to reverse public distaste for heavy industry, to improve the quality of British management, and to require unions to learn the lesson of industrial survival is perhaps asking for three impossible things before breakfast. I cannot pretend to offer a solution to any of those problems, but it is vital that they should be solved if this country is to compete effectively in the industrial world.
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We need to regenerate pride of our industries as well as pride within them. I will make one small suggestion in relation to the improvement of management. One gets what one pays for, and compared with our competitors we tend to have inadequate differentials for professional managers within our workforces. We tend also to provide inadequate incentives for them in relation to the attractions of other professions in this country and in relation to their value in the international market.
If we are falling behind, as I believe we are, in failing to provide those incentives, we have only ourselves to blame. If we as a country wish to continue to afford the luxury we have had for the past 100 years of distributing wealth to so many good causes, then we must be prepared to pay for it by making entry into industrial management more attractive.
I am afraid that I may have spoken for too long, but perhaps I can revert to school again. I once wanted to row on the river. In part, it was to avoid playing cricket, which I did not enjoy. Rowing was not allowed until one had passed a swimming test. I could not swim but persuaded myself that mind was greater than matter and that I could pass the test. I remember sinking down to the mud in the depths and being retrieved and revived by friends. I am glad to say that ultimately I passed my swimming test. I hope that there is a moral there. I hope also that your Lordships will be as kind to me this afternoon as my friends were on that occasion. If I have gone out of my depth and into controversial waters, then perhaps your Lordships will rescue me.
4.35 p.m.
Lord Plowden: My Lords, I am privileged to be the first to congratulate the noble Lord, Lord Clitheroe, on his thoughtful and constructive speech. I know that I speak for your Lordships when I say that I hope he will find the time to speak often in your Lordships' House. I say that with particular pleasure because his father was a close friend; he was associated with me in business for 10 or 12 years, and was a friend for much longer than that.
I must begin by paying tribute to the noble Lord, Lord Aldington, and his colleagues on producing such a thoughtful and constructive report, with which I am largely in full agreement. As we have a great many speakers this evening, I shall confine myself to one point. It is the point raised in paragraph 33 of the report. It states:
"The most highly qualified people have tended not to enter manufacturing industry and success and achievement have been associated with other areas of employment. Furthermore schooling has traditionally not been directed towards educating people for industry in the same way that it has in Germany for example. Indeed, these 'cultural' factors were identified at least as long ago as the late nineteenth century and have persisted despite the recurrent recognition of the problem".
We all know that the Industrial Revolution started in this country, and it continued with vigour until perhaps the middle of the nineteenth century, probably reaching its peak at about the time of the Great Exhibition in 1851. But after that, for some extraordinary reason, the British people appear to have started to look down on working in industry as something not quite nice, something people turn to if they cannot get anything better.

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Perhaps that was because industrialists wanted to become country gentlemen, because of the attitude of educationists, or because of the writings of people such as Matthew Arnold. John Ruskin, William Morris and Anthony Trollope who described an ideal rural England where men and women led fulfilled lives, whereas we all know from the most cursory reading that the squalor in which the farm labourer lived and the exploitation to which he was subject was as great, if not greater, than that suffered by his opposite number in the towns. The attitude of which I speak was probably due to all those influences.
The result is that we appear to be alone among the industrialised countries in our attitude towards that part of our society which provides much of the wealth on which every other part of our society depends. I am chairman of an ad hoc group of businessmen whose aim is to sponsor from time to time investigation by reliable sampling surveys, into issues of public interest and national concern and to publish them for the general benefit. We are not aligned to any particular grouping and we never indulge in propaganda. But as it happens—and this is my reason for intervening in this debate—we published last Friday two reports on the attitudes of two groups of young people: teenagers between the ages of 13 and 18, and students at universities and polytechnics; 3,333 teenagers from 133 schools and 1,007 undergraduates from 55 educational establishments were interviewed.
There is some encouragement to be gained from the survey of the undergraduates. The majority of them seem to have a positive attitude toward business in its wider sense, both manufacturing and commerce. When they were asked which businesses they favoured, the choices were—as one would expect—high technology industry, electronics, computers, telecommunications and banking; but iron and steel, heavy engineering, motor manufacturing and so on were of no interest whatsoever to them. I feel that this more favourable attitude among these young people must in large part be due to the activities of the CBI, the British Institute of Management, the Industrial Society, the UBI and other people.
The report on the teenagers was much less encouraging. In considering the two reports we must remember that we all go to school but only 8 or 9 per cent. of the population go on to higher education. When the teenagers were asked to choose between 13 different jobs, the two top choices were advertising and working in a bank. As for the bottom two, by far and away the most unpopular choice was working in a factory; the other was farm work.
In neither of the groups surveyed did there seem to be any appreciation of the fact that industry and commerce create the wealth on which so much of the rest of society depends. The surveys showed that young people begin to decide what career to follow at around 13 or 14 years of age. Therefore it is at this age that industry should start to influence them and draw attention to the merits of industry if it wishes to obtain a fair proportion of the best and brightest young men and women who are coming out of the education system.
When the young people were asked to recall the different companies, industries and professions which
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had supplied speakers or videos which they could remember, the following emerged. One in five—that is, 20 per cent.—had been exposed to material or visits from financial institutions, such as banks, insurance companies and so on; 18 per cent. remembered hearing about the armed forces; the police came next with 10 per cent. Perhaps that was due to talks on road safety and so on; nonetheless 10 per cent. of the children remembered the police. The National Health Service registered 7 per cent., retail stores 5 per cent., and engineering only 4 per cent.
If we are to arrest and reverse the decline in manufacturing industry, industry must recruit many more of the best and brightest young men and women who are coming out of the schools to fill the skilled jobs on the shop floor and to go into management at all levels. If this is to be accomplished, there must be much more contact between industry, schools and the young people in them such as happens in other industrialised countries, in particular in Germany. This means not just visits from personnel officers and senior managers, important though they are, but also visits from young people who are already doing jobs, as young people in schools relate more easily to those who are not so very much older than they are themselves.
If recruitment is part of the problem which is facing industry, the solution of it lies in large measure within the hands of industry itself. Obviously the Government have a part to play, but I hope that industrialists will learn that it is something which they have to tackle.
4.45 p.m.
Lord Hanson: My Lords, I too should like to congratulate my noble friend Lord Clitheroe on his excellent maiden speech on a subject of which he has much experience at home and overseas. We look forward to hearing from him on many future occasions. I know from my own experience how much better he feels now than he felt at 4.30 this afternoon.
The House is greatly indebted to my noble friend Lord Aldington for initiating this debate and I should like to add my own appreciation and respect for the distinguished committee's report. My noble friend himself and the members of his committee brought to their inquiry a formidable array of experience, not only in manufacturing but in banking, insurance, consumer services, energy, international trade and not least in their experience of government office.
I must take this opportunity to apologise to your Lordships for the fact that I shall be unable to attend for the whole debate because of a long-standing previous engagement.
The committee sought to "draw attention to manufacturing industry", which objective they most certainly succeeded in achieving. It is not given to all reports to become best sellers or to generate such interest and comment. As a manufacturer myself as well as an international trader, I thoroughly approve of the spotlight being turned on the subject of Britain's manufacturing industry. The committee's analysis of how we have reached our present position—I decline to call it "plight"—contains a great deal with which industrialists are very familiar; but I for one do not agree with the diagnosis. It seems to me that there are

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some major omissions. Most curiously, I think, it omits the fact that the commanding heights of British industry have been nationalised—for many of us for most of our working lifetime—with devastating consequences for Britain's manufacturing industry. Nationalisation turned huge sections of our industry into loss-makers. It absorbed massive investment capital and loaded all manufacturing industry with excessive energy and transport costs.
One major way of restoring manufacturing competitiveness in this country which is currently being actively pursued by this Government and which I am sorry not to see in the committee's list of recommendations, lies in placing these industries in the private sector where they belong, where the customer will decide whether they prosper or decline, and where the shareholder will put up his own money and take the risk of profit or loss.
My noble friend Lord King of Wartnaby whose experience and business success in manufacturing and service industry alike are withheld from us today because of his other duties, wrote recently:
"Britain's present position is not the product of the last six years but of the 20 years that went before",
and also:
"The wonder is that Britain, as the former 'sick man of Europe' has recovered from what appeared to be a terminal illness".
I thoroughly endorse his views.
The report rightly draws attention to the lessons to be learned from other industrial nations, but it touches too little on the desperately poor base from which our recovery had to begin. In my view, the committee does not give adequate recognition to the immense progress that we have already made. It does not give adequate recognition to the right business climate that has been created by this Government.
Much argument is made about the primacy of need of manufacturing over service industry; that our oil reserves are peaking, so we must busy ourselves to stimulate the manufacturing sector. As I said earlier, I am a manufacturer myself, but I do not buy that argument. Nor am I convinced that any good will come from the proposals for more government tinkering with this, interfering with that or throwing money at the other. Let us have no stimulation, please. It is only a polite euphemism for subsidy and it does not work. One has only to recall selective employment tax, which was a tax subsidy for manufacturing at the expense of the service industries. A tax subsidy for one sector must mean a tax penalty for all the others.
There is a great deal of evidence—some- of it indeed described in the report and referred to this afternoon—that much of our manufacturing industry is healthier and more competitive than it has been for 40 years. The way that it will best grow is by manufacturers winning more of our home market. As my noble friend Lord Aldington said, our record of exporting is really rather good by international standards, but we should all be fighting the import market competitively. How can overseas manufacturers absorb all the extra costs of shipment to this country, setting up distribution and overcoming the language barrier and the local technical problems and still beat us in our own market?
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The report addresses some of the problems in its call for action: better design, more R&D, better recruits and training; all are necessary objectives to be pursued. But that is not the core of the matter. There is no magic solution, said the noble Lord, Lord Ezra. The plain fact is that manufacturing industry has shrunk, with some notable exceptions, because we have priced ourselves out of our own market-place. The report confirms that over and over again. When we price ourselves back into competition, our industry will grow. It will grow first by selling more at home and it will grow again because then we shall be competitive abroad.
As regards the exchange rates, look at the cries that we get the moment that the currency rises to reflect the country's economic strength! We get cries from our major manufacturing exporters, who are all strangely silent when we reach dollar-pound parity—£1 to the dollar. I am not sure what advantage they took of that rate at that time, but they certainly complain the moment that it goes up.
The real battle for British manufacturers, and one that we are fighting daily, is to reduce costs. I have already spoken of the burden on industry of energy costs, but we must continue the fight to control all costs, expecially wages. For too long we have been getting "owt for nowt", and I should like to see a little more "summat for summat". The report tells us of wage costs having risen here 260 per cent. compared to 70 per cent. in Germany and 110 per cent. in the United States. Productivity in certain industries still lags far behind foreign competition. But we must get our own house in order and keep it that way.
The report calls for relief from the burden on industry of rates. The answer to that is surely a vast reduction of the whole town hall machinery and a return to private enterprise of all possible local authority functions. I believe that if we hold to our present path the balance of manufacturing and services will evolve naturally and without the horror-movie scenario foreshadowed by the committee.
There is in the report a great deal that we can all warmly embrace, and above all its underlying theme: the need for change. I would have put it as the need to continue the present course of change. We have as a nation finally come to understand that the world does not owe us a living. We have really begun to believe that wealth has to be created before it can be distributed. There is some way to go, not least in the educational field, to which the committee draws attention. As my noble friend Lord Aldington said, and as was stressed by the noble Lord, Lord Plowden, I am not sure that industry is doing anything like enough to tell pupils and their teachers of the importance and attraction of a career in industry.
But we should take account of the measure of change that has been achieved. I can report only that I am happy to work in industry, and I do not feel at all gloomy about this great country's present position. With the continued encouragement of this Government I look forard with great excitement to Britain's future prospects.
4.55 p.m.
Lord Greenhill of Harrow: My Lords, I join with others in congratulating the noble Lord, Lord

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Clitheroe, on his maiden speech. He showed by an account of his early education that he was ahead of his time. His subsequent remarks show that he remains in the forefront of sensible thinking. He is clearly a most valuable and important addition to the House.
As a member of the committee I do not want to trespass on the time of those in the House who may now wish to comment on the contents of the report. It has this afternoon been admirably introduced by the noble Lord, Lord Aldington, the chairman, and I shall try not to be repetitious. I believe that he fully justified to the House the concern of the committee. Both he and the noble Lord and Minister were free with the use of statistics, but I think that I may be forgiven for thinking that the noble Lord, Lord Aldington, emerged as the victor in that statistical battle.
There has been a lot of comment already in both Houses of Parliament and the media since the publication of the report. Some of the initial commentators omitted, I think, the desirable requirement of reading the report beforehand, but gradually the recognition of the wisdom of the recommendations has been generally accepted.
I should like to make one or two quick observations. First, I should like to draw the attention of the House to an earlier report in 1979 by the Hansard Society under the chairmanship of the noble Lord, Lord Marsh, assisted by the late Lord Byers and Lord Armstrong of Sanderstead. The report was entitled Politics and Industry—the Great Mismatch, and it drew particular attention to what the authors described as—and these are their words—the increasingly pernicious effect that adversary politics was having on British industry. The authors of the report were not strangers either to industry or to government and their conclusions confirm some of the conclusions that our report has drawn. It is a pity that more notice was not taken of them at the time.
Ministers' immediate reactions to our report were a good example of adversary politics; and of course it may be argued that such politics have been commonplace for years and indeed are a necessary part of our political system. But there is no reason why we should continue to tolerate their worst features if they damage our industrial future, as I believe they certainly do.
I made the same calculations as the noble Lord, Lord Bruce of Donington, about the average age of the committee and the average age of the Government, but I thought that it was beside the point because we all have a vivid recollection of a recent example in this House of how very old age and wisdom can be effectively combined.
Looking back over this century one cannot but be sadly disappointed at our industrial performance and the way in which we passively allowed our initial industrial advantages to slip away. Re-reading recently a history of industry in the Midlands, I was interested and surprised to see that the weaknesses to which our report draws attention were clearly identified more than 80 years ago—poor management, inadequate industrial relations, insular design, poor marketing and investment conflicts between the City and industry. All these things were then the subject of
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argument and discussion, but nevertheless they have remained largely without effective remedy. Opportunities, again and again, have been missed. Now, I believe, we have an opportunity to reverse this sad story.
In addition, one must admit that national attitudes to manufacturing industry have in many cases deteriorated. I noticed the other day that a foreign observer said that the United Kingdom was the only Western country—and these were his words—where,
"intellectually to destroy and reject had taken the place of longing to build and create".
That is, I believe, an exaggeration. But it is certainly more than half true. We see it reflected daily in comments in the media.
The Select Committee report calls for these disagreeable facts to be faced and a decisive effort made to ensure that over the long term our past sins of omission are overcome. Above all, the report calls, as we have been reminded again and again this afternoon, for new attitudes. Members of the House will notice that the report does not attribute past lack of success to one political party or to one political segment of our society, but to all of us. It calls on all of us to put our hands and heads together as our rivals seem so often to do. I am sorry that this central point of the report has been so largely missed by commentators.
The comparative ineffectiveness of the NEDO Council hitherto shows how very difficult we find it is to work together even when our economic objectives are close together. I believe that the central elements of the report summarised in Chapter 7 do in fact, in spite of what the noble Lord the Minister has said, command agreement across all sections of the community and with many in all political parties.
I should like to repeat these three elements. First, the decline in our manufacturing industry has reached serious proportions. Juggling with dates and statistics cannot conceal lasting basic weaknesses. Secondly, although the United Kingdom will remain self-sufficient in oil for many years to come, the massive contribution of oil to our export earnings will assuredly decline. Thirdly, there is nothing automatic about the recovery of our manufacturing industry as the oil declines. Lastly, the fall in our industrial export earnings cannot be fully replaced by service industries whose achievements, of course, must be applauded and acknowledged.
The logical conclusion of this—it is, I think, inescapable—is that our standard of living will be put at risk. The timescale may be a matter of debate but we must prepare ourselves with consistent policy not only for the immediate future but for the longer term. The Economist stated blandly a few weeks ago that the governments of the future will have plenty of time to adjust. Adjust to what? Surely, only downwards unless more vigorous action is taken, starting at once. This action must be the collective work of all parts of our society. Of course, the main responsibility for the recovery of manufacturing industry lies with industry itself, but everyone can and must contribute and have the interests of manufacturing industries high in their own priorities. I am glad that so much emphasis this afternoon has been put on import substitution. For

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example, an individual can try in a most modest way to substitute British goods for foreign imports. All companies should look hard at their purchasing policies.
The motor industry is a classic example of an area in which we suffer this great deficit. On my way to the House, I ran my eye over the cars in the car park where I keep my car in the City. Eighty per cent. of the cars—more than 80 per cent.—were imported. Interestingly enough, a very large proportion of that 80 per cent. were capable of travelling at twice the legal limit in this country. Is not this an area in which there could be a little less self-indulgence? What is the general attitude of the Government to industry? I hope that I have it right. It is, so the Chancellor of the Exchequer said in his evidence to the committee, to create a framework in which manufacturing industry and indeed all other industries could prosper. Other Ministers have said that the Government's job is to create the right overall climate and then leave industry to do the rest with a new spirit of enterprise.
It is true indeed, and very welcome, that a new spirit of enterprise is being created. There are undoubted but insufficient improvements. In this way the Government seem to be distancing themselves from the problems of industry and inclining towards a "hands off' policy. But, happily, from time to time, one does recognise that they see that they have a responsibility that goes far beyond creating the right framework. The leadership of the noble Lord the Minister of another industrial mission to China is more than just creating the right framework. It is active and overdue practical help.
The Government are increasingly involving themselves in the battle for large overseas contracts—quite rightly, but again belatedly. They are correctly hugely subsidising research nationally and internationally. It would, of course, be very useful if they funded our overseas missions and the BOTB more adequately. But possibly most important of all, they should exercise their inescapable responsibility, with the assistance of us all, in the reform of our educational system to make it more appropriate for our industrial needs. It is through a better educational system that the vital new attitude to industry will eventually be established. Important, at the same time, will be the abandonment of self-destructive adversary politics.
The Select Committee report clearly and correctly points out the possibility of a crisis in the future and the consequential need for action now. The report summarises ways in which manufacturing industry can help itself and be helped by governments. These obviously cannot be exhaustive and are sometimes debatable, but new ways will suggest themselves if public attitudes are right. Especially important, in my view, will be the relations between the City and industry. What is going to be done about the report? If I may use a Rugby metaphor, are the Government going to kick it into touch or are we as a team going to try and run with the ball?
5.10 p.m.
Lord Kaldor: My Lords, I should also like to add my congratulations upon the maiden speech of the noble
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Lord, Lord Clitheroe which are more genuinely felt as I find myself in agreement with so much of what he said.
I think that the noble Lord, Lord Aldington, and his team earned our gratitude for producing a report on overseas trade which I am sure will have far-reaching repercussions. We have learned today that it has already run into six editions. I am sure that this is only just the beginning—it will run into very many more. It will certainly be very widely read by people in this country and, despite the Government's rather feeble attempts to play down its findings, it is bound to have an increasing influence on national policies. Indeed, at some future time it may be viewed as a historic landmark which has torn away the veil of complacency concerning Britain's position, which is concealed for the present by the huge, though temporary, benefit derived from North Sea oil.
The basic facts are simple enough. What is new is that they are here put together to present a comprehensive picture and to demonstrate the inevitability of an economic crisis of catastrophic proportions sooner or later. It may occur not in our lifetime nor even our children's lifetime, but in our grandchildren's lifetime. We cannot be sure. But we can be sure that it will occur—and I have been sure for many years that it will happen, as shown by numerous articles—unless the long-standing trends of industrial decline which have so much accelerated since 1979 as a result of misguided policies pursued by the present Government are decisively reversed in the not too distant future.
Britain was the country which invented and first experienced the Industrial Revolution, which began quite spontaneously in the closing decades of the 18th century, independently of any supporting policies of the governments of the day, who must have been largely ignorant of the fundamental nature of the economic transformations that were taking place. As a result Britain developed a tradition of keeping politics and business apart and of refraining from governmental interference in economic affairs.
In this, as I shall argue today, Britain inherited a tradition wholly different from that of other industrialised countries, with the sole exception of the United States. That attitude survives to this very day. The present Chancellor of the Exchequer told the committee that
"that Government's general philosophy is that 'it is industry's job to make itself competitive, the Government's job is to provide an overall climate' ".
The "overall climate" has generally meant pursuing sound financial policies such as the return to the gold standard in 1925, or, more recently, the policy of purposely overvaluing exchange rates and of high interest rates in the misguided belief that that is the cure for inflation and the further misguided belief that curing inflation would cure all our ills.
These policies have provided the worst possible climate for manufacturing industry, on which the nation mainly depends, whether directly or indirectly, for jobs and prosperity even when North Sea oil provides, for the time being, ample foreign exchange to pay for our imports.
The Government argue, according to the committee's report, that the decline in the net demand

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for British manufactures is an inevitable consequence of North Sea oil. If the trade balance in oil improves in a dramatic fashion the trade balance in manufactures must decline since overall exports cannot exceed imports. This argument incorporates a whole series of contradictions as well as fallacies. The first is that oil, though it can provide us with all the foreign exchange we need, does not generate the same volume of employment as other activities.
Only 2 per cent. of the value added by oil extractions is represented by wages and salaries, as against 70 per cent. in manufacturing industry. If we were faced with the necessity of replacing manufacturing industry by oil extraction—assuming that we had all the oil we wanted for everything—and would allow the exchange rate to settle at the point at which all our demands for manufactured goods were fully satisfied by imports and paid for by oil, Britain would become a most miserable place with most of its population living on the dole—and living on the dole is a most unhappy state of affairs because it deprives life of its purpose, quite independently of whether the dole is sufficient or insufficient for material needs.
However, there is no need for any of this to happen. If we take the extreme case and suppose that oil pays for all our imports, we can, and indeed we must, reduce taxation sufficiently to give people enough money to spend to buy all that can be produced in this country. If that is considered an extreme solution, we could go for a large balance of payments surplus on current account and spend the money on helping the starving millions of the majority of humanity. If that is considered too extreme, we could reduce the rate of extraction of oil to whatever level we prefer and thereby make our oil reserves last longer. The nation is immortal even though a generation is not. Making our oil reserves last 100 years as against 20 or 30 years would be a great advantage from the national point of view.
We have all the freedoms of the rich and it is nonsensical to suggest that the discovery of North Sea oil condemns the nation to a decline of its traditional industries and to millions of unemployed for whom no jobs can be found. The committee of your Lordships' House was not concerned with the problem of our new found richesse. It was concerned with the problem of what happens when the oil runs out and we have to return to our old ways of paying for our imports—through the net excess of exports over imports in manufactures. Many speakers ask, "Why manufactures?" But nobody suggests what else, other than manufactures, they have in mind. If they prefer, we can speak of an excess of exports over imports of manufactures plus everything else on which we can have an excess of exports.
As in all other contexts, the Government are incredibly complacent on this matter. Just as the deterioration of the trade balance in manufactures is regarded as an automatic consequnce of the emergence of oil exports, so equally automatically manufactures will take over from oil when oil exports run down. The fact that in the meantime our manufacturing output capacity will have shrunk to a shadow of its former self, and that it takes a long time to build it up again to a level of efficiency where it is
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competitive with other manufacturing exporters does not cause any worry to Ministers or to the Treasury. In the Treasury's view, according to the committee:
"there is no cause for concern"—
the decline in oil output (and again I quote the Treasury's view given to the Committee):
"will automatically tend to bring about adjustments in the economy which will compensate for the loss".
They do not say how, and what do they mean by "adjustments"? One adjustment would be to reduce our standard of living and consumption by 50 per cent., but that cannot be reckoned in the same way as other types of adjustment. Twenty-four per cent. of manufacturing industry has already disappeared in the three years between 1980 and 1983. That is an absolutely fantastic and unbelievable figure. It has literally disappeared: it has not been transformed into unutilised surplus capacity—the capacity is not there any longer. According to the figures, in certain sectors like the motor car industry or textiles the percentage decline was much greater. There is no reason to suppose that this process is now at an end or that there are economic forces in motion tending to rebuild our industries, as some people have been inclined to suggest in this debate. Indeed, almost every day we read in the newspapers of 200, 500 or 600 people being made redundant in this or that manufacturing company.
Nor, in the committee's view, is there any justification for the equally naive view that Britain can become "the great service economy"—that service exports can fill the gap left by the decline in the manufacturing sector. That cannot happen partly because our share in world service exports is declining twice as fast as our share in world manufactured exports, partly because the value of our service exports is less than half the value of our manufactured exports; and finally, because as the committee rightly points out, so much of the service exports provide ancillary services to the exports of manufacturers. They provide connected services which depend on manufactured exports.
Whitehall's aloofness to industry is in strong contrast to the traditional policies of our main industrial competitors, such as Germany, France or Japan. In these countries, which aimed to emulate Britain's success in industrialisation in the 19th or 20th century, the transformation of their economies involved Government initiative from the beginning. The best historical example is Bismarck's nationalisation of the Prussian railway system, which was undertaken in order to be able to command the railways to buy only German-made rails and rolling stock and thereby develop the iron and steel industries of the Ruhr. The exact counterpart of this for the present Government is the advantage claimed for the privatisation of British Telecom, which in private ownership will no longer be obliged to get all its equipment from British sources. It will henceforth be able to buy in the cheapest market, wherever that is, and thereby make more profit or possibly lower its prices. On this issue I definitely side with Bismarck and against the views of the present British Government.
The major objective of the governments of Germany, France and Japan has traditionally been to foster industrial development in the most promising

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directions. In Japan there is an institution called MITI (the Ministry for International Trade and Industry), which is the central director of economic development and its activities consist of issuing "administrative guidance" (as it modestly calls them) to business firms as to when to develop and when not to. It closely monitors developments in each industry and communicates its "vision of the future" in close and frequent consultations with industrial leaders. It was in that way, and only in that way, that Japanese industrialisation leap-frogged in a series of steps from one industry to another; a new industry was not begun before the major developments in the first industry were completed.
When I first visited Japan in 1956, there were very few motor cars and hardly any roads. When I returned for a second visit in 1960 the picture had changed completely. There were endless new roads and endless new cars, because the Japanese plan had in the meantime led to the creation of a motor car industry attaining an output of 2 million cars in the very first year. In France and West Germany, planning by central government is not so intricate as it is in Japan, but the banks play a vital role in providing long-term as well as short-term finance, and they do so in accord with the known aims and preferences of the government. In Germany and Japan there is also much closer and more frequent consultation between the management and the workers, where management go to considerable lengths to explain their aims and possibilities to the workers' elected representatives.
In Japan, where the large firms offer life employment to all their employees, with regular age increments in pay up to retiring age, a considerable part of the workers' annual income consists of an annual or semi-annual bonus which is additional to their contractual wage and represents a share of the profits. So the workers have the same interest in making profits as high as possible as has the business as a whole.
We have a long way to go before we can emulate these policies of mutual co-operation of workers, management and government and get rid of the out-of-date adversarial relationships which still dominate our industries. But, if we wish to survive we must embark on that road, and the sooner we begin the better.
5.28 p.m.
The Earl of Limerick: My Lords, conventional wisdom has it that no Back Bench speech should attempt to make more than three or four points. As there are four points that I wish to make, I shall not follow the noble Lord, Lord Kaldor, down his interesting avenues apart from saying that I share his scepticism about the Treasury analysis and also his view of the role which the service sector might play.
I wish to speak first about the report itself. I believe that it is a timely, useful, workmanlike and in many respects an excellent report. Our thanks and congratulations are due to my noble friend Lord Aldington and to his hard-working colleagues on the Select Committee. At this point I should say that I had undertaken an engagement this evening before I knew the date of this debate, and I hope that the House will
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accept that there is no discourtesy if I am unable to stay for the closing speeches.
This debate would have been worthwhile if only for having stirred up the subject of the Select Committee's report, a subject for too long unstirred, and for having provoked this and other discussions. It would be worthwhile if only to have evoked the maiden speech of my noble friend Lord Clitheroe. He was my friend before either of us was noble. I was not one of those who resuced him from the bed of the river, although I would have done so with enthusiasm had I been there, but I was one of those who shared with him the science classroom to which he referred. Thereafter our paths parted, but it is a privilege to have listened to his speech, and we greatly hope that he will not long delay speaking to us again on similar topics.
This debate has done much more than that. The report should force out into the open the question which has increasingly been bothering many of us in recent years. That question is, can we foresee how our national prosperity can be maintained against a background of a shrinking industrial base, a declining share in world trade, and the inevitability that the oil is going to decline and ultimately run out?
Those who seek to dismiss the question, or who claim that the case is overstated, would do well to spend a few minutes studying the pi charts and the bar charts on pages 14 and 15 of the report. These read like a strip cartoon. They show more graphically than words how the balance of our overseas trade has changed, and the forecasts indicate that it will continue to change.
Most of us recall how the balance of payments constituted the main constraint on our economic policy post-war. It remained so until the developments of domestic hydrocarbons—to which we rightly gave very high priority—removed that constraint. The big question is how we prepare for the time, not so far distant, when that constraint is reimposed by the exhaustion of those resources.
The initial reaction of the Government to the report was surprising. It was surprising for its speed on the very morning of the publication, for its vehemence, and for commenting on the "crisis" theme, so as to amount almost to a health warning against taking the report too seriously. It seemed that it was taken almost personally, although the tenor of the report, as my noble friend Lord Aldington pointed out, was in effect to say, "Doing quite well. These are some suggestions for doing better".
The report, most deservedly, has been taken seriously. It has done what it set out to do and has inspired a serious discussion. I was greatly heartened by the reaction earlier from the Front Bench of my noble friend Lord Young, and I think we should acknowledge the many ways in which Government policy has contributed to the aims towards which the report is reaching.
The Government's mature reaction was more dignified and certainly more contributory to the debate. But it is postulated on the belief that oil income forecasts are probably too pessimistic. There is a continued dismissal of the idea of crisis and any consequent need for an action plan. It is the

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Government's belief that insufficient weight—I refer to paragraph 5 of their statement—is given to the,
"sustained recovery of the United Kingdom economy in recent years".
Overall, recovery, certainly, yes, but certain trends have been inexorable throughout those years. We have lost market share in world trade. We have lost two and a quarter million jobs in manufacturing industry since the oil shock of 1973. We have lost whole industries in areas where we are now obliged to rely on imports.
Those three propositions I have cited do not really hang together. It is quite possible that the speed of the oil decline is exaggerated. We all hope so. My noble friend Lord Aldington made it plain that the committee deemed it wise to concentrate on the more pessimistic estimate. But surely it is not an answer to argue that because we have more time to make a structural change in order to protect our living standards, therefore planning for that change is unnecessary, or that we should not be considering all possible means of reversing the industrial decline. Those two factors, as has been stated, do not depend the one on the other. We can deal with the industrial problem quite independently of the oil question. It is the imminence of the change in the oil balance which makes it imperative that we do deal with it.
There was one other comment in the Government's reaction to which I would just refer: that the approach was too narrow. That is paragraph 10. As my noble friend Lord Aldington pointed out, the approach was governed by its terms of reference. Here I would express the hope that the committee, which he has chaired in so distinguished a way, may be allowed to continue with its work to deal with some of its own self-identified omissions.
What seems to be a real bone of contention is perhaps more a question of emphasis: the scope for, and the speed of, adjustment of the economy in the era of oil decline. In the Government response there was some emphasis on automaticity—the automatic pilot to which my noble friend Lord Aldington referred. The downward adjustment in the exchange rate; the resurgence of other forms of economic activity which that is expected to generate; and the need for the account to balance. Of course it will balance, a point already made this afternoon, but balance at what level? And why should we assume that forms of activity employing people in value adding, wealth creating industries will automatically emerge? How can the fixed assets, the production and management skills, the marketing capability, be recreated once those have been lost?
Then, subsidies. Here the Government response, very properly, is to react against any extra or avoidable subsidy to our industry, trade, or commerce. Of course, in the ideal world to which we aspire, and towards which recent government policies have substantially helped, it is for all our producers and exporters to be fully cost competitive on the world scene without subsidy. That must be the aim. Of course, no one should argue for subsidies which seek, Canute-like, to defer the moment of sunset for industries in cyclical decline. But—and I am echoing the noble Lord, Lord Ezra—I believe that penny pinching on promotional activities (and I declare an interest as a member, and former chairman, of the
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British Overseas Trade Board) is misguided. It is not extra resources that are required, it is the maintenance of resources which have been demonstrated to give a cost effective return in additionality for British exporters.
When we meet foreign practices, particularly in the field of projects overseas which involve the injection of government finance, government subsidy in various ways, unless we wish to resign from competition we need to position ourselves with a minimum expenditure to meet that form of competition. Therefore, recent changes to the aid programme are welcome but we have to be certain that, selectively, there is an adequate resource to deal with the cases with which we need to deal.
My second point concerns the service industries. Here I declare an interest as chairman of the British Invisible Exports Council. In 1984 receipts from tradeable services overseas were £39,000 million. That is approximately half our bill for visible imports. There has been a surplus on this invisible account every year since records were kept, starting in 1794. Overseas investments in this country through the Victorian expansion era were built not on any visible surplus, which existed in only five or six years during the whole of that period, but substantially on this invisible surplus. That surplus is, happily, large, and it is growing, especially in the financial services sector. We can anticipate some further growth in most sectors, with the notable exception of shipping.
That is good, but it is insufficient to deal with the problem we are addressing. No foreseeable growth in the service sector will compensate for the eventual loss of our oil surplus, currently running at about £8 billion, let alone the foreign exchange required to import our domestic consumption running at a further £8 billion at today's prices and exchange rates, when the oil really runs out.
There is no foreseen rate of growth in employment in services, where extra jobs will be numbered in tens of thousands rather than in millions, to compensate for the regretted continuing job loss in manufacturing industry. One item which has grown substantially is the IPD—the net interest, profits and dividends from overseas assets, which stood at the end of 1983 at £3·1 billion, and is still growing. The building up of this income is an essential but still quantitatively insufficient buffer against the reversal of the oil balance.
Let us consider the case of Kuwait. In 1966, when its oil production really took off, it was already concerned with what would happen when that resource was no longer available. Kuwait started to make investments overseas to the effect that in 1983 the investment income of Kuwait exceeded the oil income of that country. Canada has taken a similar approach to this depletable resource.
There are other reasons for not being over-optimistic about prospects for invisibles. First, there is the direct linkage in industries such as banking, insurance and shipping with trade and therefore a tendency for one to drop with a decline in the other. Secondly, competition grows worldwide in provision of all services, especially from countries having their own problems with balancing their visible books, but we should note also the spectacular advances made by

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Japan which expects—having been the second largest deficit country on invisibles in 1981—to be in structural surplus by the end of the decade.
Lastly, there is the question of protection, where we are striving to maintain liberalisation of trade in services against what seems to be a not very helpful climate. In this we are standing shoulder to shoulder with our fellow members of the EEC, and it is a debate which we hope may be brought to a more constructive point than it is at present.
So there is success in this services field, but we should not delude ourselves that it is a success which can deal with the problem which we have on the trade balance.
My third point concerns the time scale. Development and pursuit of successful economic policies requires a horizon of probably 10 to 15 years to change course, to move from one major product to another, to reshape the workforce, to produce a new generation of management skills and to develop new product lines. To what pressures are we responding in running our businesses, let alone in planning for change? They tend to be rather short term. First, there is the public perception led by the market analyst (the phenomenon of the 1980s) whose judgments do not span a period of years, not even a single year-on-year comparison, but go on the shortest information available which may be half-yearly or even quarterly. Statements of longer-term trends or prospects are often brushed aside or ignored; non-performing companies or managements in these analytical terms based on short-term time scales are written down.
Then there is the political perception, on a sliding scale from one week (which has been described as a long time in politics) up to almost five years. The consequence is that managements who are running businesses are responding substantially more than they would wish to short-term pressures which may work against their long-term prosperity or even, in some cases, their prospects for survival.
Product development requires time and long-term investment. Market development requires time and investment; changes of industrial strategy the same. I am talking of five to 10 years and sometimes longer; certainly not that number of months.
My last point is one which may seem a little peripheral, but it arises directly from the thrust of this report; it is the question of education. A liberal education is a fine luxury and one which many of us have enjoyed, which has thrown up many of the finest leaders in this country, including industrialists. I have no quarrel with that and would wish to see it maintained. I am talking of the lack of relevance in the basic curricula of much of our secondary and tertiary education system to the industrial society on which, for better or worse, we have to rely. In that education there is no concept of the underlying factors making for prosperity; there is no concept of value-added, of the relation of input to output and the consequences for our standard of living.
And worse, we have all seen personal examples of postively anti-industrial tendencies in the education system. That culture is one we have to address. It is encouraging that so many people are giving attention
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to it and seeking to bring schools, industries, education authorities into a debate where each sees the value and the relevance of the activities of the other. This is not the moment to pursue that topic, but I believe we have much to learn from the United States and particularly from Japan in the way they approach their education.
In industry, we see that apprenticeships are fewer in number than they were. We see often inadequate training, in quantity and quality. It is encouraging, and I do not wish to sound pessimistic on this because one has seen so much being done, and seen how attention is being drawn to this great issue.
All that sounds long term. Of course it is long term. But if it is perceived to be something in need of doing, and to be overdue for its inception, then there is no time like the present to make a start. I believe this is one example among many that have been discussed this afternoon where we need a united "heave-ho" to get us on to the path indicated by the report.
5.49 p.m.
Lord Bauer: My Lords, I too wish to thank the committee for their wide-ranging report which, together with the evidence, will serve as a useful outline of influential and widely canvassed opinion on the recurrent themes of public discourse. I also have to apologise to the House if, for reasons of health, I have to leave before the end of the debate. I hope it will not be regarded as discourtesy.
I begin with finance. While in no way hostile to the City, the report nevertheless echoes familiar complaints about the difficulties of long-term finance for risky projects, and the insufficient involvement of British banks in industry.
My Lords, are these complaints well-founded? The City has supplied massive amounts of money to finance railways, ports and utilities the world over and also for distant British mining and plantation operations. The early history of the rubber industry is informative. Rubber trees yield only five years after planting. Before that, the jungle had to be cleared, infrastructure built and distant labour forces recruited. Returns on the initial investment could not be expected for eight or more years. Yet in the early 20th century, finance was found for hundreds of small British rubber companies. Does this suggest excessive caution or commercial myopia? Today the rise of pension funds and life-insurance companies could be expected to extend time horizons, since their investment decisions look forward for decades.
Leaving aside complaints based on uneconomic or even fanciful projects, there are developments which have shortened time horizons. One is the high level of nominal interest rates. This in turn reflects various factors, including the fear of inflation, and the wasteful use of investable funds in recent decades, or their diversion to uses of low or no direct economic value. With high interest rates, the tying-up of capital for very long periods becomes uneconomic, both to society and to the investor. Likewise, high taxation and extensive state-involvement in the economy shorten time horizons because commercial prospects come to depend on political decisions, and their time horizon is short indeed. A week may be a long time in politics, but a decade may be necessary for some productive

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investments to mature. If time horizons are indeed short, the causes do not lie in economic myopia or excessive risk aversion by investors.
There is an instructive episode on the close links between German banks and industry. In 1930, the managing director of a leading German bank extolled the virtues of the links in evidence to the Committe on Finance and Industry of 1929–31. Within a few months, his bank collapsed, primarily because of the bankruptcy of a large textile concern in which it was heavily involved. The bank's collapse contributed to the financial crisis, with the large-scale deflation, which much aggravated unemployment and helped Hitler to power. If the clearing banks were to follow the German practice, this may well lead to expensive rescue operations. Incidentally, in that bank's crash, British investors lost over £300 million in today's money.
The committee strongly supports aid and trade provision, both as promoting trade and as necessary to meet similar practices elsewhere. Aid supporters and sceptics agree that its purpose is to relieve the worst poverty in ldcs, which is a hard enough task. The best way to help the poor is by straight grants, rather than subsidised loans which confuse aid with investment. Donors tend to regard such loans as aid, and recipients as a continuing liability. Tied grants confuse domestic subsidies with overseas aid. They engender conflict over the value of aid and also smack of dumping unsaleable goods. Combining subsidised loans and tied aid makes it impossible to say who received how much from whom. A week ago, the Financial Times reported a leading Brazilian official complaining of the multi-billion dollar losses to his country on large-scale projects financed by German and British banks in support of their exporters.
To claim that the aid element in ATP generates four times its value of trade is unhelpful. Apart from the imprecision of such calculations, this formulation somehow equates gross proceeds with net income. The committee correctly says that domestic income in ldcs largely determines trade with them. However, this does not justify simply transferring resources to them, as is suggested in the very same paragraph.
Neither is ATP forced on us by the practices of other countries. Suppose France or Japan were to give away their exports: should we do likewise? Our exporters are equally affected whatever is the reason for competing exports becoming cheaper. Indeed, it may even be argued that by giving away their exports or subsidising them heavily, our competitors benefit Britain by enabling the recipients to buy more from us. In any case, to maintain activity and employment at home, we have a whole range of options. Why should we emulate governments who subsidise their exporters at the expense of their taxpayers?
Like other critics, I do not share the committee's apprehensions about the decline of manufacturing. Manufacturing is one of many forms of economic activity which supplement one another. Plainly, transport and distribution presuppose production. However, equally, without transport and distribution production nothing can be produced except for subsistence. Furthermore, the distinction between manufacturing, transport and distribution is arbitrary and shifting. If a manufacturer uses his own transport,
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it counts as manufacturing, but if it is taken over by a distributor or an outside contractor, it counts as service. If a manufacturer uses his own machinery, this is manufacturing; if he leases the equipment, it becomes investment by the financial sector. Indeed, much manufacturing consists largely of transporting bits of products within the firm for assembly.
Nor is the decline, or even disappearance, of manufacturing capacity irreversible. German and Japanese industrial capacity was destroyed in the last war. Within a few years, they had again become major industrial powers. The committee urges the importance of investment in manufacturing for maintaining living standards, growth rates and international competitiveness. Yet the type as well as the quality of investment is critical. A piece of spending does not become productive simply by being labelled investment. A commercial asset is productive only if over its life the return exceeds amortisation and interest. Alas, productive investment is now often confused with employment subsidies, with spending to maintain output and jobs, including particular jobs. Productive investment and employment subsidies are altogether different. Confusion between them has brought about much waste which, in turn, has contributed to high interest rates.
In any case, we should not exaggerate the role of investment in long-term growth. The late Simon Kuznets, Nobel Laureate, estimated that the growth of labour and capital together has accounted at most for one-tenth of the growth of per capita income over the past two centuries or so. Far more important were social, economic and, not least, technological changes which are in fact often capital saving. All such improvements are quite distinct from investment, even though often confused with it. I do not accept that we must strive for the same national or manufacturing rates of growth as other countries, though I believe that the British people would benefit from more open markets at home and abroad.
For all my reservations, I sincerely welcome the report in the hope that it will provoke examination of the various options available for influencing our economic future.
6 p.m.
Lord Shepherd: My Lords, I would add my words of congratulation to the noble Lord, Lord Clitheroe. and also to the noble Lord, Lord Aldington, and his committee. They have rendered a very notable service in this report. I think that it would also be right to express appreciation to all those who gave evidence, both written and oral, because in truth those parts of the evidence that I have read perhaps could be re-read more ominously than the report itself. Some of the remarks of most senior industrialists made me wonder when the noble Lord, Lord Young of Graffham, was speaking whether in a sense we were talking about the same country or the same industry.
I was involved in the export trade some 30 years ago; and some 27 years ago I made my initial contributions in your Lordships' House, drawing attention to the threats already perceived towards our export performance and in countries where even then we had the benefit of the Commonwealth trade agreement. That was long before Japan had reached its

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potential as a manufacturing base and certainly long before Korea, Taiwan and other new industrial countries had emerged.
The anxiety that I have of the report is not that the problems are there—and I do not think that anyone would deny that the problems were there. But they are not problems that have arisen just recently. They go back over many years, and some might well say at least over 150 years. The question therefore is whether this decline is inevitable. That was the topic of a lecture that was given by Sir Peter Carey: "Is Britain's industrial decline inevitable?" It was delivered to some of my colleagues about 12 months ago. Sir Peter had only just retired from being a permanent secretary in the Department of Industry. I shall quote only one paragraph. I do so in the light of what I thought the noble Lord, Lord Young, was suggesting: that time was still available to us to make these adjustments. Sir Peter had dealt with the difficulties and the way in which our manufacturing base had declined and our exports had fallen, and then he answered the question: is decline inevitable? He said:
"So my contention is that our decline need not be irreversible. We have it in us to arrest the process. It will of course take several decades, at the least, to see even the beginning of a climb back. And it will not be done at all unless we face up to the reality of our present situation, and show a willingness to make some sacrifices of sectional interest in order to provide the wealth-creating sector with a climate conducive to growth rather than constriction, to give it absolute priority in our order of things".
He then went on:
"Make no mistake, however, it is awfully late in the day. We have come a long way down; and if we do not begin to heed the signs very soon, the seal could be put on our decline".
I remember those words and I drew them out of my drawer only this morning. It seemed to me, based upon Sir Peter Carey's experience and long and dedicated service to the community, that there certainly had been no political defences to be made either for the past or the present. He was able clearly to express his own sense of urgency. I do not think we are yet at the crisis situation, but I believe that if the decline goes on very much further, we could well be faced with a general economic collapse within this country. And I do not believe that even our membership of the Community in itself would be able to protect us from the consequences of it, because I think it would be beyond even their capacity.
The report said that there is a need for a new national approach, a new discussion. I agree entirely with the view of the report. But we have heard this so many times, have we not? Yet very little is ever done, very little is ever achieved. At the moment I am president of one of the social partners to the Community, the Centre of European Public Enterprises, which is the public sector organisation within the Community. I sit as a social partner with the employers of the private sector and the European trade unions.
We had a meeting some three weeks ago under the presidency of Mr. Delors, the president of the Commission, and we were discussing two particular questions which in a sense are rather pertinent to our discussion today. The first was, how to introduce the new technologies into the European Community and into our particular nation; how to find agreement
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between the investor, the manager and the work force, as to how these new technologies should be brought into place. I found a great deal of agreement, though in the end there was disagreement as to the practicalities and as to how one should proceed. But one thing that we came away with was a clear determination that we would continue the dialogue.
The other matter was the subject—and I think this will be of supreme importance in the next 12 months or so—of how we are going to break out of the very deep recession that we have been in. Is there a concordat that could be arrived at within the Community between the employers, on the one hand, and the European trade unions on the other and within our own national purpose as to ways in which we could agree to a basic strategy—not a plan—to obtain growth, but recognising that certain sacrifices would have to be made by one party and may also be made in regard to the other? But, in return for sacrifices, there could be a gesture, there could be an understanding; there could be a light in this agreement following the sacrifices by which we could see growth and the reduction of unemployment. This is a debate which, I believe, is only starting within the Community.
I mention this point only because I should like to respond to the noble Lord, Lord Greenhill, when he asks, "What happens to this report?" In the end it depends on what your Lordships' House wishes to do with it. You can have it in the cubby hole and leave it for 10 years, or you can say, "We want to do something about it." We have a very flexible approach in this House. We can decide ourselves what we want to do with it. I am not suggesting that we should even consider today what we should do about it, but I feel the situation is serious.
There is a major problem, but as Sir Peter Carey has said there is a way out. We have the capacity to do it. The only difficulty is to find an agreement, a concordat, between ourselves as to how it is to be achieved. So I hope that this report will not go into the cubby hole. I hope that this House will consider in due course what it wishes to do with the report—whether it wishes to pursue it on the Floor of the House on another occasion or whether it wishes people to go out and talk—I shall not say over the heads of the Government—in the end to industry and unions together, to see whether it is possible to find a common agreement.
My suspicion—I put this in the nicest possible way—is that there is far greater agreement between the leaders of the unions and the leaders of industry than they themselves like to let on. If that agreement exists, as I believe it does, then we need to find ways and means for it to be expressed so that the country as a whole can perceive it. If we then can have a plan or a strategy, I believe there is a way out of the difficulties which this report has shown.
The House is indeed grateful to the noble Lord, Lord Aldington, and his committee for the very long hours they have spent on this report. I think we should pursue this issue at a later stage.
6.12 p.m.
Lord Selsdon: My Lords, after some 21 years in your Lordships' House I am hesitant to suggest that I have come of age, but over these past 21 years I have participated in various economic debates and various Select Committees. Now for the first time I see some form of hope. This particular Select Committee has been one of the most enjoyable and interesting with which I have been involved. It has been full of logic, political cunning and strange emotional activities. My noble friend Lord Aldington, whose reputation as a "wet" or a "dry" is known by others, has a certain political skill, no doubt because of his helicopter background, in dropping things from a great height. At the moment underneath one finds the Government which, in the guise of two members of the Cabinet panicked, perhaps like latter-day oozlum oozlum birds. They flew around in circles and returned in the form of my noble friend Lord Young to say, "Yes, we have received the report; yes, we accept the information, but there are certain recommendations we do not agree with."
At last we have the Government thinking in the same way as the Select Committee, which is made up of a strange gang of people from opposing sides and with opposing political views—those who, on the one side, support the Government and those, on the other side, who do not. Politics, in our strange democratic process, is usually based on driving wedges between people rather than under them. I recall an occasion when the noble Lord, Lord Stoddart, on our committee was talking to the Chancellor and the Chancellor was not perhaps being as co-operative as one would expect. We were talking about jobs. I had been Whipped by the Government to go and speak in Edinburgh at a seminar on exports and jobs. The Prime Minister was organising her own seminar in Downing Street. There was another one in Cardiff Castle. The Government were actually doing what we had recommended they should do: concentrating on the potential for trade.
In my intervention today I have to declare a wide range of interests. First, by accident rather than design, I am a member of the British Overseas Trade Board and we are recommending more support for ourselves. The noble Lord, Lord Ezra, was on it; my noble friend Lord Limerick is president of it. That may be deemed to be corrupt or unwise, but we feel that we do a good job. However, I am not allowed to say that because my noble friend Lord Jellicoe, the chairman, has said that he cannot actually intervene in this and we should keep out of it until asked to do so by the Government. I hope that the Government may ask its advisory board now to comment upon the report.
I also chair the Government's Committee for Middle East Trade, where actually the bulk of our surplus in certain areas of manufactures comes from. I took over from my noble friend Lord Limerick. At that time we had a deficit, as my noble freind is aware, of about £2 billion in manufactures a year. I am happy to say that this year we will have surplus of about £4 billion. That is with a total budget from Government of £100,000.
My intervention is concerned with the role of Government, because I think we are in danger of
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making the mistake of believing that the Government should have a bigger role than it is capable of. Personally, I wish the Government would get their public expenditure down to perhaps one-third instead of the exhorbitantly high level which is currently prevailing. But it is not the spending of money that creates and generates wealth: it is the creation of added value. We already have a government which I submit spends too much, taxes too much and legislates too much. When is it going to do less? Noble Lords opposite were guilty of exactly the same crime but there was a difference in that they were unable to spend very much more than this current Government. They tried; but there is a time in a country when spending or intervention by the government is too great, whatever your political views.
However, the application of government resources and of taxpayers' funds is another matter. In the whole field of trade we must acknowledge that we are the most significant trading nation of the world, because we are more dependent on it than any of our industrial or non-industrial competitors. We have to look at where we are, what we can do and how we can perform. It is all very well for those of us who. like myself, started off full of ambitions and wishing to be in industry, like my noble friend Lord Clitheroe. who is far wiser and was far more successful and who has made a very eminent speech today. I wanted to join the Foreign Office but was told, "Don't join a declining industry because the United Kingdom is going to get less important." I did not like to accept that. I went into the asbestos industry, which was not really the sort one should go in for, but I did not know those things would be wrong. I ended up in the banking world, where again I have to declare an interest because we banks in general are in 200 countries of the world, as I have quoted before—we have not heard of half of them or perhaps a quarter and we might wish we had not heard of many of them, but the remaining amount were only prepared to do things sometimes if our own Government would give a guarantee. There was a time when a guarantee of our own Government was not regarded as very good.
I come to this point: what is the role of government? If we look at our trade I am going to suggest that we look at it in two areas: the areas where government can be involved and the areas where it should not. In a free market economy or in trade between industrialised nations, the role for government should be minimal. The Government's job must be to create the climate where industry can prosper. That, above all else, means stability. The change in economic thinking by governments over the years has without doubt created instability. Few other industrialised nations have the same switch of political thinking as governments change. Thus, we ask of governments of both sides stability. We ask, too, that they should actually recognise the importance of trade instead of believing that someone in trade should be invited to dinner on Thursday evenings with the butcher or the vicar, with all great respect to the right reverend Prelates. The attitude was that if you were in trade you were not a vital part of the economy. In fact, the trade element today is the only successful part of our economy, whether it be visible or invisible, because we are successful in both.

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Our exports have been rising in all sectors: it is the balance which is wrong. If we look at that balance, particularly at the manufactures sector, we can listen to the economists (I was one for a while) where we are told we do not need to export manufactures any more and that balances will be automatic. We used to have to import our food: we do not do so now. We used to import our raw materials; but now we do not have to do so. The economic arguments are sound: there is nothing to worry about. But when at such time as our raw material resource runs out there will be a period of assessment. It is not now. It need not be cataclysmic if we make certain adjustments or plans now—and that does not necessarily mean the Government: it means industry. When that period of adjustment comes, if nothing is done it will be serious and it will cause major problems. I personally believe that merely by drawing attention to the fact now, certain activities will take place.
If we look as where that deficit in manufactures lies, it lies essentially with the industrialised nations who are our principal competitors. Last year our deficit with the developed world was about £12·9 billion. This year it will be over £14 billion, and it will continue to rise until such time as we make the products that we want to buy ourselves at a price that is competitive. Delivery, performance—all those things your Lordships are aware of. But if the erosion of our manufacturing base is not halted—and I believe it has now been halted—we will see more and more problems where we are unable to produce the very goods that we might like to buy.
That deficit with the industrialised nations is perhaps almost entirely made up of Japan, the United States and the Common Market. Japan is about £3 billion—quite sizeable; with Germany within the Common Market our deficit is £5 billion and rising rapidly, and with the United States it is about £1·2 billion. But those nations together contribute to a deficit of £ 12 billion or more. Within that field what can Government do? They cannot trade; they do not buy or sell. They are no good at it. It is not their role. Their role is essentially to reduce inflation, which they have acceptably done. It has been painful, and perhaps more painful or less painful than the adjustment may be if we lose our manufacturing base in future.
They could give us certain added stability in relation to interest rates and currencies. It is not the level that is important; it is the stability, because in order to trade we have to import, add value and export. Therefore, we must have stability. It seemed to me very simple—and many thought this would happen—that as the pound strengthened the Government would reduce interest rates, that they would act selfishly and think of ourselves and how we can perform—because I assure your Lordships that we are competitive now. There are times when the industrial companies with whom I work are thinking of how much more they can add to their price when exporting, instead of taking orders on marginal costings. But the role of the Government with the industrialised nations' trade is minimal. It is more a matter of economic policy at home.
But with the developing world—and much of the report concentrates on the need for Government
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expenditure or support in relation to export credit and aid in trade—there is a role for Government, and that role is not purely a monetary one. With the developing world last year we had a surplus of around £6 billion, of which £4 billion was in the Middle East. That is because, in general, they do not make the things that we wish to sell them. But in order to sell to them, we have to recognise that in the market place governments are part of the market activity. They have to provide convenants, they have to provide credit, they have to provide assisted finance if necessary, in order to get the levels of finance down to those of our major industrialised competitors. But also they have to provide political participation and political cunning.
The countries with whom we have the greatest surpluses at the moment are many which we might regard as politically sensitive. Our surplus with South Africa in manufactures is some £857 million, and I commend the Prime Minister for recognising that at Nassau. We must, above all, believe in free trade. We trade with whomever we can and influence them while we trade. Our surplus with Iran is sizeable; our surplus with Iraq and our surplus with Nigeria even historic. We must trade, and have always traded, with the world, and with those countries there is an important political role to be played.
I would just pay tribute to another element of your Lordships' House—the Church. It may have come to your Lordships' notice that a man called Terry Waite, a man of the Church, has been doing great things in many countries in the interests of liberty and freedom, and that goodwill generated has had a rub-off even on trade, because it helps the United Kingdom to hold its head up as a negotiator, a trader and someone who believes in fair play and freedom. All these political ingredients that are difficult to quantify have a role, and to reduce the Government's presence, or the strength of the Foreign Office, in these countries is criminal, because that is where much of our trading future lies.
There are in this whole area many things for which we can commend and thank the Government. Government Ministers have travelled more extensively over the past few years than many, to many parts of the world, and that goodwill has started to rub-off. The Government have themselves supported, through the Trade Board and through other mechanisms, numerous interventions, but the Government themselves are starved of resources in this area. Apart from trade and industry itself, they spend the bulk of their money stopping people from doing things. The amount of the vote which is allocated to the development of trade is minimal.
Perhaps I may ask my noble friends whether they will give us in their reply some indication of the proportion of the total Government spend—which is enormous—which is allocated to the development of trade. It is tiny. Even in our own report we have commented that expenditure in this field is well justified. In certain areas of aid and trade we look for added value; we look for other benefits that spin off at home.
I pause and comment for a moment on employment. In your Lordships' report we perhaps touched a nerve. The Government were in danger of

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having a trapped nerve. But the next political sensitivity is employment. The Government have already started to draw a relationship between exports, trade and jobs. Those of us who are amateurs in the private sector might point out that, if we could wipe out our deficit with the industrialised nations, we would reduce unemployment by one-third, because that is almost certainly true. Equally, we could point out that for every £10,000, £12,000 or £15,000 of exports, jobs are created.
I give one brief example of something with which I was associated. Recently, after several years, the Government, in co-operation with industry, set up a water and sewerage project in Cairo called the Greater Cairo Waste Water Project, which the Prime Minister herself went out to launch. This required a remarkable combination of activity between Government, industry, consultancy, the ODA and others, not without difficulty. The first order was for £777 million, because everything in Egypt takes seven years, seven days and seven nights. The next one will be of the order of £1·2 billion. The first phase will create some 19,000 to 20,000 jobs. It will produce a wide range of sub-contracts running into hundreds which we are now tracing.
But out of this come certain strange things. The ECGD were concerned that many companies were not buying British products, so in investigating we asked: why? Do you know, my Lords, we do not make tower cranes any more? I cannot believe it. There must be some Member of your Lordships' House who is associated with somebody, somewhere, who makes tower cranes. But all the 17 contractors there said that they should like to buy British tower cranes. I thought that we invented them. Many of the components of pumps are not made any more. Many of the things that we should like to finance with soft credits or with ordinary bank credits are not made any more, so we may be financing other people's trade. I just raise that as an example.
As I sit down, I say that there is hope. I certainly feel more enthusiastic than at any time. We talk about the education system. We spend too much of our time with too many people advising on matters. I think that one of our big problems lies in the bureaucracy inherent in our political system, in our Civil Service and certainly in large industrial sectors.
I recall that in one of my grandfather's diaries he pointed out that when he consulted his father about what he should do, how he should be educated and what he was being educated for, my great-grandfather said, "There are only three things your can do in life and that is what you should train yourself for. You do it yourself, in which case you become a principal; or you advise people how to do it, in which case you join a profession; or you take credit for them that do it, in which case you become a politician." There are too many advisers, too many politicians, and not enough doers.
6.28 p.m.
Lord Whaddon: My Lords, perhaps I may begin by declaring an interest in this topic, since I have for many years earned my bread and the occasional spoon of caviare from export business and from the finance of exports. A number of noble Lords today have made
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most impressive speeches about the macro-economics that underlie British industry and, as always, when I hear a speech from an expert on macro-economics I find myself convinced. I find myself convinced about twice a week on average.
But I cannot help having a little doubt when I hear noble Lords say that everything we are doing is right, and that we have only to wait and everything will come right. I cannot help recalling the man who convinced himself that he had developed a method of jumping safely from the roof of a skyscraper. He plunged from the roof and as he passed the tenth floor on the way down he was heard to say "Well, so far so good." In my daily work I find that there are increasing problems for British exports.
I am very impressed by the report of the committee. It is the most cogent and considered report which has ever crossed my path. For so many years it was obvious that investment in British industry was too low. Because there was such low investment our productivity was low, and we were selling less. Our investment was low because our productivity was low and it was not worth investing.
Behind all this, as the committee pointed out in the report, lies the attitude of our society. We are producing far too few engineers. We pay them too little and we hold them in too low esteem. How can we increase the esteem in which we hold our engineers and scientists? How can we persuade our best brains that that is where they should be putting in their efforts and their life's work?—by changing attitudes. This is far from being easy. The report will do its part in this, and I sincerely hope that the report will be given the widest possible circulation not only in Government circles but also among senior classes at schools. This would be useful.
One weapon above all others can be used for changing attitudes. It is this machine, television. Above all other methods this is the one that affects people's attitudes across the whole country. I should like to make one small suggestion. In the coming CBI Year of British Industry 1986 they should put a little effort into persuading television to show British industry and industrial careers in a favourable light. Is it not time that we had a prize for the best industrial television show of the year? I suggest that the Government could start this off. They could even call it the Thatcher Prize. I do not mind. The CBI and the TUC should join in. Using television for this purpose could be effective.
I have a second suggestion. Many noble Lords have mentioned the importance of small industry and of starting small enterprises. Across the country a whole series of efforts have been made to promote new industry. The coal industry, the steel industry and many other large enterprises have put money into the small enterprises of employees whom they have had to make redundant. The Government have repeatedly expressed their support for the establishment of small industry. I cannot help wondering why, in their support, they have up to now ignored the most effective weapon which has yet been produced for supporting small industry. It is a British method some 70 years old and still going strong. I refer of course to CoSIRA—the Council for Small Industries in Rural Areas—which has a splendid record of promoting,

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maintaining and expanding small industry in rural areas. But for some reason its activities are restricted to rural areas. I see no reason in the world why there should not be a version of CoSIRA in the towns—the so-called CoSIURBA idea. It would cost money, but anything worthwhile costs money. We could at least start with an experimental project in some of the worst black spots in the towns.
CoSIRA has the big advantage of not only acting as a channel for the finance of small industries, but of covering all the aspects which are liable to be problems to the new entrepreneur; for example, getting premises, getting permission to use those premises, finance, training, marketing, and legal help. All these things are available through CoSIRA, and I do not know any other body which gives such a comprehensive service for launching and supporting new industry. I plead with the Government again to look at this idea of CoSIURBA and at least give it an experimental run. I am sure they could take a few of the established experts from CoSIRA to run such an experiment.
Another topic with which I am constantly concerned is the pharmaceutical industry. This involves jumping from one end of industry to the other, from small firms to giants, because this is one of the giants. It is one of the successful giants. So why on earth should I be mentioning this in a debate which is concerned with the problems of British exports? We ignore the successful giants at our peril because it is the successful giants of yesterday which have come to be the problems and failures to today. We must try to ensure that our successful giants of today go on to greater successes in the future.
The report points out that success in exports depends on a whole spectrum of the environment in which industry operates. The pharmaceutical industry is one of our giants and accounts for about 20 per cent. of the total of British exports. This country has produced some of the outstanding scientific breakthroughs in pharmaceuticals in the whole world, of great benefit to humanity and to British industry. But we must not assume that this industry can take any amount of battering and still continue to be a successful British industry. It has taken some hammering in the past few years.
The recent Government move to restrict the approved list of pharmaceuticals has been an appalling blow to the British pharmaceutical industry and its export efforts. If you restrict the products which are approved on the National Health Service in the United Kingdom, you have a much weaker case for telling foreign clients that they should be buying those drugs. The Government, I know, believe that they are justified in saving a little money on the National Health Service, but they are saving a tiny bit of the National Health Service and risking a gigantic loss in exports. I beg the Government to think again about the restricted list and to see whether they can again expand it in the broader interest.
The Government have also cut down on the Medical Research Council activities and on certain university research projects. This is a great shame because from these seed beds have often come the plants which have grown to giant oaks in our industry.
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I beg the Government to think again about this. They are spoiling the ship for a ha'porth of tar. Our brains in the Medical Research Council and in the universities need the support if they are going to produce the new breakthroughs which will become the giant exports of 10 years to 20 years from now.
One further suggestion which would benefit our pharmaceutical industry in its export efforts would be to look again at the validity of patents. Patents are 100 per cent. justified because they enable a company to recoup the gigantic costs of research and development. It is during those years that they reap the benefits which they have earned in their speculation of years before. It would be of the very greatest benefit to this most important industry if the Government would consider expanding the patent validity for pharmaceuticals to include the research and development period. I ask the Government to give that a little thought.
Another topic which has commanded my attention recently is counter-trade. This subject appears to be almost unknown in Government circles, but it is becoming increasingly important in everyday foreign trade. I know the Government prefer multilateral free trade; don't we all? But we do not live in a perfect world. Increasingly, we find that in the difficult areas of the world to which we are expecting to export, the only way to achieve that is by counter-trade.
Only this morning I received a telephone call from a director of a large company who asked whether I could give him advice on counter-trading in respect of a giant, multi million pound project which will go to either Germany or Britain. The project must be paid for by counter-trade and he simply could not obtain any decent advice on the subject. I make the suggestion that the Department of Trade and Industry should itself create a small section devoted to the study of counter-trade so that Government departments will have their own source of information and will be able to understand whether or not projects brought to their attention by those of us in industry really make sense.
I have another suggestion connected with counter-trading which, as I have said, is growing bigger and more important. Much of the trade into Britain and into Western Europe is governed by quotas. We find very often that when we attempt counter-trade the quota is already spoken for. Therefore, we are ruled out of getting the project for Britain. I suggest that it might be in the interests of Britain and of all the countries in Western Europe, because such quotas are largely negotiated through the EC, that in setting the quotas a little slack should be left available for use as and when it is proved essential for underpinning counter-trade proposals. If the noble Lord says that such is not a matter for the Government, I would point out to him that at this very moment discussions are afoot for reforming the provisions of the Treaty of Rome. What better time could there be for the Government to raise a suggestion such as that which I have made?
The report states that the National Economic Development Council is a really first-rate body, and I would endorse that observation. However, I cannot understand why the council is chaired by the Treasury. It is so clearly a subject for the Department of Trade and Industry. The Government could, and most

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certainly should, consider not exactly sacking Sir Geoffrey, but at least moving him to somewhere where he can do the least harm. It is clearly for the Department of Trade and Industry to chair the National Economic Development Council.
Monetarism has its place, I am convinced. However, we do not eat pound notes. Nobody was ever nourished by eating money. It is the production of real goods that is the name of the game and upon which we depend for our future.
6.43 p.m.
Lord Boardman: My Lords, may I start as other noble Lords have done, by congratulating my noble friend Lord Clitheroe on his maiden speech. To my ear he struck every note right. I congratulate also my noble friend Lord Aldington, not only for his introduction to the debate today but also on the way in which he chaired the Select Committee. To have persuaded a Select Committee of such a disparate group, as the noble Lords on that Committee were, to agree is good. To have persuaded them to agree to a report which has the almost universal support of such a wide section of the community is quite magnificent. My noble friend chaired the committee in the most distinguished way and made our task so much more easy and pleasant.
Immediate criticism came primarily from two sectors. The first was certain selected journalists. I am always somewhat intrigued—although I have to be careful of my noble friend Lord Bruce-Gardyne who sits on my left—at the arrogance with which journalists write and decry the massive experience of, in this case, some 100 experts from industry—those who have been operating at the sharp end—and claim that as journalists they know better about what industry wants or should have.
Their own experience is primarly centred on Fleet Street, which is not noted for its competitive position in overseas trade or for many of its other practices. I of course exclude a very wide section of highly intelligent and very able journalists who write sensibly; but the immediate reaction from some journalists was disappointing.
Also disappointing was the immediate reaction from some members of the Government. My noble friend Lord Aldington has referred to them. It was a little uncomplimentary to the distinguished witnesses who gave evidence, and possibly even to your Lordships' House, to write off the report in the way that it was written off within an hour or two of it being published. However, I was delighted today to hear my noble friend Lord Young give an excellent and balanced response to the report. He was able to welcome a great deal of it. He was able to point out, as indeed the Government response has done, that the report is not directed at a particular short period of time but shows a whole trend going back, as the Government response makes reference, to the beginning of the century—but accentuated in recent years by the oil surplus that has come about. It illustrates that the defects, in so far as defects are laid at the door of government by this report, span the lifetime of a number of governments.
I should like to comment on one or two of the more important points. First, I found that import
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penetration was more worrying to me than the lack of export performance. Industry has always had something of an alibi about its failure to export. That failure can be blamed on the non-tariff barriers of the country to which industry wants to sell, or on the specialist needs of that country, or on the nationalistic attitudes of the country to which industry wants to export. But those alibis do not apply in respect of imports coming into this country. The only test is whether our domestic production is competitive in the home market; can we be competitive in our home market? There is no question of non-tariff barriers and the like applying in that instance.
Our failure to be competitive in our home market may be due to one of three points, or to a combination of them. First, the country exporting to us may be subsidising her exports and there may be dumping. Reference has been made to this in the report but I do not believe any of your Lordships would place the whole blame for the high level of penetration on that factor—although it is certainly a feature not to be ignored. Secondly, imports can be hugely helped by a very favourable exchange rate. I may have an opportunity of saying something more on that point in a moment. Thirdly—and this is the point to which industry must direct its attention—imports may come in because home market production is not efficient; paying itself wages which are too high or lacking the efficiency that is needed to compete with imported products.
A second point of concern was the way in which the Treasury and indeed other departments tended to keep on bringing up what I call the inevitability argument. It was "inevitable" that when oil came in manufacturing would decline. It was equally "inevitable" that when oil declined, manufacturing would, like the phoenix, rise from the ashes. These were the arguments that were put forward by a number of witnesses and which caused much concern in the committee because we know that as oil production declines, industry will not suddenly rise again and fill the gap unless we prepare for it now.
The situation of course could have been much worse but for what I believe was a courageous decision by government to remove exchange controls because the greater the surplus that we accumulated on oil, the greater would be the adverse impact on our manufacturing base unless that surplus, or part of it, was invested overseas. So, contrary to views very often put forward, the greater the part of our surplus expended on investment overseas, the greater the number of jobs in manufacturing industry that can be preserved. It may seem strange and somewhat illogical but if we had been able to invest overseas like Japan, which would have meant many other factors coming into it such as the very high savings ratio, then we would have preserved more jobs here.
The next point that I should like to touch on concerns the stability of the exchange rate. There were almost unanimous requests by all industrialists who gave evidence to have greater stability in the exchange rate, preferably at a lower level but certainly stability even at a higher level than they would like rather than the fluctuations which have affected industry so much in the past 12 months. It has been impossible for industrialists to plan their costings, their marketing,

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the whole of their strategy, because of these violent fluctuations: sterling went from nearly parity with the dollar to 1·50 dollars, or so, yesterday. Such fluctuations make life extremely difficult for industrialists.
It is not just a question of exports but the import penetration which becomes possible when sterling is too high. In a way that is even more serious because, while one can cover forward to some extent in respect of export contracts that are taken, it is not possible to cover forward for imports—you do not know where they come from and in any case they have nothing to do with you but come in and are sold to one of your customers. So there is a need for stability in the exchange rate which was put very high on the list of priorities of all those who gave evidence.
I recognise that a strong pound and what industry may consider to be an over-strong pound has consumer benefits. It enables the consumer to obtain foreign goods cheaper than those obtainable on the home market. I realise too that it has an effect on inflation. Certainly these high and fluctuating rates can only be damaging to the prospects for jobs in the future.
I am glad that my noble friend Lord Young went through many of the recommendations this afternoon and expressed his agreement with what was proposed. Many of the recommendations are entirely in line with what the Government are seeking to do, and indeed with what my noble friend would say the Government are doing and doing very well. He said that the committee did not give enough credit to what is being achieved but I think that we all felt that the Government would not be modest about their own achievements and our task was better performed by influencing the Government's mind in the direction in which we all agreed it should go.
Certainly as regards national attitudes to industry, there is Industry Year 1986, which we are all supporting as massively as we can, competitiveness and all the things that my noble friend is doing in cutting bureaucracy and red-tape. Non-inflationary wage settlements is on the lips of every Government minister and industrialist in the country; there is support for innovation and export of research and development. These are marvellous things which I hope no one in the Government would dream of criticising. To the extent to which they are asked to give financial support to it, I recognise that it does have public expenditure connotations. Lower taxation and lower local authority rates are essential to industry, so is better trained management, better business training, better education in schools—these are things that we welcome—as are more profitable investment, encouraging potential customers to look at British industry and the British product before they place an order overseas, and the elimination of unfair practices. I could go on. These are recommendations by the committee which I am sure are very close to the heart of the Prime Minister and all the members of her Government, and indeed my noble friend welcomed them today.
There were some recommendations to which I understand the Government did not want to commit themselves, at any rate at that stage, such as the co-
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ordination of industrial policy—indeed whether that should be through Neddy or, as the report suggested, possibly through another committee. I understand that is something which the Government and the NEDO will wish to look at and discuss. Indeed, I should be sorry if there had been an immediate condemnation of the suggestion from the Government.
I touched on the exchange rate and interest rates and I accept that these run across a broader canvas and are major economic policy issues—for example the Group of Five or the Plaza agreement, which entered into an understanding about the relationship of the pound and the dollar.
In that context, I am sure that I do not need to remind my noble friend Lord Young or the Chancellor of the Exchequer that the Chancellor's responsibility to the British economy and British industry is perhaps much greater than it is for sorting out the trade and budget deficits of the United States of America. So far as there is conflict between those two objectives, I feel confident that British industry will be given priority.
There was another reservation expressed by the Government which has public expenditure connotations, and which concerns more money for the BOTB which we strongly recommended. I believe it is essential that we should give support to our exporters comparable with that which exporters in other countries receive. I welcome the fact that the Government have now extended the soft loans and improved the aid and trade provisions. I regret that they should be necessary at all. To me it is objectionable that we must have these forms of competition introduced. They distort the whole pattern of trade, but if other countries act in this way it is thought right that we should not put our people at a disadvantage.
So the Government can rightly claim—and they certainly will do so—that a great deal of what we suggest is already being done. We welcome it and hope that they will do even better. After due consideration, they may wish to come back to some points to which at the moment they do not feel they can give complete support and I hope they will reflect on them carefully—I can tell my noble friend that I do not want to hear a statement on the "AM Programme" tomorrow morning—and in due course come back to the House and say how far the Government have been able to go to meet the full recommendations of this excellent Select Committee.
6.58 p.m.
Lord Donoughue: My Lords, we are today undoubtedly considering an issue of great importance and for that we must thank the Select Committee for producing such an informative, concise and lively report. It is already clear that it is the basis for an excellent debate, which has been graced by an engaging "maiden" from the noble Lord, Lord Clitheroe—and we look forward to more—which was opened with remarkable power by the noble Lord, Lord Aldington, and which, among many good speeches to which I have listened this afternoon, was perhaps most convincingly and authoritatively supported by the very impressive speech from the noble Earl, Lord Limerick.

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The issue that we are considering is the immediate and medium-term future of our economy. Within five to 10 years we see the worrying combination which the report describes of oil in decline and concurrently the threat that manufacturing will continue to decline. Oil is a resource currently worth £20 billion on our balance of payments and £12 billion in Government revenues, and the manufacturing sector is currently worth 21 per cent. of our GDP, 25 per cent. of our jobs and 40 per cent. of our overseas earnings. The recent experience in manufacturing has been a quite devastating decline, with one-fifth of the jobs disappearing since 1979 and the balance of trade going dramatically into deficit. It is not certain that the future will turn out for the worst, but it is a dire prospect.
I must say that I agree with noble Lords on all sides who express concern that official attitudes often appear worryingly complacent. If I may say so, that is not the case today. We were pleased and reassured by the thoughtful and positive response of the noble Lord, Lord Young. But too often the reaction is one of complacency, as was shown by the Government's initial reaction. I think that the noble Lord has partly but not wholly rescued the Chancellor of the Exchequer and the Secretary of State for Trade and Industry. We shall forgive them, as we understand that almost certainly they did not have time fully to read the report before reacting.
But it seems that often the Government relax under the comforting doctrines mentioned by the noble Lord, Lord Boardman. There are worrying doctrines of inevitability and automaticity: it is inevitable that manufacturing will decline and it is inevitable and automatic that something else will replace the oil revenues. They are beguiling doctrines. They enable people to feel that it is nobody's fault if things go wrong, and the Government need do nothing because in the end something will turn up.
That is wrong and it is particularly wrong when accompanied by the misplaced view that the decline in manufacturing does not matter. Each of those attitudes is questionable. It is not inevitable that manufacturing will decline. Output rose satisfactorily in the years 1975 to 1979 and has risen again since 1983. Much of the worst damage was not inevitable. As has been mentioned, it was due to the high level of sterling after 1980, which was to some extent but not totally due to oil; and in so far as it was not it was a gratuitously self-inflicted injury to industry, raising our relative unit costs about 50 per cent. in that short period. So the decline is not inevitable, and it matters, as has been pointed out. Other strong economies all have at their base a strong manufacturing industry. It is a delusion to think that the service industries can replace that. They depend and feed on a healthy manufacturing base.
It is certainly not automatic that the oil revenues will be replaced. It is inevitable that they will decline but it is not automatic that they will be replaced. I was intrigued to read what the Government had to say in their response to the report about the future replacement of oil revenues. As far as I can see, it depends to a considerable extent on a major devaluation of sterling. The noble Lord looks sceptical. I think that
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the sentence is there. It depends on other things, too. But a devaluation of sterling is explicitly stated as a factor. We look forward to the noble Lord's reassurance on that and on what it does to expectations about inflation.
If we look to the 1990s we have possibly a bad scenario, with revenues from oil falling, with manufacturing having less encouragement, not necessarily having recovered, and with perhaps no more public assets to sell. There is the prospect of a high PSBR and a high trade deficit almost certainly forcing whichever Government are in power to pursue deflationary measures with the consequences of low growth and high unemployment. That is not a rosy prospect and is worthy of the consideration of us all.
The problem is well analysed and diagnosed in the report. I stress that the problems apply to the services and to the rest of the economy, and it is a little unfair to criticise the report for focusing on manufacturing. The problems are common across the service industries as well as in manufacturing. If remedies are applied and succeed, they will affect the whole economy.
Among the remedies I should like to pick out three broad points which are mentioned in the report and to which one looks for reassurance to the Government. The first is the question of attitudes and how far they can be improved. The second is the question of planning—to use a currently, but not forever, discredited word—which simply means considering how best we can positively prepare for what I shall call the post-oil period. Most important of all is the question of investment in physical and in human resources. I stress again that those points apply not just to manufacturing.
We know the problem with attitudes. It is the anti-industrial bias of our culture. It is here today The noble Lord, Lord Plowden, reported on that. It is not new. Anyone who has studied the situation in India 100 years ago will be aware that the gentlemen who represented industry, trade and marketing were referred to contemptuously as "box-wallahs" and were not invited to the governor's residence. The attitude has been here a long time. I saw it when I was in government. One saw the regrettable attitude of the Department of Industry to attempts, in which I was involved, to set up the Finniston inquiry into engineering. It was an unhelpful attitude. One also saw the regrettably snobbish attitudes to parts of engineering at the sharp end—for instance, production engineers.
It is a major problem. As many noble Lords said, it starts with education. The noble Lord, Lord Clitheroe, made a telling general point. When I was at university I knew few people who went into industry or even considered it. The best people then went either into the Civil Service or, like myself (if I may be considered to be on the fringe of the best people), into part-time occupations such as university teaching. So we had a very good Civil Service.
When taking part in negotiations with the Germans I was struck by the superiority of our civil servants. My first reaction was great pride, my second was concern, and finally I realised that what we had was the best administered economic decline in the Western world

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while opposite us was the worst administered economic growth in the Western world. Thinking about it further, I realised which I would prefer.
I must confess that it is not easy to change attitudes. Long-term attitudes cannot be changed easily in the short term, and so we must not expect too much. But one looks to the Government for a lead in terms of their language and their policy priorities. I have looked at the language as it affects planning attitudes. I think that we need much less hostility to the whole concept of planning. It is a myth which is not shared by our most successful competitors—Japan, Germany and France—that planning is bad for one's economy. By that I do not mean than we heed constant "nannying" and interference.
In a healthy economy the most important factors are market disciplines and a climate of low inflation. But it is extremely important to accompany them with planning in general, and in this case specifically, to arrange that the short-term oil benefits are replaced and that our manufacturing base is not finally destroyed. I would therefore ask noble Lords on the Government Front Bench what they are actually going to do to plan that we, as a nation, do not suffer a massive decline in our living standards or massive devaluations when oil runs down.
Finally, and most important, is the question of investment—investment in physical and in human resources. There is a need for a good social infrastructure. That is essential to an efficient economy. I have particularly in mind transportation, the need for greater investment in our roads and our railways. When I hear—I have heard it under previous Governments—that our motorway programme is virtually complete, I wonder which roads people are travelling on. It is saturated but not complete. There is need of housing for our workforce and provision of the cheapest possible energy for our industry. There is need for direct Government investment.
Secondly, there is need to encourage physical investment in industry research and development through cheap loans. We should not be ashamed of public funds to encourage to a much greater extent, through cheap loans, new and small industries. Our competitors, the Japanese, the Germans and the French, as has been pointed out, are willing to do that. I believe that we should do it, too. The crucial point is not to argue the ideology of where the funds come from, but to ensure that we have sufficient capacity in the post-oil period. As already stated, it is easy to close industrial capacity and to retreat from a market. It is very difficult and very expensive to get back in.
In the area of investment, the most important factor is investment in human resources. Repeated studies show that deficiencies in education, in skill and in technical expertise are one, and a major, factor in our industrial under-performance. Admittedly, the present Government have made progress in this area. They have increased training resources. The noble Lord, Lord Young, has been very active in that area. They are trying, in the education field, to change and to improve syllabuses. They have reduced the educational bias against industry. I commend that, and I support it. I should, however, like to say that what is being done in total in the education field is a drop in the ocean compared with what is required.
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Frankly, as a part-time economist, I cannot understand why the Government do not spend much, much, much more in the education field. It seems to me that if you look at the Government's economic policies the success of that particular brand of approach needs above all a highly educated, highly trained and skilled workforce.
The Prime Minister has often explained that there is no future in the old, low-skill, subsidised kind of industry. We must have genuine international competitiveness. We must have high quality services and goods. We must earn a living through adding value. Adding value must mean higher skills. Britain's prime resource is its people. We must add value to our people. You do that through education. Their output is limited not by their numbers, as we know from the unemployment figures. It is limited by their skills. Many economists suggest that up to 50 per cent. of the growth in a mature economy—we are a very mature economy—is due to skill, knowledge and information in the workforce.
Education in its' broadest sense is both the instrument and a major product of any successful modern economy. Yet when one looks at the PESC reviews and at the recent White and Green Papers we see projections for real cuts in educational provision over the next five years. I would argue that this must be wrong. It must be wrong for a country that, among advanced nations, has the lowest percentage of people in education. And it must be wrong, I say with deference, when the Government seek to transform the economy in the particular way they are doing. It is equally wrong—less quantifiable but more pernicious—to talk, when trying to do that, as if only the top 20 per cent. in education matter.
In conclusion, I should like to join others in supporting this report where it argues that to survive the alarming decade ahead we need a healthy manufacturing base as well as healthy service industries. That requires a positive response from the Government. And, if that is so, it requires a more positive role from the Government. It requires the Government, first, to acknowledge that the problem is there and to acknowledge that it is as serious as it is. I believe that this afternoon we have had some reassurance on that front. Secondly, there is need to encourage industry itself to invest more. Thirdly, there is the need to invest directly in a better infrastructure. Fourthly, and above all, there is need to invest massively in human resources to achieve a better educated and skilled workforce. With such a planned approach, we can face with some degree of confidence the difficult period ahead when oil is declining. Without it, if we close our eyes and wait for the automatic workings of imperfect markets, we evade our responsibilities and we are in danger of betraying our children.
7.18 p.m.
Lord Bruce-Gardyne: My Lords, it is a pleasure to follow the noble Lord, Lord Donoughue. At least it gives me the opportunity to thank him for the fascinating contribution that he made to a television programme 10 days ago in which he gave a graphic description of the appalling debacle that faced the

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Government with which he was associated ten years ago when they had tried to pursue some of the policies which I have a horrible suspicion the party opposite would still wish us to pursue today until they got the broker's men in. Like all your Lordships, I wish to congratulate my noble friend Lord Aldington on introducing this subject today and on the remarkable report which he and his noble colleagues produced as the subject of this debate this afternoon. It has had a remarkable reception. It has certainly been a succès d'estime—almost, one might say, a succès de scandale.
I shall have to be very careful what I say because I am peculiarly conscious of the point drawn to your Lordships' attention by my noble friend Lord Boardman that I belong to the scribbling classes. Indeed, like the noble Lord, Lord Donoughue, I have spent too much of my life as a consumer and armchair critic. I am sure that my noble friend Lord Aldington will agree that this must have been why I found it reasonably comfortable to reside for a brief period in the Treasury. Having said that, I would like to agree with what seems to be the fundamental message from your Lordships' committee, well summed up by my noble friend Lord Aldington when he said that we had a serious problem which will not solve itself. That I think is the fundamental message. I am sure that your Lordships would agree with that. My right honourable friend the Chancellor of the Exchequer has inescapably pointed out that as our oil windfall shrinks away—and I am bound to say that I do not think it will be quite as fast as your Lordships' committee suggests, but we shall see—the switch to a changed trading pattern will have to be achieved by an adjustment in the real exchange rate which can take place either through a considerable improvement in our own competitiveness, or, as the noble Lord, Lord Donoughue, suggested, by a counterveiling devaluation. But I must say that I humbly agree with your Lordships' committee that it will not necessarily be a painless process.
I also very much agree with the strictures which your Lordships' committee makes, in particular at paragraph 219 of the report, on what seems to me the folly of the propensity of all governments, including I am bound to say this one, to seek to pull into this country inward investment from overseas with a view to short-term employment considerations by means of massive subsidisation. I find it hard to believe that the £100 million which we are pledged to inject into Nissan will prove a desirable investment from the point of view of the taxpayer—but we shall see.
I also very much agree with your Lordships' committee that in this rude, harsh world, we may have very little alternative but to provide effective and competitive support for the winning of so-called turnkey export orders. It sometimes seems to me downright crazy that we in this country should be presenting third world countries with solid gold tea sets and steel plants, or synthetic textile plants thrown in as well, so that they can then remove our markets for steel or synthetic textiles, as the case may be. However, I am bound to agree with your Lordships' committee that we live in a world where that is what goes on, and if we do not provide a better solid gold coffee set to go with our steel plants or synthetic textile plants than do
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the Japanese, the Germans, the French, or soon the Americans, we shall be out of that particular trade altogether.
I believe that there is a conundrum to which several of your Lordships have referred today. The noble Lord, Lord Ezra, referred to the very peculiar theory—he called it—of the Treasury's idea of a balance sheet in trade. My noble friend Lord Aldington referred to determinism in these matters. I have a difficulty here. I have read with great interest the question which my noble friend Lord Boardman put to Sir Anthony Rawlinson when he appeared before the committee on behalf of the Department of Trade. At question 54 on page 36 of the minutes of evidence my noble friend said:
"One would have hoped you might have said that if we were vastly more efficient in manufacturing and gaining a larger share of the market we would retain our service industry and would have a far greater potential for further overseas investment on the one hand or further capital investment in this country on the other, as well as higher employment, which after all is the key to it.".
The fact is that in 1975—which is the bench year which the committee, as I understood it, took—we had a deficit on oil trade of £3 billion. We had a surplus on service trade of about £1 billion. We had a surplus on manufacturing trade of about £4 billion. Eight years later—which again was the bench year which your Lordships' committee took—we had a surplus not of £1 billion but of £4 billion on services. We had not a deficit on oil of £3 billion but a surplus of some £8 billion. If one interprets what my noble friend suggested, we should have had presumably not a surplus on manufacturing trade of £4 billion, as we had in 1975, but a surplus of double that, since we had increased our market share—that of £8 billion.
I must say that if we put those figures together with nothing on the other side, the auditors of the National Westminster Bank might ask a few questions about the accounts. Of course, I understand that it is the message of the committee that this could have been counterbalanced by a huge, outward flow of capital investment, as indeed no doubt in theory it could. The example of Japan was quoted. Japan has a huge surplus on current trade, as we know. This is counterbalanced by a huge outflow of capital investment. In the first place I do not get the impression that parties opposite would all view with vast enthusiasm a huge increase in the outward flow of capital from this country.
However, leaving that aside, I wonder about our ability to copy this particular Japanese example The counterpart of that is of course that the Japanese have by far the highest personal investment ratio in the world, about four times that of ours. It is possible, of course, that we could turn ourselves overnight into a nation of piggy-bank savers—and pigs might fly. But I am bound to say that even if we did, I am not sure that we would be universally popular. I am not sure that the huge export surplus on current trade which the Japanese maintain, offset by a huge outflow of capital mainly to the United States, has endeared the Japanese economy universally, least of all in the United States.
Lord Ezra: My Lords, has it not made it a very successful economy; and is that not what we are talking about?
Lord Bruce-Gardyne: My Lords, I entirely agree with the noble Lord that the Japanese economy is highly successful. I still insist that it is not a universally popular economy. I think that it is liable to come up against the buffers of a problem to which I wish to turn in a moment, the problem of protectionism.
But now I want to turn to the recommendations of your Lordships' committee with many of which, like others of your Lordships, I found myself in profound agreement. There was the call for a change in national attitudes. That is a fundamental call and it was supported so eloquently by my noble friend Lord Clitheroe in his admirable maiden speech this afternoon. I could not help recalling that when my noble friend and I, and my noble friend Lord Limerick, were at a certain university we regarded my noble friend Lord Clitheroe as being something of an oddball because he had gone in for sciences. We all thought that that meant he worked far too hard. Your Lordships have heard the consequences this afternoon. I am sure that we shall all greatly enjoy hearing from my noble friend on many occasions again.
A second suggestion from the committee—about which I must say I have some reservations—is the need for greater exchange rate stability. We are all in favour of stability of exchange rates, just as we are all in favour of godliness. But, as my right honourable friends in the Government have fairly pointed out in their response to the committee, it takes more than one to stabilise. I cannot help feeling that underneath the call for exchange rates stability, coupled as it is with the call for lower interest rates, the real message is that we should aim for a substantially lower exchange rate in sterling terms.
The noble Lord, Lord Ezra, in his powerful speech earlier this afternoon called for us to trade up-market. I am sure that he must be right about that. But for the life of me I am not clear how you up-market trade and down-market your currency at one and the same time.
Finally, I should like to turn to two of the specific recommendations of the committee which worry me. At this point I wish to express the hope that perhaps some of your Lordships have shared the experience which I have enjoyed in the last few weeks of listening to some of the very remarkable Reith lectures of Professor David Henderson. If it were permissible, which fortunately for your Lordships it is not, to copy the example of the American Senate and to be able to write things into the record, I would write the entire lecture series so far into the record for your Lordships' interest. However, I do not think that Professor Henderson would be altogether happy with the two specific recommendations to which I now wish to refer.
One is contained at paragraph 220 of the report where your Lordships' committee refer to the question of domestic sourcing for manufactures in this country and quote Sir Anthony Rawlinson as saying:
"As regards [motor] companies which are already established here [such as Ford and so on], the Government does from time to time discuss these matters, but its powers of insistence are rather limited within the framework of current policy".
Your Lordships' committee comments:
"It is time for current policy to become more robust".
I hope that someone from your Lordships' committee will tell me how we become more robust with cars
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from other parts of the European Community. Are we to declare them a health risk, like milk? I am bound to say that even that ploy has not worked that well with milk. I am glad to see that at least the committee does not come anywhere near to suggesting that we should take the easy road out and opt out of our Community obligations by withdrawing from the Community.
The contrary is the case, and here I turn to the last recommendation to which I should like to refer, which is at the very end of the committee's report where the committee refers to the whole issue of trade and tariffs. At paragraph 230 the report says:
"One witness powerfully argued for substantial increases in Common external tariffs".
Your Lordships' committee comments:
"If the Community act in concert there could be little prospect of retaliatory action by third countries".
I am an ignoramus in these matters and your Lordships' committee is composed of men of great wisdom and experience in the field of international trade. However, I should have thought that if a trading bloc as large as the Community embarked on a procedure of substantially increased tariffs on imported goods, it would be remarkably surprising if other parts of the world did not follow that example. Indeed, I personally should have thought it would be hard to think of a surer way of setting off the sort of protection war which cost the world so appallingly dear in the 1930s.
Finally, I humbly suggest that in this House sometimes we may need to remember that the price of protectionism is paid by the consumers. Some of us are producers and fewer of us are manufacturers, but all of us are consumers from the cradle to the grave. Fortunately, in this House we do not have to concern ourselves with the fact that vast numbers of those consumers have votes, but in another place they do have to concern themselves with that fact. I wonder whether Her Majesty's Government would be entirely wise to follow your Lordships' committee's advice in embracing the possibilities of protectionism with the consequences for the wellbeing of those who are the consumers, who will eventually be voting them in or out of power at the next election.
7.34 p.m.
Lord Kearton: My Lords, I must begin by congratulating the noble Lord, Lord Clitheroe, on his thoughtful and constructive maiden speech. Like other noble Lords, I very much hope that we shall frequently hear him in this House. The name "Clitheroe" has certain significance for me because nearly 50 years ago one of the first chemical plants for ICI, with which design I was associated, was built at Clitheroe to make catalysts for chemical processes, and I think that that plant, much improved, is still there.
The chairman of the Select Committee, the noble Lord, Lord Aldington, gave in his admirable opening speech a clear account of the committee's work, of its findings and of its recommendations. I agree with everything that the noble Lord so cogently said. It was a privilege to sit under his chairmanship as he guided the committee through its in-depth investigation and lead the committee in its examination of witnesses and consideration of documents. Besides the 23 witness

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sessions and the visits overseas, the committee had 13 discussion meetings. The evidence, both written and oral, was carefully assessed. The full report, which includes the record of this evidence, runs to over 1,200 pages.
It is possible that the committee is wrong in its findings. Obviously I do not think so. However, even for those not so persuaded, it was overreacting to describe the report, in the words of the Chancellor, as
"special pleading dressed up as analysis, and assertion masquerading as evidence".
A more valid criticism would be that the committee is only saying what everybody knows to be true. The committee but brought the situation into focus, and the committee has no magic formula or "quick fix" to avert the dangers which it sees ahead.
We conclude that the way to future success and prosperity fundamentally lies in a change of national attitudes in all sectors, and with particular regard to manufacturing industry. The report indicates the nature of these changes. There is bound to be a sense of déjà vu. The record shows that for well over a century cries of alarm have been raised about our decline in some sort of activity or another, and in most cases we recovered. We stayed up front with our main industrial competitors, except for the United States. However, by 1960 our relative decline in most material areas was well under way—relative, but not absolute.
In the past 25 years we have indeed increased our gross domestic product; we have become much wealthier as a nation; we have carried out major schemes of internal wealth redistribution; and the gross domestic product, as the Government can claim, is currently at its highest ever. But relatively the position is different. According to the 1985 OECD figures, we are now down to seventeenth in the international league table of such figures. We were tenth as recently as 1973, and this before the development of our North Sea oil wealth.
It is not that the relative decline went unnoticed and unmarked. For the past 25 years Prime Ministers of all parties have come to office resolved to adopt policies to reverse the trend, which nevertheless continued.
The present Government are tackling the problem with vigour and energy. They are now providing the sort of framework in which a new enterprise and entrepreneurial culture can take root and hopefully flourish, and in the area of training their efforts, through the Manpower Services Commission, are admirable. It is not yet enough—far from it—but it is moving very much in the right direction, and the Secretary of State for Employment, who will be replying to the debate, deserves particular credit for this.
However, the Government have some blind spots. They profoundly under-estimate the crucial importance of manufacturing industry. When Government statisticians say that manufacturing industry accounts for just over 20 per cent.—say, 22½ per cent.—of GDP, they are calculating mistakenly. A great many services have transferred from inside industry to outside industry and now count as services, but they serve industry. If one takes the service-related
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sector of our economy depending on manufacturing industry, it would not far from double that part of our GDP which depends on manufacturing, industry The Government hardly seem to recognise that our industrial base is considerably lower than it was.
The noble Lord, Lord Selsdon, in his powerful and illustrative speech, gave some examples of articles of manufacture which we can no longer make. The noble Lord, Lord Young, in his remarks claimed that investment in the country was at an all-time high. But investment in industry is not at an all-time high. Of the £50 billion-odd total annual investment, less than £10 billion goes to manufacturing industry.
As the committee found in its examination of witnesses, even that investment is not directed very much to new products; only about 30 per cent of it. Most of the industrial investment goes to increase efficiency in making existing products in our reduced manufacturing base and not to extending our range of products. The noble Earl, Lord Limerick, mentioned in his speech—and few can speak with more authority on the subject—that services, vitally important as they are, cannot replace manufacturing industry in our national affairs.
We have recently seen some great money-raising efforts in the City both for privatisation and for mergers; billions and billions. But all this money-raising is not to create assets but to transfer them. There is no net creation of new wealth activities. And again in the Government's own sphere the Department of Industry the other day published a report saying how concerned it was about the low level of R & D in this country and its relative inefficiency. I repeat: the Government have some serious blind spots, highly commendable and creditable as their efforts are in so many directions. I venture to suggest that the recommendations in the report go some way to establish a clearer vision.
As so many are speaking in the debate, I shall confine my own particularity to just one topic: North Sea oil. It is oil which has been covering for the manufacturing decline in the past six years, but it will not be able to do so indefinitely. What is the time scale? The first oil was discovered in 1969, and it was quickly followed by some very big finds.
In 1976 the annual Brown Book survey, issued by the Department of Energy, estimated the initial "in place" recoverable oil reserves as being 2,210 million tonnes. These were firm resource figures in the categories "proven" and "probable". The "proven" figure was 1,350 million tonnes and the "probable" figure 860 million tonnes. A much larger amount was quoted as being "possible", and it was expected that further exploration would help to establish and delineate these possibilities, thus increasing the resource base.
This was nine years ago. By April of this year, and after the drilling of an additional 850 exploration and appraisal wells, the Brown Book estimates of the initial resources had fallen rather than increased. They had fallen by 10 per cent. While the "proven" category has gone up by 150 million tonnes, the "probable" category has dropped by 360 million tonnes.
The estimate for "possible" reserves remains high. But "possible" in oil industry jargon covers a range

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starting at 1 per cent.; a one in a hundred chance. The range goes up to 50 per cent., but even then it rests on speculative economic assessments. I am certain that further oil remains to be discovered, but possible reserves are pie in the sky until discoveries are actually made. In view of the record of the past nine years, some prudence as to the size of the pie seems advisable.
We have been using up the established initial reserves rather rapidly; to date 800 million tonnes, which is 40 per cent. of them. The Minister of State for Energy in another place recently quoted the remaining "proven" and "probable" reserves as 1,225 million tonnes. At the present rate of production, which is 125 million tonnes a year, this would be only ten years to exhaustion, and it is these high rates which allow us to make considerable exports.
Of course the oil will last longer than 10 years. The production rate will fall off from present levels and so will the exportable surplus. Fifty per cent. of today's production comes from four fields, all discovered in the early 1970s. These same four fields have yielded 60 per cent. of all production to date. Three of them are now past their peak outputs, and so are three fields in the next tier of medium-sized fields. The other 20 fields in production at the beginning of this year, and the new developments in hand, will not arrest the overall decline. Only a few of the 20 fields are of even medium size.
The actual rate at which production will decline is not easy to predict. The big fields have so far maintained production remarkably well, but such levels today imply a sharper rate of fall-off towards the end of their life. The Department of Energy gives a range of production possibilities for 1987, 1988 and 1989. The high figures mean that oil exports will decline gradually in these three years. The low figures—and these are figures from the Department of Energy—indicate that they will decline quite sharply. The output expected is something in between. But in the following years, 1990 and 1991 and then onwards, my own view as to probability is that export potential will be sharply diminished and could become nonexistent.
Our oil export cushion will go in six or seven years at best. When my noble friend Lord Young says that oil will contribute to the balance of payments well into the next century, he is right in the sense that there will still be some oil production which will mean we shall not have to import so much, but current production is roughly £20 billion a year. It is not much consolation if we are still producing oil in the 21st century at a rate of £2 or £3 billion a year. It will still be contributing to the balance of payments, but not very seriously.
We shall need new discoveries and new developments just to maintain this self-sufficiency from the mid-1990s, and this new oil will be much more expensive in capital cost per barrel and in production cost per barrel than existing reserves. It will certainly not give the same tax yield per barrel, but without the new oil we shall have an import bill to contend with as well as having no oil exports.
If our country is to be strong and great when indigenous oil is but a trickle, we must have another industrial revolution. Many of the Government's
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actions and initiatives indeed conform with this view. In surveying the national prospects it is natural that the Government should want to sound confident. I do not see how they can sound quite so confident when they have taken on board the powerful speech of the noble Earl, Lord Limerick. But Ministers must know that our industrial competitors, oil importers all, have not slowed down. We shall not catch up with them, much less overtake them, unless we make a conscious national effort at all levels of a kind to make a sea change in our culture, a theme taken up by many of our witnesses.
Back to déjà vu. How many times something similar has been said in the past 25 years. Yet we have advanced, wealth has increased, and material circumstances for most of us have never been better. But Cassandra was right in the end. The committee's report, based on a survey in depth, cannot be brushed aside. As were so many speakers, I was delighted that Lord Young's reaction indicated that the Government have no intention of brushing it aside. This time we must make a reality out of our needs. We face a tremendous challenge.
The committee's report is both an alarm signal and, even more germane, a torch. How sensible it would be, how exhilarating it would be, if the Government picked up the torch and used the committee's recommendations—all the Committee's recommendations—to light the way forward!
7.50 p.m.
Viscount Montgomery of Alamein: My Lords, I start by congratulating my noble friend Lord Aldington. I find his report stimulating and interesting. I thought that the Government's initial reaction was rather surprising and I was therefore particularly glad to hear the more mature and balanced comments made this afternoon by my noble friend Lord Young.
I shall not dwell on the macro-economic issues, since this has been done much more effectively by more experienced speakers than myself and none more so than the noble Lord, Lord Kearton. I was particularly glad to listen to the speech of the noble Lord, Lord Plowden, on the importance of education for industry. This is of vital importance for the future. I start here by making a confession, particularly to my noble friend Lord Bruce-Gardyne, because I studied engineering at Cambridge. I have been involved ever since with marketing industrial products and services overseas. I therefore have to declare an interest in as much as I speak from the sharp end of overseas trade, particularly in connection with developing countries. I am also a director of companies which have been beneficiaries of Government export services in various manifestations.
Exporting is very hard work, whatever the product, and industry needs encouragement. I think that it probably can draw some from the general nature of this report. Industry dislikes depending on Government, but it recognises the need to work together. Industry and Government need each other. That also emerges from this report. Direct exports, whatever the product may be, are very important. I want in the brief time that is available to mention two weapons in the armoury of export promotion services, both of which are vital and both need some attention:

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these are the ECGD and ATP. ECGD has a problem in as much as it has conflicting aims. If I have understood it correctly, it is required to make a profit and to support exports. These two aims are frequently contradictory, incompatible and may well be impossible. I have had many dealings with ECGD for which I have great respect, but it may be short of senior management and constantly under parliamentary and other pressures. I hope that something can be done to look after ECGD and support it in a slightly different way than has been the case heretofore.
The other subject is aid. I must admit that I am not much in favour of cash handouts overseas because they are very frequently misused and subject to the most bizarre political pressures. But assistance in the acquisition of goods at special prices may be a useful compromise. That often provides something useful for the developing country, such as electric power, irrigation or water treatment, as well as stimulating exports. The noble Lord, Lord Selsdon, has referred to this rather more eloquently than I can. It is a difficult area. It may frequently be thought of as special pleading, but the fact is that other major industrial nations, France, Germany and Japan, all provide ATP, or its equivalent, in vastly increased volume than our contribution. If we wish to compete in these areas we have to follow suit.
The problem is that our present mechanism is slow and inflexible. ATP is currently administered by ODA, whereas it probably should be more directly under the control of the DTI. In every major project overseas some five Government departments intervene: ODA. DTI, FCO, ECGD and the Treasury all get involved. It is industrial and commercial action by committee, which is never a very satisfactory solution.
My noble friend Lord Aldington during the latter part of the war worked for someone who had a particular expression for this sort of situation. He referred to it as a "dog's breakfast". That may be over-stressing it, but the procedures and organisation for handling ATP need streamlining and its value needs increasing. Naturally industry is grateful for the recent increase that has been given to ATP and for the introduction of the soft loan system, but that is only scratching the surface and we have to go further.
This committee has done a valuable service. The report is extremely stimulating. I have heard it suggested during the debate by several speakers that it would be a good idea if the committee stayed in existence. That is an extremely sensible idea and I hope it will happen.
I am not disheartened about British industry, which I believe is becoming more and more efficient all the time. The epilogue to the report as it stands and the situation which follows thereafter is summed up by the wartime slogan, "Give us the tools and let us get on with the job".
7.57 p.m.
Lord Weinstock: My Lords, I must first apologise for I have been unavoidably detained elsewhere for the greater part of the day and therefore I have had to miss so much of the debate. I have heard much wisdom
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from noble Lords in the time since I arrived in the Chamber and I shall scrutinise Hansard tomorrow with the greatest care. I hope I shall not go again over too much ground that other noble Lords have already covered.
At the outset I must declare an interest as the managing director of a major industrial manufacturing company. In my opinion, the analysis made by the committee as to the problems into which it was asked to inquire is broadly correct. Its report and the evidence it has gathered give a recognisably true-to-life picture of the conditions in which British manufacturing industries operate and of their disabilities in competing with others. It was therefore more than a little surprising, as the noble Lord, Lord Kearton, and the noble Viscount, Lord Montgomery of Alamein, said, that there should have been such an immediately dismissive response to it from the Government.
In the House and outside the debate on the report revolves around three key issues: that the relative decline in manufacturing is a world-wide phenomenon aggravated in Britain by North Sea oil; that the coming decline in revenues from North Sea oil will automatically lead to an improvement in the competitive performance of United Kingdom manufacturing, and that the increased income from service activities and the yield from investments abroad will compensate for the loss of revenue from oil and the reduced income from manufacturing. According to the Chancellor of the Exchequer, at page 553 of the oral evidence:
"The share of manufacturing in both GDP and employment has…been falling over a long period. Similar falls have occurred. mutatis mutandis, in all major industrial countries".
The Chancellor's statement is incomplete and misleading because he is referring to the share of total value added in the economy taken up by manufacturing profits and wages.
Although what he says is literally true, it takes no account of the relative rates of growth of prices and productivity, and gives the wrong impression that manufacturing output has, in general, increased less fast than output of other goods and services. The fact is the reverse. Manufacturing output has generally increased faster than total output. Taking the OECD countries as a whole, the average annual rate of increase in GDP between 1960 and 1983 was 3·7 per cent., whereas the increase in manufacturing output was 4·2 per cent. The comparable figures for Japan are 7·2 per cent. and 10·2 per cent., for France 4·1 per cent. and 5·0 per cent., for Italy 3·8 per cent. and 4·9 per cent.
Contrary to the impression given by the Chancellor, it is in Britain alone of "all the major industrial countries" that manufacturing output rose less than GDP. The average annual growh rate of British GDP over this period was 2·2 per cent., whereas manufacturing output grew by only 0·9 per cent. Even in the period 1968 to 1973, before North Sea oil, Britain was the only major industrial country in which manufacturing output rose less than GDP.
The exceptionally low relative growth of manufacturing in Britain does not reflect choices by the British people, on the one hand to buy relatively

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fewer manufactured goods, and on the other to spend a higher proportion of their wealth at the cinema or on Brighton Pier. On the contrary, real domestic expenditure on manufactured goods rose at about the same rate as expenditure on all goods and services. The reason for the relative decline in the United Kingdom output of manufactures is that the British people chose to increase—and at an incredible rate—their purchases of goods made abroad. While our manufacturing output rose 26 per cent. between 1960 and 1983, and our exports by 130 per cent., imports of manufactured goods rose by about 500 per cent.
I am sorry to have been obliged today to regale your Lordships with more statistics. But the Government do it regularly, and they can add this one: that the share of British manufactured exports in world trade has fallen in the first half of 1985 to a record low of 7·3 per cent. The Chancellor thinks this was inevitable. As his friend, and mine, Mr. Sam Brittan wrote in the Financial Times:
"If there is an oil surplus of £7 billion, an invisibles surplus of £5 billion, and a total current surplus of £1 billion—as was the case in 1984—then, as a matter of arithmetic, there has to be a deficit on other visibles of £ 11 billion.
"Of this, some £7 billion was accounted for by food and materials and another £4 billion by manufactures".
Noble Lords will require no computer, not even a Japanese one, to confirm the accuracy of this calculation. But they might also wonder why the same £1 billion total current surplus could not have been achieved, with higher levels of output, employment and investment, through a higher level of exports and a lower level of import penetration. This might have required a lower exchange value of the pound, or different fiscal policy, or other devices. I dare say all or any of these things would have added difficulties for the Government in the fight against inflation.
However, it is important to see what has happened for what it is—not an arithmetical necessity, but the result of a political decision to give overriding, indeed exclusive, priority to reducing the rate of inflation; and that has had the consequences of restricting output and raising unemployment. The reduction in the rate of inflation is, in the Chancellor's words, to be the "judge and jury" of the Government's policy.
I pay tribute to the work of the noble Lord, Lord Young of Graffham, previously in the Manpower Services Commission and now as a member of the Government, which seems to run counter to this dictum. Of course, the Government are not indifferent to the evil of unemployment, and they have taken measures to alleviate it. I heard the noble Lord, Lord Lucas of Chilworth, in this House claim a notable degree of success in job creation. He also said, I thought with some pride, that it had cost the Government £32,000 for each new job created. At that rate, if would cost more than one hundred thousand million pounds to eliminate unemployment in Britain.
On the other hand, when the Government and the great national utilities buy from United Kingdom industry instead of from foreign sources, jobs are created, or at least preserved, without any additional cost to the Exchequer. Indeed, the cost is negative, for the Government collect taxes from employers and
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from people who would otherwise have to be paid unemployment money and social security benefits. There must be competition to prevent feather-bedding. But national self-immolation in the name of a non-existent free market is surely carrying things too far. Where our productive capacities are being destroyed and skills dispersed, whether by economic policy or by competition, they cannot be easily resurrected, if at all.
The fundamental question is whether there will be a large enough recovery when oil production declines. It is no comfort at all that oil production is going to fall only slowly. Any decline at all is in sharp contrast to the huge growth since 1975, and it is this which makes a large and rapid improvement in the trading performance of industry so necessary. Will this just happen of its own accord? Or is it a major problem, identified by the committee as urgently requiring a subtle combination of new attitudes and new policies if, in their words,
"we are to avoid a major social and economic crisis in our nation's affairs in the foreseeable future"?
As I understand the Chancellor, the Treasury, the Department of Trade and Industry and Mr. Sam Brittan, the argument that the loss of oil revenue will be automatically compensated to a large extent by the regeneration of manufacturing depends on inevitable movements in the rates of exchange.
The Chancellor's strategy for the future is indicated in the evidence he gave to the Committee (page 554 of the oral evidence). Mr. Brittan faithfully expresses the same ideas.
"A sensible policy",
Mr. Brittan wrote in the Financial Times,
"would be to allow the real exchange rate to move to affect real forces, such as the running off of North Sea oil or differential changes in other countries' subsidies, while keeping a firm nominal rate, so as not to accommodate inflationary pay awards."
That is to say, with a non-inflationary higher nominal rate, industry's problems are going to be solved by allowing the real rate of exchange to fall—I repeat, allowing the real rate of exchange to fall. But there is only one way in which the real rate of exchange can fall relative to a given nominal rate; it will fall if, and only to the extent that, money wage costs rise less here than abroad.
How will it come about that money wage costs in Britain will rise less than those abroad by the 15 per cent. or more which the Oxford Economic Forecasters imply will be necessary to compensate for the loss of income from oil? Surely this means that absolute money wages here will have to fall. Do noble Lords expect a popular clamour for wages to be reduced, so strong that the Chancellor will have to allow it to occur? At the best, this is to assume away the problem which baffles all those seriously thinking about how to reconcile growth with price stability.
As to the other sources of compensation for the loss of oil revenues, I do not believe that there exists the potential for growth in export services on the scale required. Nor is it likely that income from foreign investment will rise fast enough, particularly as the accumulation of capital assets overseas will be adversely affected by the reduction in North Sea oil sales.

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I have put before your Lordships my own gloss on the committee's analysis and I have protested, with other noble Lords, that the hasty attempts to commit its report to the waste paper basket, and thence to oblivion, were tendentious and ill-founded. The committee despairingly points out that it is not merely that there is a major political and economic crisis in the offing; it is (I quote),
"that the nation at large appears to be unaware of the seriousness of its predicament".
I do not agree with all the conclusions and recommendations of the committee, but although we may be more or less all right, as the noble Lord, Lord Donoughue, said, for the next three or four years, it seems to me that the committee has correctly drawn attention to serious dangers which lie ahead in the light of which many of the measures in the Government's programme appear rather irrelevant. The implementation of any kind of new strategic plan cannot wait until the coming crisis actually arrives. Some re-thinking is needed now; and the constraints of the electoral calendar must not be allowed to get in its way. That is the burden of the committee's plea in this report, and it merits your Lordships' endorsement.
8.11 p.m.
Lord Hatch of Lusby: My Lords, I wish to confine my remarks solely to paragraphs 184 to 209 of our report on pages 69 to 74 dealing specifically with the problems of manufacturing export trade. When I was first accorded the privilege of appointment to this committee I had a feeling at the back of my mind that in the end I would probably have to produce a minority report. Two factors prevented this. The first was the patience, the tolerance and the sympathy of our chairman, the noble Lord, Lord Aldington. The second was the weight of evidence which, I progressively discovered, had supported the particular interest which has been a great part of my life and the economic ties and the economic relations between this country and the third world.
I found this weight of evidence somewhat surprising. It taught me that my views were not so idiosyncratic as some Ministers and Back-Bench Members of the Conservative Party had been trying to persuade me. Then when I discovered that the noble Lord who has just spoken, the noble Lord, Lord Weinstock, with his great experience of industry, could tell us that the cuts in aid were detrimental to British business and employment, I felt that I must be somewhere along the right track.
When in addition to this Mr. Macpherson of the Association of British Chambers of Commerce had this to say to us:
"Of course, we have to expand to get new markets because, my word, if we do not get into new markets and if we do not ensure that other countries in the world, nations which are not major industrial markets now become so, I believe the whole theory on which we base our economy will begin to fall to the ground",
I discovered that the views that I have progressively held throughout my life were supported by those with a great deal more experience than I have in the industrial world and in the economic life of our country.
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My particular interest, my special interest, in the work of this committee was in the relation between aid and trade and the projection of this interest into the vision that, if we are to become a great trading nation again, the future, or a substantial part of the future, of British overseas trade lies in our relations with the third world. But in examining the industrial witnesses and then, in particular, the Minister and the officials from the Government who came before us, I began to be puzzled.
I cannot understand this equation and I hope that the noble Lord, Lord Young of Graffham, who is to wind up, will perhaps enlighten me. As I understand it, the policy of this Government can be summarised by, first and foremost, (as was emphasised to us by the Chancellor of the Exchequer) the attack on inflation. Now what does this bring, according to the policy adopted by the Government in order to bring down inflation? It seems to rely upon this series of measures: first, a high sterling rate; second, high interest rates; third, low import prices and a consequent high export price. The logical consequence of this series must be high export prices and, therefore, a lack of competitiveness in relation to our competitors. But surely this policy is bound to be detrimental to British industry and to the creation of—and I emphasise this—real jobs, real jobs, as defined by the Government, those jobs which produce wealth.
But, in addition to this, there are throughout the world, certainly partly controlled and partly engendered by the industrialised nations, a depressed commodity market and depressed commodity prices. Of course, that reduces inflation in this country, but what does it do to our manufacturing industry and particularly to our exports? Surely the depressed commodity market, particularly in association with high interest rates, and with a high sterling level inevitably reduces the purchasing power of many of our potential customers. It may reduce inflation here but it quite inevitably shrinks our markets abroad.
My Lords, we were given constant evidence by industrialists in this country of their inability to sell goods abroad. Why?—because of the lack of purchasing power of our potential customers. Here I would refer noble Lords to paragraph 209 in this report. Yet we found also that it is the markets of the developing world that are expanding much faster than those of the developed world. These, then, should surely be the natural attraction to—and I will not exaggerate—not all our exports but to a great proportion of the expansion of our exports which is essential if our manufacturing industry is to recover. As the noble Viscount, Lord Montgomery, has pointed out, when we looked at the comparison of the support given to exports among our major competitors, we found that the Japanese provided in equivalent—not identical but equivalent—terms 40 times as much aid through the parallel to the aid/trade provisions as do this Government. The French provide 20 times as much as we do. How are exporters supposed to compete with those conditions? How are they supposed to provide us with a new thrust to our exporting industry when other governments, our competitor governments, are giving so much more support to manufacturing exports?

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The Japanese, the French and the Germans have recognised that the new world of exports, the new world market, will depend very largely upon the opening up of those markets which have never formed part of the world market before. I refer to the half of the world market that is still closed. They are adapting their policies towards this. Why? It is because they think long and because they are not restrained by the short-term thinking that has been so characteristic of this country, and, in particular, of this Government. They think long and they plan long.
If your Lordships will refer to the paragraphs within the section I have mentioned, in particular in this connection paragraphs 208, 192 and 195, you will see that apparently the Government not only do not realise the disadvantage under which British industry is being put, in competition with its major competitors in these new markets, but they are actually reducing their investment in those very institutions which can help our exporters. As has already been mentioned, there has been a reduction in overseas aid of 6 per cent. per annum since the Government came into office. There has been a reduction in real terms in the financing of the BOTB. There has been a reduction in the number of commercial posts under the Foreign and Commonwealth Office. When we challenged the Chancellor of the Exchequer on this issue his answer was: "But you know what the Government's policy is: it is to reduce public expenditure as a proportion of GDP". The Government have failed to do that. Government expenditure as a proportion of GDP has increased under this Government. What have they done in their failure? Surely it is clear that as the Government have been reducing public expenditure—and I have just given three examples of overseas aid, the BOTB and the FCO—they have been shackling our exporters as against their competitors.
I have put this point of public expenditure to the Government so often, but I have never had one answer over the six years that I have been trying: public expenditure can be a cost or it can be an investment. If it is an investment which is profitable, as has been pointed out many times during this debate, an investment which brings up to 50 times as much in return, surely that is increasing the national wealth. Is this not a use of public expenditure for the benefit of the country and for an increase in the wealth of the country? I am suggesting quite directly that in this field Government cuts have meant a reduction in national wealth and an increase in British unemployment.
These policies, in particular the policy of reduction in public expenditure, have constantly been excused by the Government on the grounds that they are essential because of the world depression. I suggest that, on the contrary, it is this policy which has caused our part of the world depression and which has deepened the suffering in this country during those years of depression. It has cut down on our ability to trade overseas and it has cut down on the proportion of the world market that Britain has been able to command. And so when the noble Lord, or any other noble Lord from the Front Bench opposite, talks about the recovery where do they start? They do not start in 1979; they always start in 1981. Of course you can have a recovery if you start from a low base—one already created in the first two or three years of this
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Government's life. When measured by the slough from 1980 to 1982, yes, it is a recovery. It is better than that, but it is not as good as it was before. I am suggesting that one of the principal reasons for this is the short-sighted, short-term thinking which considers that public expenditure, even when it is investment in wealth creation, is an essential part of this policy and thinking.
I am not alone in this; nor do I need to quote from any document from the Militant Tendency or the Marxist sources that we are told govern our thinking. I shall quote from what was said by the export group for the construction industries of this country. I shall quote from a paper which it has sent to me and I shall quote without comment, because it makes my point as clearly as if it were my own language. Talking about the United Kingdom, it says:
"It is one of only three countries which recorded a negative growth in aid in real terms between 1978–9 and 1983–4, and Britain's negative growth was easily the greatest, with a fall in official development aid of 6 per cent. per annum during this period. Britain's poor showing in aid to poorer countries is compounded by a lack of clarity about aid objectives and effectiveness".
It goes on:
"We need to persuade the Government that there should be a new approach to the aid programme, in considering which the usual short-term thinking in United Kingdom public finance is particularly unhelpful. Britain must recognise less grudgingly the needs of the poor countries and must realise that this is not pure altruism. More generous donors are establishing long-term relationships with beneficiary countries. If we do not understand the need to establish solid interdependence now, Britain will suffer later. This country needs to persuade itself that we can afford more aid because it will be good for Britain as well as for the beneficiary country, and that the return outweighs the aid in a ratio of about 5 to 1 ".
I rest my case on the opinion of an important section of British industry.
I would simply conclude by suggesting to your Lordships that in the nineteenth century British enterprise opened markets throughout the world and it was on this that we based our standard of living and the modern wealth of this country. The new industrial age demands the same spirit in regions which are still languishing in the pre-industrial age. Our industrial exports and our industrial export drive should not be confined to the cut-throat competition in already developed markets. But the Government are raising barriers to this new age that beckons us. They should be stimulating an enterprising vision for this new venture, which is crucial to the well-being of the British people and to their role in the world for the next generation.
8.28 p.m.
Lord Brookes: My Lords, persuaded by some difficulty with eyesight, the lateness of the hour and the fact that your Lordships' patience cannot be limitless, I shall confine my limited contribution to the main thrust of this most perceptive report. In my relatively short time of 10 years in your Lordships' House, I cannot recall a document of greater quality, deserving of a much better reception, as has been said, than it was given at first by the Government, whom I sense to be now engaged in a process of repentance.
That main thrust to which I have referred—and I use harsh words—is the disintegration of our historic, traditional, industrial base, with unforgivable consequences for our once proud, independent people

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in the Midlands, from which I sprang, in the North, in Scotland and in Wales. The serenity and comfort of your Lordships' House is in some marked contrast with the circumstances of a man who looks at a roofless factory—the roof taken off to save paying rates—with windows staring into the night sky. There, as recently as 11 years ago, in their thousands they toiled purposefully, trouble-free; men of whom you could be proud.
Whatever the Government think, whatever your Lordships think, we cannot for much longer evade responsibility for breaking men in this fashion, when—God knows!—they did not deserve to be broken; and I speak objectively, not emotionally and not passionately. Indeed, "hindsight" is a poor weapon with which to berate those who bear the responsibility for "foresight" today. I would therefore say that it is pointless, wasteful and in no way beneficial to seek to blame this Government, or any of their recent predecessors, whatever their political persuasion. If blame there be, and blame there has to be, it lies with industry itself, with the irresponsibilities of trades union extremism, but not trade unions per se. There is a mighty difference between an ancient and noble institution which addresses human problems in depth and those who invade it for most improper and unpatriotic purposes.
I would also blame inadequacies of management which all too often failed, and continue to fail, to distinguish between the responsibilities and privileges of leadership and the pursuit of personal aggrandizement—a past British disease, a current British disease. Too many of our leaders are concerned with their public profile, with their television profile and with looking good, rather than being good; and there is a hell of a difference!
When in 1965 I became chairman of one of Britain's largest engineering companies, I said to the nucleus of the board around me, "My own portfolios will be the men who work for us and the customers who buy from us and you can deal with all stations in between." In short, a good leader needs as his office only the boots he stands up in, because they will take him travelling to the workplace and to the customers. All British management today might well take notice of these words of wisdom from a man who is old in years, but is still young enough in heart to have a go.
The yawning gap which has appeared in our economy—not suddenly—is really the diminishing presence in home and world markets of British finished products. That gap will not be filled, as has been said, by the service industries, particularly the financial sector which services existing wealth rather than generates new wealth. But I sometimes wish that it serviced existing wealth with more delicacy of touch, with a little more refinement of manner, and that it found a little more time to invest in Britain's future, rather than playing around with manipulating existing wealth. That is not a criticism, just a passing comment.
Similarly, the entire concept of the new high-tech. industries—and thank God we have them because some are among the best in the world—has to be minimisation of labour not merely in their own
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industry but in other industries. So we are not going to cure this chronic social illness of this massive amount of unemployment, and the broken pride of people who want a purpose for living, on that front. No, my Lords. We come back to this gap in finished consumer products—not bits and pieces. I draw a marked distinction between things that are put together and bits and pieces with which we are messing about, making too little money and devoting too much money in government grants to not very hopeful enterprises.
I draw a picture briefly to your Lordships of the fact that a gleaming motor car in the showrooms of the world is a cohesive bringing together in cogent form, to address a given necessity and a defined market, but what is it, really? It is a cohesive agglomeration of all the so-called smokestack, sunset and indeed sunrise industries, to which we now attach these tags of convenience. A motor car is a very interesting example.
I have a report here mentioning the motor car industry and it gives some figures. I sense that those figures arise from a motor manufacturer, or a so-called motor manufacturer, because today most of the British motor industry, particularly the multinationals, merely assemble vehicles which masquerade as being British—and there is one hell of a difference there! But if we look at this gleaming motor car from the smokestack, sunset and sunrise industries, how many jobs are there in it? If we start with base minerals, metals, processed metals, components, glass, plastics and assembly, that is all direct labour. In 10,000 typical motor cars, there are 3,000 such jobs, which means that in a viable assembly unit of 500,000 vehicles there are 150.000 direct jobs.
I have not finished there. There is a multiplying factor of 3·8 for all the fringe activities which relate to the sale of a motor car after you have once built it. They lie in distribution, marketing, insurance, financing after-market service and components. If your Lordships question these extraordinary figures, which amount to 500,000 jobs for 500,000 motor cars, their source is the Society of Motor Manufacturers and Traders and its excellent PEIDA report. I was able to get the figures because they are kind to past presidents. I already sense the doubt in some of your Lordships' minds.
There is this appalling motor industry, with its terrible record of industrial strife, but do we have to retreat from our future because of our past? Am I to believe that the trade unions in Britain will not give a better deal to a British concept than they have given to Nissan, in terms of one or two trade unions and the elimination of demarcation lines and of restrictive practices? I never found trades union leaders lacking in patriotism to that extent, and I believe that there are enough of them today to get behind a project of this kind.
The next doubt is what would I use for money. Admittedly, I might find it difficult in going to a City which used to consist at its birth of merchant bankers and merchant venturers, with an eye for an opportunity for reasonable risk capital. Maybe we no longer have that kind of City. If we have, let it prove itself.

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However, some reference has been made in your Lordships' House to the family silver; by the noble Earl, Lord Stockton, I believe. I think that the family silver might be more usefully deployed in the kitchen rather than being kept in the safe. I just float this thought. I was never renowned in my industrial career for being orthodox. Some people thought me irresponsible but I normally managed to make a lot of money and to be consistently successful. That is conceit, if you like but it happens to be true. I suggest to the Government that they give thought to putting 50 per cent. of the proceeds of British Gas into a new National Industrial Development Corporation and let that body be empowered to provide 50 per cent. of the equity for worthwhile manufacturing programmes related to identifiable major products and major markets. I am a right-winger. I am a private enterpriser. But I have no prejudices about the source of capital. Whether it be public money, government money or private money, if it puts people to work and makes profit, then it is good enough for me.
If I wanted a little more money, what about the wonderful gambling and sporting instinct of the great British public? Sydney Opera Houe was built with the proceeds of a continuous lottery. Why not give the British punters a chance? Why not let them subscribe to a long-term raffle—25 per cent. in continuous prizes and 75 per cent. in deferred equity risk capital? All irresponsible stuff, noble Lords may think, from someone who is approaching the years of being a geriatric, but, thank God, does not think as negatively as so many people in this country are thinking tonight.
Our plight is desperate, our problem enormous. It is no good being orthodox. We have to give rebirth to the courage and originality of a people who won the Battle of Britain when no one thought it could be won; to a people who really won the war, because the Americans came in a little late in the day; to a people who more recently have satisfied the longest military supply line in the world to the Falklands at short notice and long odds. We have not gone back so far that we cannot do bold and proud things, but for God's sake let us make some things that matter and make life worth while for our people.
8.42 p.m.
Lord Irving of Dartford: My Lords, on 16th October this year the Report of the Select Committee on Overseas Trade was published. The Government took advantage of the embargo time and took what The Times called "the unprecedented step" of producing an immediate response to the report with a view to limiting its damaging effect.
The Daily Express and the Sunday Times said that the Government were "stung" into responding by the report's forecast of a glum future for this country. Sarah Hogg, the economics editor of The Times, said,
"the report had clearly got under the skin of the Government",
and she added,
"an excellent place to be".
The trade editor of the Financial Times said that the Government were trying hard to muffle the political impact of the report. The Daily Telegraph, more often a friend of the Government than an opponent, said
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that the Government were "protesting too much". However, the great bulk of the press recognised the importance of the report and said that the Government would have to consider it seriously. Only the Daily Mail and Mr. Samuel Brittan, for whom we all have an affection, were really critical of the report. It looks as though the Church is going to get the same instant reply. I think that is rather sad and I hope that in future the Government will not do this and will give us a considered reply which is the tradition of this place. David Lipsey in the Sunday Times pointed out that,
"the Committee produced more evidence than did the Government, 1,268 pages of it, against the six brusque paragraphs of Mr. Leon Brittan".
Mr. Brittan, in his prompt response to the report, said:
"This Report needs to be set in perspective if we are not to get a totally biased and misleading view of the performance and prospects for the economy. The Lords have missed some vital facts: manufacturing output has risen 11 per cent. since the trough of the recession, manufacturing investment was up 39 per cent., profitability up 31.3 per cent. and exports were at a record level".
What is the true perspective? Ministers frequently remind us that we are in the fifth year of a sustained recovery and that the whole economy has expanded by 6.5 percent. since the recession year of 1979. What we are reminded of less frequently is the distribution of this growth. The latest figures from the Central Statistical Office show that industrial production as a whole increased by only 0.3 per cent. between 1979 and 1985. What the Guardian called "this piffling expansion" was more than accounted for by a 17 per cent. increase in energy, mainly North Sea oil.
We are supposed to have had a consumer boom, yet output in the consumer industries is still 5.6 per cent. below pre-recession levels. The balance of manufacturing trade has changed from a surplus of £5.6 billion in 1978 to a deficit of £4.7 billion today. Total manufacturing investment is 20 per cent. lower than it was in 1979. And, of course, unemployment is 2 million higher than it was at that time. That is hardly the encouraging picture the Government suggest.
I concede at once that, in contrast to the instant reaction of the Government, the noble Lord, Lord Young, did greater justice to the report tonight than was done previously. However, the noble Lord was less encouraging in respect of manufacturing industry than I should have liked him to be. The Chancellor said:
"This Government rejects the committee's principal remedy 'that British manufacturing industries should be protected by a cocoon of subsidies' ".
This was the basic theme of the noble Lord, Lord Young. It is clear that the Chancellor either does not understand or does not want to understand, what the report, the CBI, many industrialists, many economists and an increasing number of Conservatives are saying to the Government. It is that, far from wishing to be cocooned in subsidies, what industry is asking for is that it should not be put at a disadvantage in relation to its foreign competitors by the failure of the Government to support it in the way other countries support their industry. It is an extravagant distortion to call this a demand to be "cocooned in subsidies".
As the Guardian said:
"The success stories of the post-war era, West Germany, Japan and France, have never baulked at subsidy or intervention when the need was carefully established by clear market factors".

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As the noble Lord, Lord Aldington, said in his very effective press retort to the Government:
"It is no good the Chancellor saying that companies can export without Government assistance. All our competitors get assistance—we have amassed the facts".

I hope that these facts will be studied.
How can our companies be competitive if they are faced with competitors more effectively supported by their governments than ours? As the report says:
"The Government should step up its support for innovation and exports, identify areas of innovation, take a more aggressive line on unfair competition and, if necessary, use selective retaliatory measures".
Far from wanting to be cocooned in subsidies, we want them to do all the things other governments are doing without which our companies are at a disadvantage, making our exporters' task more difficult, if not impossible. One area where this failure has been evident has been the field of energy. There are a small number of industries—paper (with which I am associated), cement, glass, chemicals, parts of the steel industry and the clay-using industry—where energy represents a high proportion of cost; something like 15 per cent. or 20 per cent. In France and Germany, volume rebates of up to 20 per cent. are available, but there is no recognition in this country of that kind of situation. To give equivalent support to those intensive energy-using industries would not be to "cocoon them in subsidies" but to allow them to compete on equal terms with their foreign competitors in France and Germany.
For years our companies were hampered by an exchange rate of 2.40 dollars to the pound kept artificially high by oil, and high interest rates, to deal with inflation. Competitiveness was re-established but is again being destroyed by unprecedentedly long periods of high interest rates causing a rise in the value of the pound. Those who know will tell you that the Bank of England has been the least active of all central banks whereas Japanese, French and German central banks have been the most active.
There is a note on the tape tonight that there is a fall in our currency reserves and it was speculated that this might be because the money has been used to achieve a reduction in the dollar and to help the British pound. I hope that that is right.
The Government have tended to blame everything on the world recession; but as Sarah Hogg, the economics editor of The Times, has said:
"The main European economies—France, Germany and Italy—with similar structures have not experienced so rapid a decline".
No other competitors—Japan, the United States, or the EEC as a whole—have experienced an absolute fall in the level of manufacturing output as we have.
The noble Lord, Lord Young, spoke glowingly about the Jaguar Car Company and enterprise. I entirely agree with him that that company deserves every credit. However, I recollected that I had listened to the chairman of that company on the radio the other morning. As the noble Viscount, Lord Tonypandy, used to say when he received the Queen's Speech in the Commons, I have for the greater
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accuracy and easier reference received a copy of what was said by Mr. John Egan. It is a tribute to your Lordships' Library to have obtained this on the same evening as this debate.
Mr. John Egan, chairman and managing director of the Jaguar Car Company, mentioned the easier tax regime in Germany. He was asked what the Government here could do to help. He replied that:
"That Government have helped"—
quite generously and properly—
"and made the whole thing possible"—
that is, Jaguar's success. But, he went on,
"they must now look at the fine print of the economy to make things easier for the manufacturing industries. For instance, we had an easy regime until last year with capital allowances which could be written off immediately in the year that you made extraordinary capital expenditure. This has now been removed from us and sterling has appreciated, which has made the job more difficult. Industry lobbying the Government is the wrong way around to achieve this. The Government should look carefully at what is needed and make our task no more difficult than that of our overseas competitors".
The noble Lord, Lord Young, used the Jaguar Car Company as an example of how, without government subsidy and without government help, companies could succeed in the competitive race abroad. It is clear that the chairman of Jaguar does not believe that. I was therefore happy to obtain that enlightenment.
The romantic idea that when the oil disappears there will be a resurgence in manufacturing industry is believed by almost no one who is associated with industry. Markets once lost are hard to recover; manufacturing capacity once gone is difficult to reestablish; failure to invest cannot easily be made good without great cost; and new industries and products need a long period of gestation.
Nor can services and overseas income fill the gap left by the loss of manufacturing industry or the decline of oil revenue. Even the British Invisible Export Council has warned the Government that services will not be able to make good the jobs and foreign exchange lost by declining manufacturing industry. Only 20 per cent. of services can affect exports directly. The loss of £1 of manufactured exports needs £3 of service exports to replace it.
In the debate on the Queen's Speech in another place, Mr. Edward Heath gave a list of major contracts lost because of the failure of the Government to respond in appropriate terms. The noble Lord may smile but I believe that he will eventually have to listen more carefully to what Mr. Edward Heath is saying. Even in high-tech-services we have been losing ground to America.
The Government have always tended to put up Aunt Sallys to knock them down. One is that additional borrowing will automatically lead to much higher inflation. We borrow a great deal already and the Government have allowed PSBR to rise by another £1 billion. However, the test is not so much how high the borrowing is but to what purpose it is put. If our oil revenues had been reinvested and not spent on unemployment benefits, and if a moderate investment in infrastructure had been allowed, we could still have kept inflation low and halted the upward rise in unemployment. After all, inflation in both Japan and the United States has been less than in Britain, while they have kept unemployment lower.

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The noble Lord, Lord Young, spoke also of privatisation. For me privatisation has two dangers. The first is that by changing a public monopoly into a private monopoly, public accountability will be reduced. Secondly, a windfall receipt can never be replaced unless it is invested. Even if it is used for tax reductions, similar amounts will be needed in the future to sustain those tax reductions. The Government have talked about shareholder power. It was noticeable that at the first annual general meeting of British Telecom, the chairman asked shareholders to give him their proxies. That seems less like shareholder power and more like shareholders nobbled.
We are failing to provide the scale of educational opportunity, training and research that is needed to match our competitors. I believe that this Government will in the end be forced to take notice of the report. Unhappily, the cost of delay will become ever higher.
8.56 p.m.
Lord Harris of High Cross: My Lords, the noble Lord, Lord Aldington, gave a spirited defence of the report, which has been generally welcomed on all sides of the House. Indeed, the noble Lord might ponder the enthusiasm it has provoked from some surprising quarters, including my old antagonist the noble Lord, Lord Bruce. The danger of too cosy a consensus may be that it masks or even suppresses conscientious differences of judgment. I hope therefore that the noble Lord and his colleagues will forgive me for presenting a rather contrasting view, perhaps in rather a strong form.
I find it much easier to congratulate the members of the Select Committee on surviving their protracted labours than on the drafting of their report. It is not difficult to find particular passages to approve in so wide-ranging a survey. Indeed, there is something in it for everyone, except perhaps the Treasury. When we read the transcript of the evidence from the Chancellor and his officials we find that some of the cross-examination got very cross indeed. Such was the gloom of the committee that they found little good and pretty well everything wrong about the way things are going.
Accordingly, when it comes to remedies there is such a swamping catalogue of measures, all equally urgent, that the effect is to overwhelm the conscientious reader and even to paralyse action. The noble Lord, Lord Aldington, may recall the dilemma of the shipwrecked sailor in A. A. Milne's nursery rhyme:
"There was once an old sailor my grandfather knew Who had so many things which he wanted to do That whenever he thought it was time to begin He couldn't because of the state he was in.".
Consider what is required, leaving aside the complete change of national attitudes and education—on which in my view, the Select Committee would have done better to concentrate a larger part of their attention, as the best hope of jolting all those reactionaries among the Labour trade union and Tory rustics. Instead of emphasising the need to reinvigorate this culture with more self-help and enterprise, the committee tends to reinforce the national vice of looking primarily to the Government
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for salvation. The Government must, it is said, decree lower interest rates and lower, as well as more stable, exchange rates. The Government must somehow bring about more, better and different investment. And of course the Exchequer must dispense more subsidies dressed up as,
"selective and forward-looking industrial policy".
There is to be more tying of foreign aid, still more help for research and development, and
"measures of support needed by manufacturing industry in general and certain sectors in particular".
There is some call for improved management and marketing with a nod at lower wage increases and higher productivity. But how is all this to be brought about?
What I found lacking was any consistent framework of analysis, much less of market analysis. Instead, we glimpse their model as a kind of hand-and-mouth operated economy with the Government pushing or pulling the right—or the left—levers and showering exhortations on everybody to do better and produce more. But more of what? Alas, they do not exactly specify. Rather than reveal how to pick the winners, the report has an unerring eye for losers. Thus its chosen instrument for the necessary transformation of industry is to be a grand sub-committee of the National Economic Development Council, which after 25 years they acknowledge "has not so far proved to be an effective body".
The Select Committee's almost indiscriminate turmoil of reform is based upon the frenzied fear that the industrial base is more or less about to vanish—presumably into some black hole which is not unadjacent to the Treasury. Their obsession with the narrow trade deficit appears to unhinge their judgment. Our Jeremiahs oscillate between calmly calculated pessimism in the matter of the oil balance and panic with talk about the prospect of "a major social and economic crisis" and "a grave threat" to our standard of living. It was this which made the headlines and accounts for the report running into several editions.
Who would imagine from this rather alarmist assault on Her Majesty's Government that tiny Britain still accounts for one-thirteenth of a massively expanded world trade in manufactured goods? Who would credit that British exports per man employed in manufacturing at just short of 11,000 dollars a year is very close indeed to the Japanese average of 11,500 dollars a year? In view of the hint of scorn for services, notably by quoting Lord Weinstock's nonsense about the beefeaters and the changing of the guard, what reader would guess that Japan also displays a familiar secular shift towards services, with twice as many people employed in these activities as in manufacturing, which is very close indeed to the ratio in Britain. What has robbed the Select Committee of a balanced perspective is that the balance of trade in manufactures has shifted from a surplus into a deficit, though it is offset by still larger surpluses in both oil and services. They have taken no account of the secular or cyclical change in the volume, composition and source of international trade.
I am surprised that the noble Lord, Lord Aldington, should have forgotten Disraeli. Looking ahead way

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back in 1838, that rather shrewd old fox warned in an often misquoted passage:
"The continent will not suffer England to be the workshop of the world".
Yet, however much world trade expands, today's Little Englanders, including the noble Lord, Lord Bruce, seem to expect Britain to maintain a constant share of the multiplying total, as well as to export more services and now oil.
It is surely no mystery why the coming of oil partly displaced the traditional surplus in manufactured goods. As Lord Boardman's persistent questioning of witnesses revealed, the essential explanation is straightforward. The inevitable result of a sudden shift in foreign trade from a deficit in oil of £4 billion to a surplus of £8 billion must be to exert some upward pressure on the real sterling exchange rate. This effect was of course reinforced and even exaggerated by the improved expectations about domestic inflation. The impact of this was bound to hit British exports at their most exposed margin of vulnerability, which was in parts of the long-deteriorating, over-manned, high cost manufacturing sector, as the noble Lord, Lord Brookes, has mentioned.
The good news, touched on by the noble Lord, Lord Hanson, but largely omitted from this report, is that the Government's refusal to go on accommodating rising costs has compelled management to begin using labour and plant more efficiently. As the noble Lord, Lord Brookes, has said, there have been sad casualties and certainly the battle is by no means over. But if we face an uncertain future, we plainly need the maximum of economic flexibility and adaptation, which this Government, after years of cosy consensus, is painfully trying to bring about and in my view they deserve more encouragement than will be found in this report. In my view, further success will be assisted by real reductions in Government spending and borrowing which would allow the burden of income tax and interest rates to be safely reduced.
I must conclude by saying that my own regret remains that this report, on balance, diverts attention away from such stubborn and overriding priorities.
9.5 p.m.
Lord Polwarth: My Lords, I think I am confirmed in my view that it must be enormous fun to be an economist and particularly one of such outstanding eminence as the noble Lord, Lord Harris, who has just enlivened the dying stages of a long debate with something which has wakened us all up, if nothing else. I always admire the immense certainty with which these gentlemen can lay about and demolish their opponents in the total certainty that there is only one view of economics and it is always the right one. My economics were abandoned after one year at Cambridge and certainly I do not intend to follow the noble Lord any further.
Speaking personally, whatever the noble Lord has said about us—which was quite a lot—I think it was a great privilege to be a member of a committee which has produced a best seller, however spurious he may think that production was. But to those who say that we have got it all wrong, I would simply say that our
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conclusions were firmly based on the evidence that we heard and our interpretation of it, and if certain issues were less emphasised than others your Lordships should remember that we were a pretty motley group of all parties and none, and that we achieved a remarkable degree of unanimity (though I gather that that does not appeal to the noble Lord, Lord Harris), that unanimity having been achieved largely by the skilful and devoted chairmanship of my noble friend Lord Aldington.
I personally welcome the switch in Government attitude from the initial, somewhat hysterical reaction to the measured and thoughtful response that we have had today from the noble Lord, Lord Young. We are extremely fortunate to have him with us occupying in government the position he holds, and doing so with his breadth of experience. I entirely acknowledge the efforts that the Government are making to help industry to recover and not the least those initiatives which are under his aegis.
In our report—and this has been echoed by many noble Lords today—is stressed the basic need for a change in national attitudes, which is in fact not the easiest thing to bring about. It is a change in attitudes in industry itself, in schools, universities, families and the community as a whole, not excluding economists and the media men. This need for a change of attitude applies no less in government and the corridors of power. I do not say that politicians, government and civil servants have any animosity toward business and industry, but simply that they tend not to understand it. They tend either under governments of one party to want to get involved in it too much or under another party to stand back from it. I believe that there is still a fixed gulf between governments—and I mean governments—and industry.
What we require under any government is a more purposeful partnership between government and industry—and the results of this may be seen in the success of some of our principal competitor countries. What we have at present is a cultural gap, which I believe results basically from our educational system. My noble friend Lord Clitheroe in his outstanding maiden speech told us of his tussle with his tutors to be allowed to go into science and industry. Had he lost that tussle he would undoubtedly now be at the pinnacle of one of the professions or of the administration, or he might even be a bishop—but what a loss to industry!
Happily this attitude is changing. There is much more recognition of the importance of business and industry at all levels of education. I have seen it from the use of computers in primary schools and the Technical Vocational Education Initiative—I hope that the noble Lord, Lord Young, will find a briefer name for it—right up to universities, where I have some experience of what is going on. I still think that we need a bit of a change of attitude at the top and must do something to try to close the gap. I think I could explain it best by quoting from one of our witnesses who wrote among his comments on our report:
"We would very much lke to see more people at senior levels moving between government and industry and in much larger numbers than hitherto. Politics and the public services are not well inhabited by people with industrial backgrounds, experience and

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know-how. We believe there is a very real need for this area to be developed and that more movement would be of real value and highly relevant to the kind of problems the Committee wrote about".
The trouble is that once committed to a career in business or, alternatively, in administration, our system makes it very difficult to change. One is there for life, or at least, with apologies to my noble friend Lord Greenhill, until as a mandarin one retires or is invited to join some prestigious board where, I must admit, such people tend to make extremely valuable contributions, none more so than my noble friend.
With some at least of our competitors it is very different. The Japanese have a variety of methods of exchange between the two sides. One of them is known as coming down from heaven—from the heights of administration into industry. I would particularly draw attention to the system in France of which I have a little experience. There the ablest young people—those with the ambition to get to the top—go through the same institutions of higher learning and training, regardless of their ultimate career. They all get to know each other's problems and, more important, they get to know each other, and for the rest of their careers they remain largely interchangeable. They know what wires to pull and where, and they cross-fertilise each other's field. I am not suggesting that that can easily be achieved here, but could we not seriously think of creating some institution on similar lines?
I remember raising that point once with a distinguished permanent under-secretary, and he slapped me down saying, "Of course we meet each other regularly at lunches, dinners and cocktail parties"! I submit that convivial encounters at Claridge's or the Athenaeum are no substitute for a training in common understanding and actual exchange of experience. If we can bring about that greater mutual understanding at the top, that will give an impulse to our industrial recovery.
We have been criticised by a number of noble Lords, by government and by some of the media for prophesying doom and gloom. I think that that is a more than slightly exaggerated description of our report. If, admittedly, we have in places used some occasionally trenchant language—for the composition of which we are partially indebted and grateful to our chairman—perhaps we realised that if we were to catch the attention not just of government but of the whole country for this enormously important subject, a little provocation was essential; and the results in terms of publicity and subsequent debate, I believe, fully justified what we said and the terms in which we said it.
The timing of our report is fortunate, quite by chance, in that we are about to embark on Industry Year, and I know that great preparations have been made to blow industry's trumpet in the course of it. Now that the great debate has begun, I just say let us all, whether members of the committee or other noble Lords, whether industrialists and educationists, or even economists and journalists, carry on the debate, and then our labours of the last year will not have been in vain.
9.14 p.m.
The Viscount of Falkland: My Lords, may I first, in this fascinating debate, pay tribute to the maiden speaker, the noble Lord, Lord Clitheroe, who made what was for me a model maiden speech. It was brief, it was to the point, it was courteous, it had humour, and, best of all, it was admirably suited to the topic that we are debating. Here is a noble Lord who has been educated through the traditional systems of our country and who has taken the path so rarely taken today or, indeed, so rarely ever taken, of going into industry. He has been at the sharp end of industry, if I may use that expression. His remarks tonight have been bolstered by other noble Lords who also come from the sharp end, the cutting edge, of industry. I hope very much that when we have further discussions on this sort of topic we shall hear more from the noble Lord, Lord Clitheroe.
The debate began with a forceful and powerful speech by the noble Lord, Lord Aldington, chairman of the committee upon which I had the honour to serve. I shall return to the noble Lord in a moment. As my noble friend Lord Ezra said, these matters really began through an Unstarred Question of his before I joined your Lordships' House. I have been here only a relatively short time. Having joined these Benches, I have been plunged into the thick of it, and I am all the more thankful for that.
My noble friend Lord Ezra had the awareness—lots of people have this awareness, but my noble friend has articulated the awareness—that there was something basically wrong in the industrial and commercial life of our country. He saw that the enormous import penetration into our country and our declining balance of manufactures were going to create a problem which it would be hard for this Government or any subsequent government to cope with. He also foresaw great dangers for the great mass of our people if something was not done quickly. It was through his articulation of those problems that we arrived at the stage where your Lordships sanctioned a Select Committee of this House composed—again I use a popular expression—of a lot of very heavy Members of your Lordships' House. I shall return to that matter when I refer to the powerful speech of the noble Lord, Lord Aldington.
What, then, were the facts that we faced at that time? We faced a manufacturing deficit in 1983 that-has risen to over £4 billion. We have seen import penetration that cannot have escaped the notice of even the most uncommercially minded of our people. Every time that people go shopping this Christmas they will see an abundance of foreign goods in the shops. They will be tempted to buy goods from foreign sources. This development has grown. It has produced the problem that gave rise to today's debate—a debate that we are all thankful to have seen take place.
We had a manufacturing deficit and a situation in which Britain, in the period of a decade, was now producing less than any of the OECD countries except Norway. During that decade Japan increased its output, the United States increased its output, and so on and so on. This state of affairs was largely hidden, as many noble Lords have pointed out, by the balance of payments to which North Sea oil had, of course,

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contributed. This concealed the true situation. The balance was healthy, but within that total picture of the balance the manufacturing picture was a sorry one. The Chancellor of the Exchequer was recorded as saying that the balance of payments had never been stronger and that it was a sign of the growing confidence in the future of the British economy. Some of us took exception to that view.
The Chancellor's reaction to the fact that our output over a decade, as I have described, had declined was to say that our relative decline in manufacturing was nothing new or unhealthy. It is clear that a situation had arisen that needed to be debated. There was need for a debate not only in your Lordships' House, but also on a national level. The problem had to be brought out into the open and exposed to people who were not normally exposed to these matters. I am repeating points which many noble Lords have raised. People had to be exposed to the concept that wealth production, as related to our assets in this country, is an absolute necessity. We have to produce the most out of our assets—not only oil, but also our manufacturing industry, which historically has been that part of our economy which has produced so much wealth in the past and which has been declining for so many years.
The country has become aware of the situation. Not just as a result of the report of the committee, but even before it came out there was a general realisation of the idea that wealth creation as the bedrock of the future prosperity of this country had been neglected by a great majority of our people. It is no good half the country being unaware of the importance of wealth production. Many noble Lords who have been involved in wealth production have said this. The noble Lord, Lord Hanson, who is at the sharp edge of industry in this country, made this point most forcefully. It is no good half the country not recognising the importance of wealth creation. I think that the noble Lord the Minister would agree that it is not unfair to say that within the half who do not recognise this many teachers and those who are responsible for training young people have failed to grasp that basic fact, too. It is the young, after all, who will inherit the mistakes that we make today.
That was the situation which has now been brought before the country. We have had a great deal of debate and discussion on the situation. The reasons for our decline are multifarious. Many noble Lords have drawn attention to that fact. They are social in origin. Referring again to the noble Lord, Lord Hanson, he made a statement with which I would not disagree entirely. The noble Lord said that we started from a position where some of our major industries were nationalised and, as I understood him, there was monumental inefficiency and a need therefore to take these out of the nationalised sector in order to produce the kind of energy and entrepreneurial spirit to set the whole thing in motion.
That may well be true in this country, but in other countries in Europe the great part of these same industries to which the noble Lord refers are nationalised. They do not operate as badly or as unprofitably as ours. I would say that the problem started with an attitude—which we are trying to
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change—which already existed. I turn to the fascinating speech made by the youngest Member of the committee who made one of the most astonishing speeches tonight—the noble Lord, Lord Selsdon. He said that one of the most inhibiting factors in our manufacturing growth over the years was government interference. I suggest that in the nationalised industries in our country we have seen a level of government interference which is unparalleled. In France and other countries, in particular in Germany where we went on our committee peregrinations—if I may use that expression—we found that if one mentioned government interference in operations of this kind, they threw up their hands in horror. The last thing they want in these countries is government interfering with their proceedings. Nevertheless, they want the kind of climate, the kind of encouragement, created by government which gives a unity of purpose. It is this unity of purpose and change of attitude—high sounding phrases but nevertheless the kind of thing which I sense in your Lordships' House—that most of us agree is needed in order to render a change.
I may well be wrong, but I do not think any noble Lord has mentioned my next point, and I have slipped out of the Chamber for only a few minutes during the debate. In this country people seem to be wedded to the idea that efficiency is best promoted by mergers and take-overs. There seems to be an enormous wish for companies to take over other companies, to rationalise in an attempt to carry out economies of scale, and so on. I suggest that if one looks at the record, that has not always been achieved.
We often have a situation where the energy of the take-over and the aggressiveness of the take-over has resulted in a semi-monopolistic situation which in a large concern gives rise to an attitude which has ignored both employees and customers. The idea of take-overs and mergers is not so common in Germany and France; and certainly in Japan it is regarded as a rather anti-social activity.
Many noble Lords have touched on the subject of education, particularly the noble Lord, Lord Plowden; and here I refer to the excellent maiden speech of the noble Lord, Lord Clitheroe. People in this country are not and never have been educated to go into industry. The social reasons for that are touched on in the report. During the Industrial Revolution people who were at the cutting edge and who were the new industrialists, because of our curious social system in this country, wished to gentrify their sons and they sent them to Eton or Harrow or—with apologies to the noble Lord, Lord Aldington—to Winchester, and so on. Their sons were gentrified, went into the professions and ignored industry. I do not think that many noble Lords would disagree with that. How we change that attitude is another matter. Perhaps we shall have debates on that subject; but I cannot find any easy answer to that. I have children who are still at school and I still regard it as a great problem. When Sir Charles Villiers, who I saw in the Gallery today, gave his testimony to our committee, he said that in some educational establishments which he visited and spoke at, he met downright hostility to the idea of going into industry.
Other matters have been mentioned by noble Lords which are all-important and we can debate them

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endlessly. They included the stability of the exchange rate and interest rates. I would suggest that there is lack of support for involving worker participation. I was interested that the noble Lord, Lord Young of Graffham, mentioned the Jaguar car company. Jaguar is indeed a very successful operation, although it is quite small. It is not a business on which we can build the prosperity of our country. However, Mr. Egan has gone on record as saying that one of the main reasons for the success of his new operation has been the level of worker participation in share schemes. That has increased communication within the company which has directly resulted in a product of improved quality and the state in which the company finds itself today. It now has a product which is totally accepted but which only a few years ago one could not sell if one tried. Those are the matters which we have discussed tonight, and if I sense the feeling of the House, we now require a unity of purpose to get away from the "them" and "us" attitude of confrontation, and so on, and to move ahead to a new consensus.
As time is short, I should like to deal with the amazing reaction which the report met when it was first published. It has been referred to in the press generally as a knee-jerk reaction, which is a good expression—I like journalistic expressions of that kind because they have flavour. The response has been referred to as facile, scornful and even frosty—it was certainly all of those things—and there was an immediate attempt to put the report in a poor light. I shall not go into the reasons why they wanted to do so, but that was certainly the case. Today I am very heartened that the noble Lord, Lord Young of Graffham, has come here with a much more conciliatory and, from the point of view of those of us on these Benches and those of us who served on the committee, acceptable approach to the report. I sense that there is a wish, although it may not be stated, to adopt many of the ideas expressed in the report from that committee.
For the Chancellor immediately to say that on the whole the report did not form a helpful contribution to the debate was absurd. The debate was going on before, it has gone on, we have had a debate here tonight, and the debate will continue. One would hope that out of that debate will come something on which we can base a more prosperous future.
The Paymaster General went on record as saying that the evidence chosen was highly selective. That is absurd. Look at the numbers; the 120-odd bodies which submitted written evidence and the 35 people who came and gave oral testimony. How anybody who has read it can say that it was selective I do not know. What motives are there to have a selective report? It is ridiculous.
Some people said that it was interventionist. I do not think it is. All one is talking about is a change of attitude. The noble Lord, Lord Young of Graffham, would certainly agree that we need a private sector on which to build the kind of entrepreneurial spirit required. The private sector does not want dirigisme or anything of that kind, or interference by government.
There was an unfortunate happening last week on a programme devoted to political subjects where a Government Minister spoke when the subject of this
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committee came up. It was on the subject of our manufacturing imbalance. He mistakenly launched himself—perhaps it was late in the day and perhaps he had indigestion, I do not know—into what I can only describe as an uncouth and unseemly attack personally on the body of that committee. That was not worthy of either him or the government of which he is a part. I feel much mollified tonight by the approach of the noble Lord, Lord Young of Graffham, and so I shall skip over that.
That leads me to the committee. I am the second youngest member of this Select Committee. I am certainly one of the least distinguished members. It is a heavy-weight committee. Most noble Lords who serve on it have a considerable and distinguished public service record.
One of the benefits of coming into your Lordships' House in the natural order of things when a close relative becomes deceased is that you arrive here in middle age feeling rather tired and weary. Suddenly you find that you are rather young. If any noble Lords are golfers—and I know that the noble Lord, Lord Aldington, is—and when you came here you are not hitting the ball so far, I can tell them that I have been so heartened by the reception I have had in this House that I feel much younger and am driving the ball a good deal farther.
I was honoured to serve on this committee and I wanted to pay tribute to my colleagues because I was so impressed with the committee. I had never served on a committee of this kind and I was very impressed by the dedication, expertise, and the time and energy which they devoted to it. This was all spearheaded by the tireless efforts of the chairman, the noble Lord, Lord Aldington. I have been on many committees and seen many chairmen, but I have never seen anybody who dealt with witnesses and committee alike with such fairness and such energy and enthusiasm. I should like to put that on record because it needs to be said. Some noble Lords may think that I was perhaps extravagant about that, but I was prompted by the initial reactions of the press, and some of the other matters I have mentioned tonight, to underline how tremendous the conduct of that committee has been.
It has been a great exercise for me personally. I was most interested tonight that the question of ages should have come up. If the average of the committee was 65, I am well below the average age, and one wonders if you took the noble Lord, Lord Selsdon, and I out of it what the average age would have been. I dare say that we shall find that out in due course when we work it out in the Library on the back of our Order Papers.
That is the situation. It has been a wonderful debate and I think that all those on these Benches whom I represent would agree that it has been a wonderful debate. A great deal needs to be done. We are all behind the recommendations of the report. However, one has to be fair; some of the recommendations could have been a little sharper but time was limited. The cultural aspect will be difficult, but we must achieve the sense of purpose which has been recommended by your Lordships tonight, the energy and the kind of understanding that is required, and realise the dangers that are faced if we do not reach the standards which are needed in competitiveness, inventiveness and

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industry. If that message is not got across then our descendants will have a sorry time. We have started something rolling and I am optimistic enough to feel that when the noble Lord, Lord Young of Graffham, speaks in a moment he will give me something more encouraging to go to bed with.
9.36 p.m.
Lord Stoddart of Swindon: My Lords, the easiest and most pleasant duty I have to perform tonight is to congratulate the noble Lord, Lord Clitheroe, on his excellent and apposite maiden speech today. We were interested to learn of the experience he had in his early days. He will know that had he lived in Japan his tutors there would have described him, because he wanted to go into industry, as a first-class and honoured student. Perhaps that is the reason why Japan is doing so well and we are doing to badly in manufacturing terms. The speech was excellent and I sincerely hope we shall hear from the noble Lord on many occasions in this House, not only on this subject but on many others as well.
I had the honour of serving on the Select Committee. It was indeed a rewarding and fascinating experience. The chairman deserves our congratulations, not only on the way he presented the report tonight but on the manner in which he directed and handled the committee's remit. Also I congratulate him on his diplomatic handling of the members of the committee, all of whom had some industrial experience and some of whom had a great wealth of it. I am certain he did not have an easy ride.
I saw that one newspaper described the report as "the Aldington report". If they had seen the committee in operation they could never have written that because the noble Lord certainly did not have an easy ride with the members of the committee. There were some difficult situations which the noble Lord successfully defused through his charm and openness. But he was a hard taskmaster. He had to be to get the report out on time.
I have served on many Select Committees in another place, but I can safely say that this committee was the hardest worked in my experience. The report and its favourable reception by industry, most commentators and the general public has justified the long hours of dedicated work put in by all the members of the committee and, in particular, the chairman. I should have liked to be able to say that the Government welcomed it as well. But, of course, I cannot, and I shall come back to that later.
However, I should like to say to the noble Lord, Lord Young of Graffham, that we were somewhat pleased that his attitude today was rather different from that of his colleagues in the Cabinet in their first reactions to the report. His approach was certainly softer and more understanding. Nevertheless, I rather fear that he still has not got the message and I hope that at the end of this debate the message will be clearer to him.
For example, I hope that on the question of manufacturing industry and the future for manufacturing industry, he listened to the noble Lord, Lord Weinstock, who, in spite of his brief encounter with the House today, nevertheless made remarks and
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gave statistical evidence which really must make the noble Lord and the Government think.
Also, in relation to the decline in our oil revenue, the noble Lord, Lord Kearton, was a member of the Select Committee and is also one of the foremost experts in oil matters we have in this country. He is a former chairman of BNOC, and he has to be listened to with great respect on matters of oil and its likely life for this country. I hope the noble Lord, Lord Young, will have listened to many of the other contributions to the debate besides the two I have mentioned. I hope he will have listened to the speech made by my noble friend Lord Hatch of Lusby, because he understands perfectly—I repeat, perfectly—that if we go on allowing other countries to get business that we should be getting because of our failure to support our own industry, then the decline in manufacturing industry will go on apace.
It is no good this country playing by the rules while every other country in the world ignores those rules with impunity. The Government have the duty to look after British industry and British people. To do that, we must ensure that other countries are not allowed to offer conditions which we are not prepared to offer in the matter of trade.
I will say one other thing to the Minister. He boasted of Jaguar. He boasted of the progress that Jaguar had made since it was denationalised. However, you know, I have to remind the noble Lord, Lord Young, that, but for BLMC being taken into public ownership in 1976, there would have been no Jaguar to privatise at all. Thus, in actual fact it was public ownership which saved Jaguar, not privatisation. Indeed, the reason why Jaguar went through a difficult period was because of the high exchange rate policy pursued by this country in 1979 to 1981.
I am speaking tonight for the official Opposition and I have to say that we welcome the report as a significant contribution to the debate about Britain's role as a trading nation in pointing towards the reasons for the decline in our position and highlighting the urgency of dealing with the serious loss of manufacturing capacity before the exportable surplus of North Sea oil comes to an end in the early 1990s.
I have to say that it was certainly not the wish of my Labour colleagues on the Select Committee, any more than it was the wish of non-Labour members, to produce a report deliberately designed to embarrass the Government. Indeed, how could such a report be produced by a Committee constituted of four Conservatives, three Labour, two Alliance and two Cross-Bench Members of your Lordships' House? What we sought to do was to produce an honest, forthright report, based on the evidence which was put before us by a wide cross-section of industrial and commercial life, as well as by the Government and experts in the field of finance and economics.
The committee produced such a report. I was shocked by the instant, surly and ill-informed response to it by the Chancellor and the Secretary of State for Trade and Industry. I can only assume that their instant condemnation of the report, which clearly they had not properly read and certainly had not assimilated, was a reflex action in seeing the report as yet another banana skin that would send the

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Government skidding once again on to their bottom. I suppose that there was some excuse for Mr. Brittan. He was a new boy. But nothing can excuse the Chancellor of the Exchequer for his boorish treatment of the report and your Lordships' Select Committee.
I have known the Chancellor for some long while, but the Mr. Lawson I used to serve with on financial committees in another place was a different character from Mr. Lawson the Chancellor of the Exchequer. In those days he had a sense of humour, but now he seems to have lost the ability occasionally to laugh at himself. Now he has become a very serious fellow indeed and, as I say, he has lost the ability to laugh at himself.
He is convinced that he, and he alone, is right and he will brook no criticism of his policies from any quarter. Yet it was the attitude and the complacency of the Treasury which worried the Select Committee most of all. The view of Treasury officials and the Chancellor himself was that inevitably, as North Sea oil revenues rose, other parts of the economy would have to decline, and if it were manufacturing industry that had to take the brunt, so be it. That is what worried the Select Committee. According to the Chancellor, nothing was lost since service industries would expand to take the place of manufacturing and, in any event, as North Sea oil revenues declined, the pound would appreciate in value, thus making exporting more profitable which, in turn, would resuscitate the manufacturing industries.
Many noble Lords tonight have undermined that case of the Chancellor of the Exchequer and we know perfectly well that it simply is not the case that manufacturing industry, which needs long lead times, can be resuscitated and rebuilt in such a short time scale.
Lord Bruce-Gardyne: My Lords, I am grateful to the noble Lord for giving way and I apologise for intervening. Can he clear up something which has worried me a lot throughout the debate? I was hoping that he would be able to enlighten me on it. Is it the stance of the noble Lord and of his colleagues that, in fact, the nation's payments need not balance, and how is that to be explained in international trading terms?
Lord Stoddart of Swindon: My Lords, I shall come to that point in a moment. Of course, there has to be balance; although as it happens—and, indeed, this has been mentioned—the Japanese appear to be able to run a trading surplus of about £22,000 million a year and it does not hurt them at all. It does not hurt them, first, because they have invested heavily in their own industry and are therefore able to export goods and capital as well. They are able in fact to do both. We are doing only one. We have exported some £60,000 million worth of capital, but unfortunately we have not ploughed the capital into our manufacturing industry, which gives us the other side of the equation; in other words, a strong manufacturing industry, as well. But, as I say, I shall deal with that point in a moment.
As I have said, it is not possible overnight to rebuild manufacturing industry and, as the noble Lord, Lord Weinstock, pointed out so succinctly regarding services, what is there left to service if you have no
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manufacturing industry left? Certainly the export of services could not compensate for manufacturing exports, as was pointed out by the Invisible Exports Council.
The Government say there is no alternative to their policy but in fact there are several. I will not go into all of them: some have been mentioned by other speakers. The noble Lord, Lord Ezra, and other noble Lords have mentioned other alternatives. Certainly there was another alternative—and this is where I deal with the noble Lord's point—our oil depletion policy could have been quite different. Since we have said in the report that the exportable surplus of oil and our oil revenues have helped to cause the manufacturing industry overseas deficit, let me deal with that.
Depletion policy could have been adjusted to produce a smaller exportable surplus over a longer period of time. That in turn would have taken pressure off manufacturing industry—oh yes, indeed it would—and it would probably have maintained a more stable pound at a lower level against other currencies. That in turn would have made our goods more competitive. Unemployment would therefore have been lower and therefore loss of tax revenues from lower oil production would not have been a serious problem, since unemployment benefits and social security payments would have been lower. Norway, which has a larger amount of oil than Britain, seems to have managed its affairs far better than we have. Norway has a much more balanced economy than we have and the unemployment rate is below 4 per cent. I cannot escape the conclusion that the Government by their policies have sacrified the long-term interests of Britain to short-term expediency and the consequences, as the Select Committee pointed out, will be serious and long lasting.
His Royal Highness the Prince of Wales in a recent speech was worried that Britain would become a fourth-rate country unless we took action to reverse present attitudes and trends. I have to tell your Lordships that evidence given to the Select Committee by one famous engineering firm predicted that Britain's standard of living would be reduced to that of a third world country unless present trends were reversed. Compared with that gloomy prognostication, His Royal Highness is a super-optimist.
The Select Committee made several recommendations which it believes will halt the undoubted decline in Britain's role as a trading nation. Most, if not all, have been referred to in the debate tonight. I think the debate has been an excellent one, and I certainly do not intend to go over that ground again. But the committee must be right when it draws attention to the damage which has been done to manufacturing industry by tight monetary policy, which has led to an overvalued pound abroad and to excessively high interest rates at home. The Opposition would agree that conquering inflation was and is a necessary component of better competitiveness, but it is not the only component, and indeed the fanatical pursuit of this single objective has weakened our trading position, caused mass unemployment and encouraged a flood of foreign imports. I hope therefore that the Government will take particular heed of the committee's recommendations on exchange rates and interest rates and that

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they will also do more, not only by exhortation but also by positive purchasing policies, to assist British industry to substitute home-produced products for imports.
I turn now to the question of national attitudes, because this was the recommendation which led in the committee's report. The national attitude is indeed of vital importance. All would agree with that. But we must understand that this applies to all of us, not to just a few. It applies to Government, Peers of the realm, Members of Parliament, political parties and owners of industry, as well as to those who work in it, and shareholders and wage and salary earners.
The Government must, for example, put British interests at the top of their priorities and set their international obligations in the context of what is good for Britain and British people. They must certainly seek to heal the divisions in our society; divisions between North and South, divisions between rich and poor, divisions between the well housed and the badly housed and divisions between those in work and those who cannot find work. This is the task of government, to weld the nation together by engendering fairness in society, which in turn will produce an attitude of mind among the people that Britain is a place worth living in and working for, and a place where everyone has a significant stake in success.
In industry high level management must not preach wage restraint to their workers while awarding themselves pay rises many times greater in percentage terms than they award to those whom they employ. Investors must look not for quick, easy and excessive profits, but to the long-term investment in industries which must provide the basis for our future prosperity.
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We must, in fact, change the national ethos to encourage the people that there can be no higher calling than making goods for use, and that trade is an honourable calling and not one that should be despised.
In industry itself workers on the shop floor have to be treated as a vital element in production and made to feel that they individually are part of and have a stake in the enterprise, not only through good wages, security of employment and good conditions of service, but also through management listening to and using their ideas for the better performance of the enterprise. Management does not have a monopoly of talent and ideas. There is a wealth of both on the shop floor which is largely untapped, because of the all too prevalent attitude of "them and us". Real involvement means having a voice at every level, including board level, where vital decisions involving livelihoods, conditions and continued employment are so often taken. That is what I believe the committee meant when it spoke about national attitudes, and I hope that we shall certainly take that recommendation very much into account.
As I said earlier, the Select Committee's report is a valuable contribution to the debate about our future as a trading nation. The debate tonight has added a further dimension. It has been an excellent debate. I hope that the Government, spurred on by this debate, will take the report's conclusions to heart and act upon them, even if this means throwing overboard some of their cherished economic theories. I believe that if they do so, there is still hope of avoiding disaster and of rebuilding Britain as a formidable manufacturing and trading nation.
9.58 p.m.
Lord Young of Graffham: My Lords, the debate today has considered vital issues for the future of our country. Perhaps I may say that the House owes a debt of gratitude for the labours of the members of the committee, all of whom spoke in today's debate, and particularly to the chairman of the committee, my noble friend Lord Aldington. Looking back over some seven hours of debate, a number of themes ran through it. Many of your Lordships have been concerned about attitudes, about our culture and about the attitude of the nation; not, if I may make so bold as to say so, in the way which the noble Lord, Lord Stoddart, stated, but about the attitude to wealth creation, the attitude to industry and seeing a proper respect in our society for the way in which we create wealth as well as for the way in which we divide it up.
That led on to the second theme of how we translate that attitude to our young people and to our society, which is done through the world of education. I suspect that few governments have been more concerned with the problem, and across the whole range of issues I suspect that few have done more. The simple truth is that the problem goes back 100 to 150 years and I doubt whether it can be cured in five years. But what I do know is that if it is not cured, our future will not be very good. I can assure the House that the Government take the problem particularly seriously and will do all they can to cure it.
The other main theme, I say a little unhappily, was the initial reaction of your Lordships this evening to the first Ministers who spoke of the report, and, if I may be so bold, not enough consideration was given to the actual words which I hope I used in my opening speech. There is much in the report with which the Government can agree but there is also much with which the Government cannot possibly agree. Much of it goes with a study of economics. We have heard from many economists tonight—some professional, many amateur, but few agreeing and all having their different slant on interpretation.
The noble Lord, Lord Bruce of Donington, started off by saying that we on this side would regard consensus as a dirty word. Consensus is not an abstract virtue. It does not exist by itself. I suspect there is a considerable degree of consensus among lemmings as they go over the edge. It perhaps existed many years ago in the rally at Nuremberg. No, my Lords, what we must have is agreement about the right things, not a forced consensus that takes us down the wrong path.
The noble Lord complained that we should spend £20 bilhon on infrastructure. I cannot think of anything worse for industry than taking £20 billion out of our total economy and putting it into an area where already——
Lord Bruce of Donington: My Lords, perhaps the noble Lord will allow me to correct him. I said no such thing. I pointed out that there was £20 billion arrears of work in that field. I did not say that the Government should spend it now.
Lord Young of Graffham: My Lords, I am always pleased to be corrected by the noble Lord, but the theme was there, that we should somehow go back and spend money on infrastructure. But that is not the point that I wish to argue tonight; nor the fact that as a Government we are spending more, and more where it is necessary to be spent, on infrastructure.
The noble Lord, Lord Ezra, pointed out the obsession we should have with quality and design. Perhaps I may pick up a theme which ran through many of the contributions of the noble Lord about the Jaguar motor car. I use that as an illustration to show that the change in that company's fortunes came not because there was a new product, not because there was new technology, not because there was new massive capital investment, but because of simple old-fashioned virtues called quality, delivery and price. I drew the parallel that those simple old-fashioned virtues lay at the heart of what this debate is all about and that if we have the right products, if we can deliver at the right time and if they are of the right quality, the world will beat a path to our door. And if they do not, no amount of exchange rate, no amount of Government subsidy, no amount of any assistance that came up would actually help the situation.
I congratulate the noble Lord, Lord Clitheroe, on his maiden speech today. If he went swimming today he certainly swam very quickly to the other side and I hope he comes to swim with us on many occasions in the future. It was not so much his maiden speech but the content of what he had to say with the concentration again on national attitudes that struck a chord with us all.
The noble Lord, Lord Hanson, pointed out in a commendably brief contribution that the commanding heights were nationalised and, as a result, excessive transport and energy costs have had to be borne over the past 30 or 40 years. It is not that some industries were nationalised and other countries put them worse. Throughout this period of managed and studied decline—the past 40 years—we have consistently gone through nationalising our industries and, I suspect, as a result of what we have seen them do, giving ourselves more and more hurdles to clear. On the happy day that British Gas is restored to the private sector will the balance between the public and the private sector be the same as that which existed during the administration of the noble Earl, Lord Stockton. To show your Lordships how far we have come, despite all of our privatisation, only then will the balance be restored. Public ownership is something we have tried and it has not worked, but we can see that the alternative is working.
The noble Lord, Lord Greenhill of Harrow, commented that the standard of living will be put at risk if collective action is not taken at once. Nothing that I see shows that our collective standard of living is being put at risk. The noble Lord said also that the Government have belatedly realised the value of overseas missions and he congratulated me on going to China. It will be the second time this year that I have been to China. I doubt whether many governments and many administrations have sent so many of their Ministers on trade missions with the idea of selling, to

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get new business for the nation, as have this Government. I shall be taking a number of business people with me, as I did last time. I hope that we enjoy equal success. Indeed, some of my colleagues have only just returned from another visit.
It is important that government demonstrates the one simple fact that the wealth of this nation turns upon our creating and selling goods. This is something which has run throughout our debate. The noble Lord, Lord Kaldor, said that the report was a watershed. I believe it is. I believe it will be seen that our recovery will accelerate a long way. The noble Lord said that Britain had inherited a long tradition of noninterference in industry and business. You could have fooled me, because it seems that most of my adult life I have seen nothing but a very long series of interference—national plans and all kinds of other plans which, alas, went the way which most plans go.
The noble Earl, Lord Limerick, said that he worried about the Government sitting down and making an action plan about the direction in which we should go. It is true that we have lost market shares. It is true that we have lost jobs in manufacturing. It is true also that we have had imports coming into this country. But there is hardly a nation of the industrialised world which has not lost a substantial number of jobs in manufacturing, has not lost them consistently in the years since the war, and, what is more, which does not look like continuing to lose them consistently for decades to come.
What is important is that we should have productive industry as wealth creation. If there is an analogy—albeit an imperfect one—it is simply that at the beginning of this century 30 per cent. of the employment in this country was in agriculture. Today it is 2·5 per cent. and we produce between five and six times as much food. It is an inevitable change of life.
We had a period in which manufacturing industry provided a large percentage of the employment in this country. That used not to be so. There was a time when 80 per cent. or 90 per cent. of the employment in this country was in domestic service or agriculture. There may come a time when the largest percentage of employment in this country is back in the service sector. That is the change we must go with, and we must facilitate such changes.
It is no use looking back and saying that there is such a difference between manufacturing service and non-manufacturing service. They all contribute. I felt a great sense of culture shock when the noble Lord, Lord Shepherd—who has apologised for not being able to stay until the end of this debate—commented about this country emerging from a "deep recession". I am not sure that we live in the same world, because every financial indicator I see, save one, shows that this country, which for 12 long years has had the lowest growth rate in the whole of Europe, has since 1982 invariably been top—higher than the United States of America. It will have a growth rate of 3 per cent. to 3·5 per cent. coming in the next two years.
One indicator that is not good is, of course, unemployment. During the same period we have had to cope with a fast-expanding workforce. Even then, I
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hope that we can see our way through to a situation in which jobs increase at a pace, which would ameliorate this terrible scourge on the land.
The noble Lord, Lord Selsdon, was suitably robust in his view of public expenditure. He recognised that the erosion of manufacturing base had been halted. Of course, it is an erosion of the base; it may not actually be an erosion of the number of people employed in it as the years go ahead.
The noble Lord, Lord Whaddon, paid a tribute to the small firm sector, which I believe to be of the greatest importance to the future of the nation. If we look back to the time, say, when I went into the Department of Industry, in 1980, what appeared to be so clear from a survey we conducted was that for 20 to 25 years we have had the lowest birthrate for new firms in the whole of Europe.
What we need today are those one- and two-man firms that should have started 10, 15 or 25 years ago and which today would have been producing wealth and employing people. We will have them. We will have them in the 1990s and in the next century because they are starting now and growing up fast and many of them will be in manufacturing. What we must always avoid is to say that these are the sectors which we must preserve, because the sectors of tomorrow are unknown to us today. The only certainty about tomorrow is that it will be different—nothing else.
I welcome the contribution of the noble Lord, Lord Donoughue, who I suspect once again tended to confuse the service sector with the service sector dependent on manufacturing. There are many large areas of services which are not dependent on manufacturing, nor indeed dependent on the City—and I include tourism and many other activities of that sort. The noble Lord recognised the difficulties in the educational system and accused the Government of not planning. This Government believe in planning, but they believe in a different sort of planning. We are planning for low inflation; we are not planning to pick winners. We are doing it on the best of all possible grounds, looking at the records of all governments that this country has had since the war, where their ability to pick winners has been amply demonstrated.
The noble Lord, Lord Bruce-Gardyne, talked about the rude, hard world and gave us his common-sense. He questioned the value of the Government's investment at Nissan but seemed to accept that the Government's efforts for overseas trade were quite respectable. I find it difficult to see the difference: one either accepts both or neither. I certainly accept his views on increasing tariffs in Europe and protectionism. It is another theme which has come through. I hope your Lordships will accept that we must do all we can to resist the drive down the road toward protectionism if we wish to have any industry left and a good standard of living.
I appreciated Lord Kearton's masterly overview of our oil reserves in the North Sea. I hope that the noble Lord will accept that somehow as time goes by the reserves seem to be more and more, and I suspect that when we come to look at them in five or seven or 10 years' time we shall find that there are other reserves

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and there will be other situations. Time alone will answer that question.
That does not change the picture in the slightest because it is a finite resource and the end of the road must come one day. One of the advantages of this sort of debate is that it succeeds in flushing out all the engineers in your Lordships' House. I welcome the contribution of the noble Viscount, Lord Montgomery. I am interested in his views on ECGD and also his views on soft loans. If I may take a business analogy, it is one thing to make a profit in a subsidiary company but not if the holding board has to make up the loss. If you look at the United Kingdom as a PLC, to give it soft loans is a cost to the nation. The fact that a particular subsidiary may make the profit is another matter.
Therefore I think that it behoves government to look not at individual transactions but at the total cumulative effect, as I am sure the noble Lord, Lord Weinstock, would do if one of his subsidiary companies wished to engage in a transaction and asked for a subsidy.
I recall that many decades ago I used to buy radios and televisions at a company that I then worked for, and the noble Lord was then, as ever, concerned with delivering quality. He complained that the quantity of imported manufactured goods rose too fast. That is the decision not of the Government but of the purchasers. They made that decision, I suspect, for the best possible reason, but it was the most difficult reason for British industry. The goods were simply better; they were designed better and went better. I suspect that the great influx of foreign cars was not merely a matter of price. At least that is my experience.
The noble Lord gave us a lecture on economics.
Lord Weinstock: My Lords, will the noble Lord accept that there are cases where it is a matter of price? The most recent example that I can think of is the importation of electronic scales from Japan. The Common Market authorities decided there was dumping in this country to the extent of 40 per cent. I believe that a duty of 23 per cent. has now been imposed after many months' delay. We have been waiting for over three years to get approval for our scales from the weights and measures authorities in Japan. That is the sort of matter of which I was complaining.
Lord Young of Graffham: My Lords, I recognise the strength of the noble Lord's argument on that matter, but, generally speaking and taken across the piece, it is the difference in quality and design. The noble Lord gave us a lecture on economics which I must confess that I did not follow, but I shall read Hansard. The point that disturbed me was immediately approved by the noble Lord, Lord Hatch, and so I shall read both speeches with considerable worry!
The noble Lord, Lord Brookes, cast what was perhaps an unfortunate glance at the City. I hope very much that it will respond and that there is no shortage of finance, and so on. He again talked of designing a
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car and the employment potential that that has. There is no question about it; if we could make all our own cars, we would not suffer from unemployment in this country. We import half of them. Noble Lords may ask why. I suspect that again one comes back to quality and price.
Lord Stoddart of Swindon: It is 60 per cent., my Lords.
Lord Young of Graffham: It is half or thereabouts, my Lords. Again it is a decision made by individuals in the market place. It is only by making such decisions that we shall restore the state of our industry. I shall not refer again to Jaguar, but that was a simple decision. It was exactly the same. It had nothing to do with government money and, if I may say so, nothing to do with share ownership. It was simply to do with quality.
I was vastly entertained by the noble Lord, Lord Harris of High Cross. I promise him that the next time I pass the Treasury I shall look carefully for the black hole. I do not find his economics understandable, but then I was a lawyer and I have never understood economics. But I accept the spirit of his contribution and my heart is certainly with him.
The noble Lord, Lord Polwarth, pointed out one immediate and excellent result of the report of your Lordships' Select Committee on Overseas Trade—it became a best-seller. That is showing the right spirit, and I hope that it continues to be a best-seller. Once again he offered the suggestion, following the French concept, of having an interchange between industry and culture and going back to education. I suspect that that would be considered too elitist by noble Lords opposite. I do not necessarily think that it is. One of the defects and troubles of our society is that we have been too scared of having an elitist educational establishment and elitist concepts. Our competitors do not suffer from that inhibition. I think that it is a point well worth considering.
The noble Viscount, Lord Falkland, brought home what seemed to me the one essential theme of the report and the debate—that wealth production and wealth are necessities. If we look at where we are going, we must realise that wealth production and creation are concepts which our society should not be ashamed of and which should be accepted by our schools, teachers and all who live and work with us. I suspect that it is a fundamental difference between our society and the society of the United States. We may speak the same language, but we have different concepts and certainly a different concept of wealth creation. Let me offer the noble Viscount a word of advice. Late night television may not be good for the spirit. I find that I sleep better if I do not watch television too late at night, particularly when it is a political programme.
Finally, I hear the message of the noble Lord, Lord Stoddart. I assure him that I can accept much of the report but, with the best will in the world, I cannot accept it all. I do not believe that it has undermined the case of the Chancellor. I believe that there is a natural balance, and when in the fullness of time oil revenues go industry will be seen to come back.

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We have exported capital. Let me give the figures for a few short years. In 1974 our net overseas assets were £2·5 billion; today they are £73·5 billion, which is an enormous increase. Incidentally, I suspect that when the oil begins to run out we shall find that the dividend income from overseas investments will largely begin to compensate for that. It is a natural and very necessary way in which we have compensated for the oil. It has not, despite the mythology, been wasted on unemployment pay, as noble Lords opposite often claim. It has been invested for our future and for our heritage.
I believe that we have had a first-rate debate. I should like to give your Lordships an assurance. It is that we shall read carefully all the contributions made to the debate. We will read the report again, and so far as we can, we shall follow its recommendations.
10.20 p.m.
Lord Aldington: My Lords, it falls to me to bring this good debate—for good I believe it has been—to an end. Before doing so, I should like to thank very much all those who have taken part and to thank noble lords on all sides of the House for the many undeservedly nice things they have said about me. They were quite unexpected. I am glad to note that my colleagues clearly still remain my friends. That is rather remarkable after all that we went through together. I thank them, too, for their speeches today which have greatly enriched the House's understanding of the report.
I think I am allowed to express my special thanks to my noble friend behind me, Lord Clitheroe, for choosing this debate for his maiden speech and to congratulate him for his apt, humorous and beautifully delivered speech. Like others, I look forward greatly to hearing him on many occasions in the future. It was the perfect example, I thought, of a maiden speech and also a perfect example of a first-class man who when quite young decided to go into industry. He has made a great success for himself and for the firm for which he worked. It is exactly that which the report, in one of its recommendations, seeks to encourage so many people to do.
My colleagues will I think agree, and the House I hope will agree, that this should not be the end of the matter. I am not going to argue with my noble friend
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the Minister, but he stressed several times that there is much with which the Government cannot agree. It will be my task over the next year to see that all those things to which the Government say now that they cannot agree become things in due course with which they do agree. For that is, I believe, what will happen.
How should we keep the matter going? I said in my opening speech that I had received many comments of great interest which we have studied. We ought to be allowed to study them as a committee, and they ought to be published, just as the Government's contribution ought to be published. The CBI has written a very interesting comment; so has the TUC. Both those organisations asked that this committee should remain in being. That will make some of your Lordships very suspicious.
I thank all your Lordships once again for the debate. I leave with a measure of satisfaction but with the feeling that there is much more to be done if the country is really to be enabled to face up to the true situation. I hope that my Motion will be accepted. The Motion is that the House takes note of the report.
On Question, Motion agreed to.
House adjourned at twenty-four minutes past ten o'clock.

  HONG KONG: RIGHT OF ABODE
  HONG KONG: RIGHT OF ABODE