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recruit joins the union shortly after starting the job. In such a case, the victim of the post-entry closed shop can go to an industrial tribunal with a claim for unfair dismissal.

As I said in my December statement, I believe that the time has now come to act against the pre-entry closed shop. I am publishing today for consultation a Green Paper which for the first time gives a similar remedy to anyone who is excluded from a job because of the pre-entry closed shop.

At the same time, we need to recognise that bad industrial relations can also provide a major obstacle to employment growth. Strikes export jobs to our competititors. In the 1970s, this country lost on average 13 million working days a year because of strikes. At this time 10 years ago, we were in the immediate aftermath of the winter of discontent which did so much damage to the reputation of this country.

Working days lost through strikes are now down to about 3.75 million a year. The number of working days lost in January of this year was the lowest in any month since August 1940, but although the position has improved, there are still areas where I believe that action should be taken.

We are particularly concerned with secondary industrial action. Although the 1980 Act took important action in this area, the position remains that as the law stands at present immunity can apply to organising certain forms of secondary action. The Government's view is that there is no good reason why employers who are not party to a dispute should be at risk of having industrial action organised against them.

For example, secondary action can deter employers from starting up for the first time in this country--in a situation where secondary action is threatened among workers in the new firm's customers or suppliers with the aim of forcing the new enterprise to accept certain terms and conditions. Indeed, exactly that sort of threat was made at Dundee, when the American Ford company planned to establish a new factory. Dundee, above all, shows the link between industrial relations and jobs.

Mr. John Townend (Bridlington) : I welcome the news about the closed shop, but will my right hon. Friend deal as soon as possible with that relic of the corporate state, the national dock labour scheme, as a result of which the container terminal in Hull remains shut, jobs are being lost and trade is going to other ports?

Mr. Fowler : My hon. Friend will not be surprised to learn--if he is, I apologise for it--that my right hon. Friend the Prime Minister gave an exact reply to his question on 19 January. I have nothing to add to what my right hon. Friend said then. My announcement today will enable the reform of industrial relations to go forward. There will be a step-by-step reform of industrial relations law. I am glad that my hon. Friend welcomes the proposals.

A range of measures is being taken to tackle barriers and obstacles to employment, but the Budget goes beyond that. It also gives opportunities for employment itself to be more attractive. It gives employees further opportunities to participate in the success of their firm. It recognises the impact that successful employee participation schemes can have on staff commitment and the business performance of the company. The experience of many leading British companies bears this out. So the Budget includes

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important new proposals on employee share ownership, profit-related pay, and pensions, including personal pensions.

In all these areas, the Budget builds on the substantial progress that has already been made. More than 1.75 million employees have already benefited from approved employee share scheme. They have received shares or options for shares worth some £4 billion. The tax relief on profit-related pay, which came into effect only 18 months ago, already covers more than 120,000 employees and profit-related pay worth more than £100 million. In this Budget, my right hon. Friend the Chancellor has proposed significant improvements which will give further encouragement to those important developmemnts. First, increased benefits will be available under employee share schemes. The limits will be raised so that firms will be able to give staff more shares free of tax. Secondly, the Budget proposes a new tax relief which is specially designed to help companies that set up employee share ownership plans. My right hon. Friend also proposes to increase the maximum of profit-related pay which can attract tax relief.

For the individual worker, the new personal pensions and money purchase pension schemes are making it substantially easier for employees to move from firm to firm and take their pension entitlement with them. That is a substantial advance in the rights of working people.

Personal pensions have been a major success story. One million people have already taken advantage of the new opportunities that have been available since last July. Money purchase schemes can be used to contract out of the state earnings-related pension scheme. Already, more than 8,000 schemes have been established, including some industrywide schemes, such as those in engineering, construction and the footwear industry.

The Budget changes will allow greater flexibility in pension provision. They will improve the arrangements for personal pensions and make very significant increases in the contribution limits for people over 35 who, as a result, will be able to make better provision for their retirement. They will make it easier and more attractive for employees to pay additional voluntary contributions to secure better benefits, simplify the rules for occupational pension schemes, and reduce the administrative burden on employers. All in all, the Budget proposals offer employers a range of important opportunities to increase employee participation in the prosperity of their firms. They will give a further impetus to developments which have already proved successful, effective and popular with employers and employees alike.

There are other issues that affect workers' and staff commitment. At the beginning of this debate on Wednesday, the shadow Chancellor, the right hon. and learned Member for Monklands, East (Mr. Smith), referred to the importance of investment in training. I agree about its importance. That is why the Government are investing £3 billion in training for young people and the long-term unemployed--£3 billion made possible by the Chancellor's policies. It is also why we are setting up training and enterprise councils around the country--to achieve more training by employers and more training generally, geared to the needs of the local labour markets.

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It is because of the crucial importance that we attach to training that I published two White Papers last year proposing important changes in our arrangements.

On training, we are entitled to say to the Opposition, "We hear the words, but we remember the action." We remember that, when the employment training programme for the long-term unemployed was launched, it was bitterly opposed by the Labour party conference. We remember that, although--to his credit--the Leader of the Opposition backed the programme, the Trades Union Congress rejected his advice. We remember that the shadow spokesman on employment, to his great discredit, took the easy way and campaigned against a training programme for the long-term unemployed.

Mr. Meacher : If the right hon. Gentleman is so pleased with his employment training scheme, will he explain why, after six months, only 50 per cent. of the target number of places have been filled and why a large number of companies, including McAlpine, which has close associations with the Tory party, refuse to have anything to do with it?

Mr. Fowler : I thought for a moment that the hon. Gentleman might have been getting to the Dispatch Box to deny that he has been campaigning against employment training. His intervention establishes and underlines what I was saying. I shall answer the hon. Gentleman directly. At the moment, we are getting about 40,000 entries to the programme each month. There are now about 170,000 people on employment training. Therefore, given that employment training has been going for only six months, the programme is off to an extremely good start by any standard. The new job training scheme, which the hon. Member for Oldham, West also tried to sabotage, attracted only 30,000 people after 12 months. After six months, 170,000 people are on employment training.

What I find so distasteful about the hon. Gentleman's attitude is that it entirely confirms what I said. Although the Leader of the Opposition had the guts to get up and back employment training, I cannot say the same for the Labour party spokesman on employment. A whole range of companies is involved in employment training, including IBM, Sainsbury, Laing and many other major companies. McAlpine occupied a special position in Yorkshire. The hon. Gentleman's only contribution to training in the past 12 months has been to try to prevent training in Britain. We shall not take lectures about training from the shadow Chancellor at least until he gets rid of the Opposition spokesman on employment, and that can only be a matter of time. I notice that we shall not have the pleasure of hearing the Opposition spokesman on employment reply to the debate. Obviously, he is on the substitutes' bench in these matters. The Budget builds on the policies which have made possible the record growth in jobs and the record fall in unemployment in Britain. Since the last general election, unemployment has fallen by more than 1 million. Over the last year, the rate of unemployment has fallen faster in this country than in any other major industrialised country. Unemployment in Britain is now well below the European Community average, and below the figures for France, Belgium, the Netherlands, Spain, Italy and Ireland.

Contrary to what the hon. Member for Oldham, West suggested, the 1988 labour force survey published last week has confirmed the record of rapidly falling

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unemployment which the monthly unemployment count has shown for the last 31 months. It also confirmed that unemployment has fallen, because record numbers of new jobs have been created.

At the last general election, the Labour party promised to reduce unemployment by 1 million within two years. Part of its plan for achieving that was to extend early retirement to 160,000 people in Britain, and a whole range of similar measures. However, since the election this Government have reduced unemployment by more than 1 million in less than two years, and our policies have reduced unemployment by creating real jobs --more than 1.75 million new jobs between March 1987 and September 1988 and a total of more than 2.5 million since 1983.

The truth is that the Opposition have nothing to offer except a return to a high taxation, low incentive and a low-growth economy. My right hon. Friend's Budget is a budget for investment, for continued employment growth and for a strong economy. I commend it to the House.

4.24 pm

Mr. John Garrett (Norwich, South) : I regret that about half an hour before the debate we, or rather I, learnt of the indisposition of my hon. Friend the Member for Dagenham (Mr. Gould). I am sure that we all wish him a speedy recovery.

Our view is that once again the Budget has failed to provide for a fair society and a strong economy. It does nothing to strengthen our economy. The 1988 Budget gave tax breaks to the rich when any economic scribbler knew that resources should have been spent on the supply side education, research and development and training. The overheating caused by boosting demand and neglecting supply has led to savage increases in mortgage interest rates and we all know from our advice surgeries how much suffering that has caused to our constituents. This version of the Barber-boom is over and we have to ask two basic questions : first, when will interest rates come down and, secondly, when will the balance of payments improve? The Budget insults the low paid. After last year's giveaway to the rich, the decent thing would have been to have given something to the poor this year. However, analysis shows that for those earning under £100 a week the gain is only £1 and for the ordinary working family it is just £3. That should be compared with last year when a person on £100,000 a year was given an extra £260 a week--more than the average family will receive in a year from the 1989 Budget. Many tax dodges still exist to be exploited by those who can afford accountants. The Government's latest contribution to the condition of the low paid has been to attack the wages councils, so the poorly paid will lose the only defence that they have had in past years. The Government tell us that Budgets are to increase incentives. Is it efficient to discourage women from going to work by failing to end the tax on workplace nurseries? Is it efficient to increase loopholes for the rich by tax relief on private health schemes or to throw money around to encourage share ownership simply to ensure that privatisation works? The Budget shows that the economy and the Chancellor have grave problems. Despite having accumulated a Budget surplus of £14 billion over the past year when the Chancellor forecast £3 billion originally, he has been unable to reduce the burden of taxation or to begin investing in the supply-side measures that Britain

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needs. He should have begun the supply-side revival by targeting expenditure on training, research and development and our deteriorating infrastructure. Not to do so is folly, not prudence.

Mr. Andrew MacKay (Berkshire, East) : Will the hon. Gentleman give way?

Mr. Garrett : Not for a minute.

Those long-term problems are the outcome of 10 years of Government economic mismanagement. Our problems are coming home to roost in the appalling balance of payments deficit--a deficit that the Chancellor admits is here to stay as far ahead as we can see because balance of payments deficits of over £10 billion a year are forecast in the Red Book over the planning period. The deficit is the product of 10 years of under-investment in the productive strength of the British economy. In those 10 years manufacturing investment has never returned to the 1979 level. It has been 10 years of a growing trade deficit in almost every sector of British industry.

Mr. Andrew MacKay rose --

Mr. Garrett : I will give way to the hon. Gentleman in my own time, not his.

Let us look at some of the most noticeable loopholes in the Budget. Let us look at those affecting corporate management, such as personal equity plans. That pet scheme of the Government flopped last year. Now, in their passion to make it work, they have created an even bigger tax loophole. Before now, only new money could be used to invest in PEPs to gain from the tax breaks that were offered. Now, privatisation shares taken up outside PEP schemes can be transferred into them, tax free. Tax-free privatisation is now the Government's policy.

Mr. Andrew MacKay : The hon. Gentleman has just criticised my right hon. Friend the Chancellor for not further reducing the tax burden. This seems a suitable opportunity for him to tell us what the basic level of taxation would be under a future Labour Government. Would it be above or below 25 per cent? That is not clear at the moment.

Mr. Garrett : I do not need to take instruction from any hon. Member on that. I am here to discuss the Budget and that is what I intend to do. My duty is to examine the Budget in terms of its effect on industry and the economy.

Another corporate issue is company cars. Understandably, the Chancellor has reduced the tax benefits accruing from having a company car. That seems fair enough, but he has failed to distinguish between those for whom cars are essential for work and those for whom a company car is a tax perk. The health visitor, for example, has been hit as hard as the company director.

We now have a simpler system for the assessment of the earnings of directors. Directors will now pay tax on the amount that they receive in the tax year, rather than the amount they earn or accrue in the tax year. Clearly, that can be exploited, giving company directors the ability to minimise tax bills by choosing when they receive income.

I want to consider the effect of the Budget on industry and the economy generally. Instead of strengthening the trading industries of Britain--the industries that must capture new markets abroad and defend markets at home- -the Government's high interest rate strategy hits investment, building up yet further problems for the

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future. It is no wonder that we find the Chancellor's trade forcasts incredible. In his Autumn Statement, five months ago, he forecast that in 1989 exports would grow by 7 per cent. and imports by 5 per cent. The export forecast has now been reduced to 5.5 per cent. and the import forecast has been revised up to 5.5 per cent. as well. Even so, the Chancellor is assuming that the growth of exports will have to accelerate from 0.5 per cent., which it is today, to 5.5 per cent. and that imports will have to fall from a rate of growth of 13 per cent. to 5.5 per cent., while he keeps interest rates up and the pound high.

The Government's failure over the past decade has led to a massive increase in the percentage of products in the domestic market that are imported. I shall give a few examples. In 1978, 18 per cent. of colour televisions were imported. From January to September 1988, the figure was 40 per cent. For telephone receivers, the figure has increased from 2 per cent. to 41 per cent. and for buses and coaches, from 3 per cent. to 38 per cent. In my own constituency, 4,000 to 5, 000 people are still employed in the footwear industry. There is great concern that imports of footwear have risen from 30 per cent. to 47 per cent. The Government boast that investment is booming, but as investment in manufacturing is down on 1979, the main growth areas have been investment in distribution and the financial sector- -aiding the financing and distribution of imports.

Growth in the past year has been fuelled by a massive consumer boom, irresponsibly stoked up by the Government. The boom has been paid for by growing personal debt. The ratio of debt to income in Britain is now the highest in the western world, threatening the future of individual families and the future stability of the economy. In the past year, the amount of mortgage lending would have bought all new housing stock twice over.

The Chancellor has admitted that inflation will rise to over 8 per cent. before falling back towards the end of the year. That fall will be caused not by any slackening in the rate of price increases, but because year-on- year comparisons will be with the high inflation months in the second half of 1988.

Mr. Tim Yeo (Suffolk, South) : Will the hon. Gentleman give way?

Mr. Garrett : No, although I know that this is a debate.

Mr. Frank Dobson (Holborn and St. Pancras) : My hon. Friend should ignore the hon. Member for Suffolk, South (Mr. Yeo). He is a ratbag. He is a person who interrupts.

Mr. Garrett : I do not care whether the hon. Gentleman is a ratbag or not. That is my hon. Friend's opinion. The hon. Gentleman may be a good husband and father, for all I know.

There are substantial and mysterious anomalies in the Red Book. I was trying to draft some questions for the Chancellor on those when I was hauled in here, protesting, half an hour ago. These questions really are my questions and I am trying to get at the truth of the matter. The Red Book tells us that underlying inflation is continuing to fall. Yet if I look at table 3.9 on page 34 of the Red Book, which deals with the increase in output prices over the previous year, I see that in 1987 the increase was 4 per cent. In 1988 it

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was forecast at 4 per cent. and for 1989 the forecast is 5 per cent. However, the Chancellor forecast a fall in inflation, as measured by the retail price index in 1989. The only way that that can be achieved is if he is right in his assumption that interest rates will stop rising, that is, unless he tries to fiddle the RPI by taking mortgage interest out of it.

Mr. Yeo : I know how difficult it must be for the hon. Gentleman to know his party's policy on income tax, so I shall not ask him any questions about that, but he may like to recall a historical fact. Can he tell the House the lowest rate of inflation achieved by the previous Labour Government?

Mr. Garrett : As I recall, when the Labour Government left office inflation was 7 per cent.--and it was falling. But what is the point of discussing that when we are talking about the Chancellor's forecast? I am simply saying that the Chancellor's forecasts of inflation do not gel or make sense. If output prices have risen by 5 per cent. on the year before, how does he expect the cost of living to fall as he forecasts?

Mr. Ashdown : Perhaps I can assist the hon. Gentleman on this point.

Mr. Garrett : I thank the hon. Gentleman but I do not need any assistance with my speech and if he catches your eye, Madam Deputy Speaker, the hon. Gentleman can make his own speech later. When reading the newspapers over the weekend, I noted that the Americans are planning to push up interest rates, which will inevitably lead to a round of interest rate increases throughout the world in which we shall have to take the lead, as at the moment. With the forecast balance of payments deficit running at well over £10 billion into the future, the pound will not be sustainable at its present level without further interest rate increases. Think of the personal misery that interest rate increases cause. Think of the mortgage foreclosures and of the people I have mentioned who come to my surgery in tears because they cannot continue to maintain their mortgage interest repayments.

In recent years we have had a novel development in economic policy--the repayment of the national debt. According to the Government, that is a new triumph, and I am willing to believe them up to a point. However, the Government also say that it represents the repayment of the debt that Labour incurred in its years of government. When one considers it, it is, in fact, the Tory debt that has been run up in the past eight years. It is the bill for unemployment.

The biggest mystery is why, when the Government forecast a repayment of £3 billion for 1988-89, they repaid £14 billion. We can piece together some of the answers. There was, for example, a £2 billion overrun on privatisation receipts and a £1.5 billion shortfall on fixed investment by the Government. There was also excess revenue from income tax, national insurance contributions and VAT because the Government could not control inflation. Receipts were increased by the Government's own inflation. I am sorry to have to say that those figures also include a £0.3 billion saving on transport spending--which is a matter of some resonance given recent news.

The Chancellor's Budget shows no recognition of the hard landing forecast in his predictions for British industry. The Budget and the public expenditure

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programme that preceded it do not help the reconstruction of industry and do not provide the training, the education or the infrastructure that our economy must have in order to be efficient and competitive. Worse still, the Budget does nothing for our new underclass, such as the homeless young people whom one can see sleeping in cardboard boxes across the river at Waterloo on any night of the week ; the confused who have been discharged from mental institutions ; single parents or for the great grey army of the unemployed. The Budget combines incompetence with inhumanity. Several Hon. Members rose--

Madam Deputy Speaker (Miss Betty Boothroyd) : Order. Before I call other hon. Members, I must tell the House that Mr. Speaker has determined that, because of the number of hon. Members who wish to speak, there should be a 10-minute limit on speeches between the hours of 7 pm and 9 pm.

4.38 pm

Mr. Edward Heath (Old Bexley and Sidcup) : I was somewhat taken aback by the abrupt end of the hilarity promoted by the hon. Member for Norwich, South (Mr. Garrett).

I shall concentrate on two main points. Before I do so, I agree with the praise by my right hon. Friend the Secretary of State for Employment for the measures which the Chancellor of the Exchequer has taken in respect of the benefit system and, in particular, of the abolition of the earnings rule. I utter just one word of caution. I am not convinced that, although desirable, the abolition of the earnings rule will lead to a great increase in production or employment. Those who were affected by the earnings rule usually found ways and means of achieving their ends without necessarily having the rule abolished or falling into trouble. But its abolition is a sound measure, and one which we have wanted for a long time. I hope that it leads to a solution of the problem.

My one reservation about my right hon. Friend's speech concerns his comments about training. I shall say much more about that point later on. He mentioned that we had the utmost difficulty in finding jobs for young people in the 1970s. I ask him to take further advice from his Department on that point. As we had 580,000 unemployed when we left office in 1974, there was no problem about finding jobs for young people--they were all in jobs. It was only in limited areas where we had any serious degree of unemployment.

I now refer to the two points on which I wish to concentrate, although fairly briefly. First, this Government have now been in power for a decade. The debate is an opportunity to look at matters over the decade, in the light of the Chancellor of the Exchequer's Budget. On this occasion, the Chancellor of the Exchequer has proved himself to be a wise man. He is not a far-seeing man, that we must know-- [Interruption.] He will agree that, in his previous Budget, he did not foresee that his surplus would be four or five times that which he calculated. He is not a well-informed Chancellor. The reason for that is that the Prime Minister's campaign against the worthless bureaucracy has so affected the statistical department of the Treasury that it often does not know what is going on.

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But the Chancellor is wise. The reason I say that is that he has got himself and the country into a position in which he does not know what to do. He has therefore very wisely decided to do nothing. It may be for that that we should be grateful.

As the Chancellor knows, he is my favourite one-club golfer. On the last occasion, he made a splendid drive from the tee. Enormous reductions in taxation were widely hailed. He now finds himself in a bunker, and he is discovering how difficult it is to get out of a bunker with the wooden club with which he drove off. All I ask is that he should now reconsider his bag of clubs and perhaps embrace a few more.

Why did I say that I want to examine matters over the past decade? It is because we have been through a decade which has not been altogether different from the decades since the second world war. The sooner we recognise that, the better. It is true that, at the beginning of this decade, the depression was lengthened because of the measures taken by the Government at the time, in particular by imposing a drastic increase in indirect taxation and allowing the pound to rise to heights which put our businesses out of practice. Our exports were seriously damaged, and they have never been able to recover. Since then, we have had the upward graph and now, undoubtedly on the Chancellor's calculations, we are at the top of that graph and are on the downward slope again. Nobody challenges that.

I accept that we have gone through that process yet again. It is the fourth time that that has happened in my time in the House of Commons. Quite honestly, I am getting rather bored with it. Every time, it has happened to a greater and worse degree.

We have heard the employment figures. Increases in the number of people employed are welcome, but there are still more than 2 million unemployed. On the basis of the statistical adjustment that is made at the end of the month, according to the season, the figure is just under 2 million, but the number of people who do not actually have jobs is over 2 million. [Interruption.] Well, that is the figure, which is seasonally adjusted. I have not forgotten completely my days as Minister of Labour. The problem is that, for the first time when we have been at the top of the cycle, we still have more than 2 million people without jobs--a large number of them young people. That is the first factor.

Secondly, borrowers now have to face interest rates higher than at any time in the past 45 years when we have been at the top of the cycle. Indeed, interest rates are higher than they have ever been. Thirdly, the adverse balance of trade is of a scale that we have never had at this point of the cycle. All these things constitute an appalling aspect of the development of the cycle in this decade, compared with the previous four and a half decades. [Interruption.] Was there a sedentary interruption?

Dame Elaine Kellett-Bowman : I was just pointing out that my right hon. Friend seems to look on the gloomy side. Never in his day, or in any other day, did we have such a massive improvement in the Budget surplus.

Mr. Heath : I am coming to that. The Chancellor's problem is that he did not expect this surplus, and he does not know what to do with it. He and the Prime Minister regard the rate of inflation as abominably high, so he has said that he is going to use the surplus to repay the national

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debt. One has to ask oneself what will happen when the national debt has been repaid. What guarantee does the Chancellor have that the funds will not be used for consumption? One cannot automatically assume that they will be used by corporations for further investment.

The Chancellor may very well find that, with the pressures of high interest rates, those people who now find themselves with cash instead of investments will start spending the cash. That would defeat his purpose, and preventing it must be one of his problems. Indeed, can he prevent it at all? I do not think so. That is another aspect of his having got himself deep into the bunker.

This is the situation in which we find ourselves after a decade. Parliament and the country ought to be asking how we can get out of this situation, which has occurred four times in the last 40 years, and achieve a stabilised system in which we are not forced to expand the economy and then to wreck that economy automatically. I am not ignoring the personal harm, anxiety and agony caused by the measures that are taken in these circumstances. I am, thinking, for instance, of high interest rates. I sometimes feel that those, both in the City and in Whitehall, who have to deal with policy of this kind are dealing with something which, to them, has no relationship at all to human beings ; that the level at which interest rates have to be pitched is a pure intellectual exercise to get a certain answer as to money circulation, and that that is only a guide as to which particular monetary definition may be adopted at a given time--they can change it as they go along.

People come to our advice bureaux. Indeed, a lady from outside my constituency wrote to me the other day saying :

"It was such a happy time when we got our mortgage as first buyers. We did what the Government told us to do. Now it is agony. I can see no future except suicide. The only thing that stops me is my two children."

It is appalling that people should get to that stage, which is brought about by those who regard as a purely intellectual exercise the level at which interest rates should be set. It behoves us all to look at that.

Several factors have kept us in this state. First, at the beginning of this decade, the market dogma adopted wiped out any question of regional aid. The market was going to put everything right. If the market preferred the south, it would move to the south and everything would be put right. We know that that was nonsense. Even if we wanted the market to move to the south, we did not make it possible for it to do so. We did not provide housing, roads, railways or anything. [Interruption.] Look at the state of the railway lines. Do I need to comment on that? I shall be accused of interfering with justice if I comment on railway lines. We did not make it possible for those in regional development to move to the south. We continued with long unemployment, and we have suffered the results politically in Scotland, the north-east and over a large part of the country. The Government should bear that in mind.

We were scorned when we said that ways could be found of choosing the infrastructure in which investment could be placed without increasing inflation. Ministers are constantly pulling out figures, saying that we are spending whatever percentage it is more than last time or more than under the Labour Government in 1979, The latter is of no interest to me or the great majority of British people. The former is not relevant to the problem. The question is : is

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what we are doing satisfactory to deal with the problem which faces the country today? The plain answer is no, even in the south. My colleagues from the south know that many motorways are unfinished, even in the south. There is the M2 in my constituency, the M20, the M25 and the M27, and in the west country there are none. Our motorways are inadequate, as are all our transport facilities. Our airports are overcrowded. Look at the mess at Heathrow. The Labour Government are largely to blame for that, because they cancelled the plans to build a great new airport on the east coast. What happens to business men who want to travel to improve their business? I travel a reasonable amount and what am I told? It all depends on whether there is a "slot". That is the latest jargon. The other day at Dusseldorf and Cologne I was told, "You can't get back. We are an hour and a half late. There is not a slot at Heathrow." Life now depends on slots. This is not the higher quality of life of which the Prime Minister spoke at Scarborough on Saturday afternoon. Housing demands are not being met, again because it was said that the market would do all that was necessary. One sees the conditions in which many of our fellow citizens have to live. The young cannot find anywhere to live ; they have families, and they still cannot find anywhere to live. Housing is another major problem that has not been dealt with.

We have not dealt with education. We have bashed it on every possible occasion. We have bashed the teachers just to bash a handful of loony Labour councils in London which do silly things. That has not produced results.

Mr. Brian Sedgemore (Hackney, South and Shoreditch) : Steady on, old man.

Mr. Heath : I am using modest language.

The other night I heard my right hon. Friend the Prime Minister on television say that we must find a new means of dealing with education and that there used to be guilds. They are out of date, yet she compared the new arrangements with the guilds. I find that difficult. I know that we have been looking back the whole time. We looked back to Marshall and the 19th century to give us our economics. He was not entirely satisfactory, so we looked back to Adam Smith and the 18th century for more economics. He has not proved foolproof, so now we are looking back to the guilds for our training arrangements. [Laughter.] I am prepared to acknowledge my vested interests. I am a member of Goldsmiths Company and the Honourable Artillery Company. I do not regard those companies as having responsibility for training. Moreover, the guilds were the most protectionist organisations which Europe has ever seen. My right hon. Friend runs all the risks of abolishing the closed shop in every conceivable circumstance, yet creates guilds which will be extremely protectionist and will not produce the education that we want. We shall never deal with the problems until we have a training system for industry which is embodied in the whole education system--and we must face that. There has always been a Department of Employment which has fought the Department of Education and Science about that. It argues that what happens after pupils leave school has nothing to do with education but is entirely to do with labour. I may even have said that myself. I certainly do not

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say that now, because I have seen the experiments and they have all failed. In 1970-74, we made a further attempt with training agencies. Three or four were successful, but the rest were not. I have come firmly to the conclusion that we shall never have a successful industry until training is embodied as part of our complete education system.

That applies equally to management. It is natural for some of my hon. Friends always to shout when a trade union is mentioned--to bash the unions. Unions are not entirely to blame. Today we should encourage enterprising unions which recognise the modern world. They may be expelled from the Trades Union Congress, but they are certainly getting on with the job of training and they are facing the modern world. They should be encouraged, not damned.

I regret to say that many of our management are not interested in management as such. They are interested in finance and the quickest way of getting their money. That is not the same as management. That is horrifying in the context of 1992, especially when one goes around the country asking people what preparations they have made. An employer wrote to me recently, "God help us when we get to 1992." I replied, "Would it not be more appropriate and effective if we helped ourselves?" Alas, that is not helping. Management training is just as important as employee training.

Such training will affect the Chancellor of the Exchequer. If we are to have some overall technical education system for industry and management as part of our education system, the Treasury will have additional burdens put on it. I believe that we have reached that point and that it is necessary.

If we compare ourselves with the two successful countries in the post-war world, the Federal Republic of Germany and Japan, we see enormous contrasts. We have only to ask ourselves the simple question : why are we not doing as they are doing?

Mr. Nicholas Budgen (Wolverhampton, South-West) : Because we are not like that.

Mr. Heath : I think that my hon. Friend would be more accurate if he said that we were not like them. That is the real point. They were both defeated in war. Japan was bombed with atom bombs and Germany was almost entirely destroyed, yet here are we unable to compete with them or to emulate what they have done.

Mr. Marlow : My right hon. Friend, sadly, is in one of his Cassandra -like moods. He is telling us about everything that he finds wrong. I wonder whether he could do us and perhaps himself a favour by telling us some of the things that the Government have done which have been successful and of which he approves.

Mr. Heath : I approve of the abolition of the earnings rule. I said that earlier. I fully approve of that.

Mr. Budgen : Will my right hon. Friend give way?

Mr. Heath : I do not think so.

Mr. Budgen rose --

Mr. Heath : Very well, then.

Mr. Budgen : My right hon. Friend appears to believe that our society should be the same as one sees in both Japan and in West Germany. He goes on to say that the main purpose of education should be materialistic and

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devoted to earning more money in later life. Was that the sort of view that was behind his devotion to music when he was at Oxford? Does he believe that our society would wish to be the same as that in Japan or West Germany?

Mr. Heath : I wish that we had as many opera houses and top-class operas as the Germans. I wish, too, that we were devoting as much to education as the Japanese. I cannot criticise them on those grounds. I shall quote one or two figures. We have heard about the fixed capital formation, and all I would say is, whatever good we may have done, do not let us think of it as being the answer to everything or that it compares with what other countries have done. We must look at it from the point of view that we are the lowest in the Community league. The latest figures for the whole of 1987 show that we are down to 17.3 per cent. of GDP.

The Chancellor of the Exchequer (Mr. Nigel Lawson) indicated dissent.

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