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Column 379Generally, the economy is performing well and the process of investment is gathering momentum. That process will continue if enterprise policies are pursued fully and if the wider opportunities afforded by a general common market in the run-up to 1992 are grasped and the principles of liberal trading firmly bulwarked in those proposals.
I have heard nothing from the Opposition that implies that there needs to be a great change of Government strategy towards investment. All that has ever been said about investment by the Government has turned out to be true --if business is given its head, if profitability is rebuilt, and if enterprise is supported, investment will follow through. It is high time that the property and the estate of the Government sector were brought up to the same modern standards as the rest of the economy. In so doing, surplus capacity could be released that would make money for the Government and would further the enterprise revolution.
Sir Anthony Meyer (Clwyd, North-West) : I congratulate the Social Democrats on their choice of subject for the debate, on the wording of their motion, much of which I agree with, on the performance of their leader--in which he appears to have lost interest himself--and, above all, on the brilliance of their timing.
The Government have a good story to tell and, if there is a good story to tell, nobody tells it better than my right hon. Friend the Chancellor of the Duchy of Lancaster. Certainly, in real terms the Government have managed to maintain the value of investment. Of course, that is nowhere near enough. We have only to glance around us to see how lamentably inadequate is the investment now taking place, or planned for the near future, in our roads, railways, city centres, hospitals, education, health and our whole built environment. Those of us who are members of the Select Committee on Welsh Affairs are aware of the depressing contrast between the preparations being made on the French side of the Channel tunnel for communications to the tunnel, not necessarily passing through Paris, and the timid preparations that are being made on the British side.
What is more, the Government appear to make things worse by dragging their feet in all too many of the collaborative enterprises in Europe. I thought that the Prime Minister in that famous Bruges speech made the point that Europe should concentrate on doing the things that we could do better together than alone. However, the Government do not appear to be living up to even the good bits of the Bruges speech. Our record in the European Space Agency, for example, is lamentable. We are being left out. I listened with some joy the other night to Lord Jenkins of Hillhead, who described Britons arriving at the railway station just after the train had gone, grumbling loudly that they did not mean to catch the train anyway, changing their minds, dashing down the line, humping a suitcase in each hand, blessing their lucky stars that the train had stopped at a signal, clambering on board and then complaining that all the seats in the dining car were full.
Of course, the timing of the debate serves to focus attention on the experiment, in quite a different approach to those things, in Wales, where a by-election is taking place. The investment in the environment in Wales, the
Column 380improvement of communications, the encouragement of research and development and the allocation of enough taxpayers' money for infrastructure improvement--so that they attract much larger sums of private investment--have been part of the approach ever since Lord Crickhowell very wisely did a U-turn in 1979 over the preservation of the Welsh Development Agency. It had been marked down for instant destruction after the 1979 election, but Lord Crickhowell did a U- turn and it was allowed to run on. Admittedly, it had to adapt itself radically in the process. That has been to the huge benefit of the people of Wales and to the unconcealed envy of hon. Members from neighbouring English areas.
Under Nicholas Edwards, as he then was, Wales enjoyed an unfair share of investment projects and major developments, such as the gigantic Cardiff bay project, which will make Cardiff one of the most attractive cities in western Europe.
The present Secretary of State for Wales has taken the process of using public money to create beautiful infrastructure, which sparks off huge private investment, a giant step further. The difference is that he boasts of doing things which his predecessor coyly admitted doing. The difference is more important than a mere difference of phraseology. It is important in the climate that has resulted in Wales, where we have local authorities of all political complexions, trade unions and employers working together in close partnership, which would be labelled in other parts of the country-- and by some of my hon. Friends--as "corporatism" and consequently derided. I prefer to call it the human face of capitalism--a capitalism which works well and is in tune with the Welsh temperament. At all events, it brings in the bacon.
A report in The Sunday Times on 16 April 1989 said :
"Tomorrow Walker will announce that Bosch plans to build a £100 million motor electrics plant promising 1,200 new jobs at Miskin near Cardiff"--
"right on the border of the Vale of Glamorgan constituency." It went on :
"Bosch will be the latest, and one of the biggest, examples of foreign undertakings in Wales Wales has enjoyed a string of new investments since he took office after the last election Beginning with the location of a Trustee Savings Bank office in Newport at the end of 1987, bringing 2,000 new jobs, it continued with the huge investment at Ford (£726m)"
the biggest engine plant in Europe--
"expansion of a string of Japanese factories in north and south Wales, and the arrival or expansion of merchant banks in Cardiff." There has not only been new manufacturing industry but financial services, too. The report says that the Secretary of State "has also increased the budget of the Wales Tourist Board to encourage more visitors to the valleys, while urban renewal is going ahead in black-spots like Abertillery, Tonypandy, Crumlin and Tredegar."
That all adds up to quite a programme.
It was reported that the Secretary of State asked :
"Where else in Britain is so much action taking place to improve the economy?"
I can answer that question from my experience, because in my constituency there are such developments. Some of them are more modest and some are a bit controversial, such as the development of a magnificent Victorian castle to provide a home for the National Portrait Gallery. That is not just a great artistic enterprise, but is serving as an attraction for discerning investors and employers who
Column 381fancy setting up high-grade technological industry or provision for financial services in the area. It makes an extremely attractive complex. Public money has gone into that, but sometimes the taxpayer or the ratepayer receives large dividends in terms of good jobs. There is altogether a new spirit in Wales, a new readiness to stop squabbling, which is our favourite hobby when there is nothing better to do. Now there is something better to do, and Wales under Walker is getting it done. I suspect that before long the results will be visible.
Mr. Charles Kennedy (Ross, Cromarty and Skye) : I thank the hon. Member for Clwyd, North-West (Sir A. Meyer) for a delightful speech. I have returned this afternoon from visiting Barry in the Vale of Glamorgan constituency. The hon. Gentleman spoke about the need for an enlightened and constructive public contribution and for co-operation between the public sector and private investors in the infrastructure and communications. He sounded almost as convincing as our excellent candidate, Frank Leavers, at the by-election press conference this morning.
We hear that not many Cabinet Ministers will traipse through the Vale of Glamorgan. They are rather thin on the ground and that is because of the current differences between the Secretary of State for Wales and the other members of the Cabinet on economic policy. At least the Secretary of State for Wales has a friend in the hon. Member for Clwyd, North-West. It was interesting to note the long faces and dry expressions of the Minister and some Conservative Back Benchers as the hon. Gentleman delivered his enlightened speech. I cannot share his optimism about what will happen on 4 May. The hon. Gentleman seems to think that the Welsh love Walker, but I suspect that people in the Vale of Glamorgan will think that they are voting about Maggie.
Mr. Redwood : Many of us supported our hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) in what he said about combined public and private investment. Did the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) go to the Vale of Glamorgan to try to bring off a last-minute alliance with the SDP?
Mr. Kennedy : That was certainly not my purpose. I am not a business man, but I can recognise bad investments when I see them. The hon. Member for Wokingham (Mr. Redwood) spoke about my right hon. Friend the Member for Yeovil (Mr. Ashdown), the leader of our party. My right hon. Friend was absent for a short time during the speech of the hon. Member for Wokingham. I am sure that the hon. Gentleman will have noticed that the Chancellor of the Duchy of Lancaster was scarcely present for the debate after he finished his speech. We make no complaint about that because we accept that ministerial duties have taken him elsewhere. [Interruption.] I am grateful for the fact that the Chancellor of the Duchy is conducting the debate rather than the Under-Secretary of State for Industry and Consumer Affairs. The hon. Member for Wokingham was slightly wide of the mark in his criticisms.
My right hon. Friend blinded the hon. Member for Wokingham with science. That is self-evident. We read
Column 382and hear a great deal about the hon. Member for Wokingham. He is said to be the great white hope, the next intellectual guru, shortly heading for the Front Bench where the Minister is lounging nonchalantly with his feet on the Table. If that is the level of attack that we can expect from Conservative Members who are to be moved in the direction of the Treasury and the Dispatch Box, there is considerable hope for the Opposition.
The hon. Member for Wokingham used such revealing phrases as "things are getting much better because investment is gathering momentum." That is lawyerspeak for the fact that under the Government investment has been in a hell of a mess for a long time. He and his hon. Friend the Member for Kingswood (Mr. Hayward) spoke about skill training and education. As both hon. Members went to some lengths to cast doubt on the figures that we have put forward, it is worth rehearsing the figures again. In his speech my right hon. Friend the Member for Yeovil spoke about investment in science and technology research and development as an estimated ratio of non- defence-related research and development. We have not heard that adequately rebutted in speeches by Conservative Back Benchers any more than we have heard an adequate Government response to last year's report by the Select Committee on which my hon. Friend the Member for Gordon (Mr. Bruce) served.
When one compares Britain with its international competitors one gets confirmation of what we have known for a long time--that in many fields Britain lags woefully behind Japan and the emerging Pacific rim nations in the economic co-operation that is developing there and in the European Community. That is not about to change as a result of anything that we heard from the Minister who had nothing new to offer. However, the matter goes further than that. It is in the universities that much research and development have their seedcorn. I should like to deal with the attention that Britain gives to that. A study of metalworking in Germany and Britain compared the qualifications of German skilled workers and people in the British work force. The results were quite horrendous. In 1985, 55,000 West Germans were trained and received craft qualifications in mechanical engineering. In Britain the figure was 10,000, which means that more than five times more people qualified in the West German economy. In terms of academic qualifications, Britain now rates 17th out of the top 20 OECD countries in the participation rate of 16-year-olds in full-time education. In Japan 95 per cent. of students stay on beyond the age of 16, but in Britain only 32 per cent. do so. No wonder our economy is having international difficulties.
In debates on education we have heard that in higher education we continue to send a far smaller proportion of our 18-year-olds into the tertiary sector and on to university than is the case in the United States, Japan, the Netherlands, France, Italy and West Germany. The list goes on.
Column 383to change in the tertiary sector, and our revamped training schemes could hardly be said to be generous or productive in achieving their stated objectives for young people. The Government and Conservative Members should look again at the legacy that they are leaving this country.
Mr. Simon Hughes (Southwark and Bermondsey) : Does my hon. Friend accept that in the Secretary of State's Green Paper on student finance the international comparisons showed that European countries that provide the highest level of support for students with taxpayers' money also have the highest participation rate by post school leaving age students? Therefore, there appears to be a direct international correlation between investment by Government in students staying on at school and their attainment. If the Government go along the road that they are going along, we are likely to see a reduction in opportunity rather than an increase.
Mr. Kennedy : I am grateful to my hon. Friend. His pertinent point illustrates the sentiment expressed by the leader of our party when he spoke about our need to move from low quality industrial assembly to a much higher quality industrial product. In reply to the hon. Member for Kingswood, may I say that that requires far more positive encouragement of the role of university departments. While he was right to speak of attitudinal problems in Britain since the second world war, any country that is serious about developing skills, technology and a resource base would not allow some university departments to go to the wall, as ours have, or be substantially reduced in their efforts and ability because of the squeeze on education expenditure of the past 10 years.
The Government's general approach in this debate is similar to their approach in many other matters. They speak of how things are picking up or taking off or are so much better and they always use as their base line 1981 or 1982. They want us to forget the first two and a half years of their administration when we had savage deflationary policies of a type with which the hon. Member for Clwyd, North-West would be most uncomfortable and in which he would find little to commend. Not the least of the deflationary measures was the 1981 Budget, the consequences of which we have been living with ever since.
When Conservative Members say how much things are improving, I can only say that if one hammers any industrial base low enough, when it begins to recover from its contraction any level of growth will show up per capita far more than it would if a more adequate manufacturing, resource and technology base had been maintained. It is for ever an indictment of the Government that they manifestly failed to achieve that in their earlier days in office, so their present success is tempered by the damage done as the result of their general economic approach.
It has been extremely useful that the Social and Liberal Democrats have raised these issues this afternoon, touching on not just many of the broad economic arguments on trade imbalance and so on but, in particular, those "forefront" technologies where, as an island and, historically, a trading nation but also as a nation of declining fossil fuels and one more closely linked to the European Community--a trend that will continue beyond 1992-- Britain must find a new competitive industrial role for itself internationally. Much of that will rest on the younger generation and on the technology that will dominate their lives to an even greater extent than at
Column 384present and soon the research and development, employment and industrial productive opportunities that such technology gives rise to.
Although I welcome the fact that the Labour party will vote for our motion this evening--
Mr. Kennedy : Some of them will, yes, and I welcome that. But although the hon. Member for Newcastle upon Tyne, North (Mr. Henderson) the only Labour Member who spoke in the debate, welcomed the fact that we seem to have something in common in our attitude towards the Government, a lot more modernisation of attitude is required of the Labour party towards these issues before it can claim with any credibility to occupy the political ground, the terra firma, occupied by our party when we argue for the importance of new technology, the greater emphasis that must be given to research and development and the excellent result that we anticipate because of that in the Vale of Glamorgan.
The Parliamentary Under-Secretary of State for Industry and Consumer Affairs (Mr. Eric Forth) : Before we go any further, we musremind ourselves that this is an Opposition day, its eighth allotted day, although, looking round the Chamber during the debate, in what I was going to describe as the ebb and flow of debate and now think that "gentle gurgle" would be a better description, I noticed that, on my counting anyway, for most of the time there were present one Member from the official Opposition Labour party and two members of the SLD. There was also one Member from the SDP.
Mr. Don Dixon (Jarrow) : I have sat here since half-past four this afternoon-- [Interruption.] --and I have been bored to bloody tears most of the time. I have also done a bit of counting. At one time there were only four Conservative Members, and one of them was a parliamentary private secretary. Had there been a vote earlier, the Labour party would have won it, because we had more hon. Members than the rest put together.
Mr. Forth : I am grateful to the hon. Member for Jarrow (Mr. Dixon). I did say that it was an Opposition day. It is not unreasonable for us to expect the Opposition to pay more attention to it and take it more seriously. It was worth making that observation so that we could get the importance of the debate fully in context. In the early stages of the debate the argument revolved around the state of the economy. The right hon. Member for Yeovil (Mr. Ashdown) spent some time describing an economy that I was quite unable to recognise. The hon. Member for Newcastle upon Tyne, North (Mr. Henderson) followed on the same lines. I was much more attracted to, and identified more readily with, the description given by my hon Friend the Member for Wokingham (Mr. Redwood), who was acknowledged by Opposition Members to be one of the intellectuals and rising stars on the Government Benches.
My hon. Friend was able accurately to describe the development of the economy over the past few years in a way that seems to have escaped Opposition Members. It is a source of continuing sadness and regret that every time we have a debate here, Opposition Members seem to want to describe our economy in such a way that it would not
Column 385attract any investment from abroad or inspire any confidence from members of our own society. The truth is that Opposition Members are in a state of confusion, not to say schizophrenia, about this. What I should like to know is whether all Opposition Members, particularly in the Labour party, agree with the early-day motion, in the name of three of their hon. Friends, welcoming the arrival of the Toyota car assembly plant in Derbyshire which, it says, will create many genuine, new and meaningful jobs for the people who live in the county and help re- establish it as a centre of industrial development. Some speeches by Opposition Members did not give that impression. I hope that at some point we will have an indication of what Opposition Members think about this influx of investment which fully reflects the confidence of the Germans and the Japanese in our economy--a confidence that Opposition Members may not share.
Mr. James Wallace (Orkney and Shetland) : I am grateful to the Minister for paying regard to the sedentary comment that I made earlier about the hon. Member for Wokingham (Mr. Redwood) being regarded as one of the intellects of the Conservative party. Perhaps the hon. Member for Wokingham will put on record his own sedentary response that he was "the only one".
If the Government are as keen to attract investment as the Minister says, is that helped or hindered by the present high interest rates?
Mr. Forth : The present level of interest rates does not seem to make a material difference either to internally generating investment, which is at a record level, or to the level of inward investment by companies from other countries.
We have had to make interest rate adjustments to deal with inflation, about which the Chancellor of the Exchequer has said many times that he is unhappy and with which he is dealing. Nevertheless it has neither impeded nor hampered the rate of investment, domestic or from other countries, and the development of the economy. The hon. Member for Newcastle upon Tyne, North said that, without an alteration in the exchange rate--he did not specify either direction or level--many industrialists would be increasingly unable to do business. That seems to be at odds with the experience of the German and Japanese economies which have both--against a very strongly appreciating currency--performed superbly well in exports over many years. If a business is successful, and has a good product which it produces to a high quality, it will export, even over a strong exchange rate parity. The exchange rate bolt hole is no longer available to those who want to take refuge there.
I shall deal with one or two of the points made by the right hon. Member for Yeovil, who, in his lengthy contribution, dealt substantially with information technology. My hon. Friend the Member for Kingswood (Mr. Hayward) pointed out in his trenchant way that he felt that the expertise of the right hon. Member for Yeovil was--let me say--questionable. I use that word because I am in one of my more polite moods.
The right hon. Member for Yeovil was quite wrong in two or three respects. He talked about gallium arsenide--with which I know the House is familiar. About two
Column 386years ago the Department of Trade and Industry announced the availability of about £25 million for collaborative projects with industry, under the heading of gallium arsenide. It is a matter of great regret to the DTI, but it is true, that that money has not been taken up in full by industry. There have been regrettably few projects. The companies in the private sector--the experts who know what they are talking about--did not see fit to take up what the Government offered. Time and again we see that pattern reflected, and time and again the matter is ducked by Opposition Members. If the Government offer support, but the private sector--the wealth creators, profit makers and experts--do not see fit to take it up, there is not much more that the Government can do.
Mr. Ashdown : The hon. Gentleman is obviously referring to the Plessey experience. However, did not the Government's committee on advanced materials recommend a programme of not £25 million, but about £300 million to help the development of gallium arsenide? When the Government finally moved, did they not do so too little, too late? When Plessey tried to use that money to get back into the market, it discovered that it had been taken away from abroad. Plessey has had to withdraw substantially from developing an invention that could have been ours to produce, instead of ours to buy in from others' production.
Mr. Forth : I do not accept the right hon. Gentleman's analysis. I have given him the facts. If a product is as good as he claims this one is, the window of opportunity will be greater than he has suggested.
The right hon. Member for Yeovil expressed a galactic view on fibre-optics. He came to the House waving something which was halfway between a wand and a panacea--I am not sure which is the most appropriate. He suggested that a universal network of fibre-optics, reaching into every home, so that we could shop electronically on broad band frequencies, would be the saving of the country. However, the right hon. Gentleman failed--as Opposition Members always do--to spell out in detail why that should be done, where there was a demand for it and, much more important, who would pay for it.
In the glib way that we have come to expect from the right hon. Member for Yeovil, he referred to pump-priming, but he did not say which pump was to be primed, to what extent or by whose money. I suspect that, inevitably, it will be taxpayers' money. Those who know what they are doing and have the resources to do it--principally British Telecom and Mercury Communications- -have already started to develop such technology and are installing it where they think it appropriate.
It would take 15 years to achieve that which the right hon. Member for Yeovil seemed to suggest could be done in the twinkling of an eye. This is one of those fraudulent proposals which sounds good if it is said quickly, and even better if nobody is told what it will cost, and purports to produce some magical transformation in the economy. However, that will not happen.
Mr. Ashdown : In his disparaging remarks, the hon. Gentleman criticises the Government. They have done exactly that which needs to be done within the confines of Northern Ireland, but not for the whole nation. They have taken the lead in saying what should be established and what the interfaces should be, and showing industry how
Column 387it could play a part in the investment. If that is good enough for Northern Ireland, why is it not good enough for the whole of Great Britain?
Mr. Forth : That is not what the right hon. Gentleman said earlier. He is talking about interfaces--whatever that means in this context--and about giving guidance. We are always giving guidance--we give it frequently. However, we shall not endorse the right hon. Gentleman's proposal, or the bandwagon on to which Members of the official Opposition have climbed, to produce an unspecified, all-singing, all-dancing network at an unspecified cost.
Mr. Henderson : Is the Under-Secretary aware that British Telecom wishes to introduce fibre-optics, but, under the terms of privatisation, is unable to do so? It seeks changes to its constitution to allow it to do that. It also seeks Government funding, which most countries recognise is necessary if fibre-optics--an important new technology--is to be introduced.
Mr. Forth : The hon. Gentleman, no doubt unintentionally, misleads the House. About 550,000 km of fibre-optics have already been installed. Therefore, he can hardly claim that we are preventing British Telecom from doing so. Discussions are continuing on the best way forward and the nature of the relationship between British Telecom and the Government. It is unfair to suggest that we are blocking the sensible and correct advancement of fibre-optics in a way that can be supported by proven consumer demand. We do not support a pie in the sky approach.
The hon. Member for Gordon (Mr. Bruce) was the only member of the Select Committee on Trade and Industry--or, certainly, one of the few--to participate in the debate. I was slightly surprised that more members of the Select Committee did not attend. I thought they might take the opportunity to expand their thoughts on the matter. The hon. Member for Gordon did so very well.
Mr. Malcolm Bruce : To be fair to the members of the Select Committee, they are on a visit to Edinburgh and Manchester investigating the impact of the single market on the financial services. I have broken my visit to participate today.
Mr. Forth : The hon. Gentleman's priorities are absolutely right. I am not surprised to hear that his colleagues are fact finding. Some of the hon. Gentleman's points were important and it is important for the House to understand the nature of the difference of views between the Select Committee and the Government. As the hon. Gentleman well knows, there is a genuine difference of view.
The Select Committee was looking for what the Department sees as a more interventionist approach than the Department of Trade and Industry is prepared to support. In particular, proposals were made about the role of an information technology Minister, the pull-through concept on information technology and Government procurement.
The Government have taken quite the opposite view. They have stressed over and over again that individual Departments and sections in the Government should be given greater autonomy and freedom to make their own decisions and are, therefore, able to enter a competitive market and buy what they think best for their needs. This old-fashioned idea of the gargantuan dinosaur of
Column 388Government, directing the sector by procurement policies, is, I regret, typical of Select Committee members but not modern Government policy. There is no point in disguising the fact that there is a difference of emphasis and the Department has a different view from that of the Select Committee.
The hon. Member for Gordon also made a crucial reference to the use of information technology. He made a good case for American Airlines. However, he missed the fact that that involves the area of use. I invite the hon. Gentleman to study again the Government's White Paper which replied to the Select Committee's report. We emphasised that we wished to get the use of information technology on a proper basis and were prepared to help and assist in its understanding and best use. That is not the same as trying to pretend that, in this country, we can compete in every sector of the industry, which is a point that my right hon. Friend the Chancellor of the Duchy made earlier. We shall continue to make the distinction between encouraging proper and effective use of IT throughout the industrial sector and pretending that we can compete with every economy in the world.
As my right hon. Friend said, it is worth emphasising that, while there is no doubt that we have a deficit in certain areas of information technology, we share that with most other developed countries in the OECD. Most countries in western Europe and the EEC have such a deficit, although Japan has not. None of us has managed to beat the problem. I am not saying that this is necessary or excusable, but we have all found it very difficult to deal with and have yet to come up with a complete solution.
This has been a useful debate, although, regrettably, rather thinly attended at times. We have heard some thoughtful contributions, mostly from Conservative Members and we shall certainly consider them when we study today's speeches.
In view of what has been said, I strongly urge hon. Members to support the amendment.
Question put, That the original words stand part of the Question :--
The House divided : Ayes 67, Noes 197.
Division No. 166] [7 pm
Ashdown, Rt Hon Paddy
Barnes, Harry (Derbyshire NE)
Barnes, Mrs Rosie (Greenwich)
Beith, A. J.
Buckley, George J.
Campbell-Savours, D. N.
Carlile, Alex (Mont'g)
Clarke, Tom (Monklands W)
Clwyd, Mrs Ann
Forsythe, Clifford (Antrim S)
Godman, Dr Norman A.
Golding, Mrs Llin
Griffiths, Win (Bridgend)
Heffer, Eric S.
Hughes, Simon (Southwark)
Johnston, Sir Russell
Jones, Martyn (Clwyd S W)
McKay, Allen (Barnsley West)
Mahon, Mrs Alice
Michie, Mrs Ray (Arg'l & Bute)
Pike, Peter L.
Powell, Ray (Ogmore)
Quin, Ms Joyce
Rees, Rt Hon Merlyn