House of Commons Hansard Debates for 16 May 1989

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create have been dissipated, just like the wealth from North sea oil. That wealth ought to have been harnessed and used to develop new industries and create new jobs, but that has not happened. That is the great tragedy of the last 10 years. Where are the sunrise industries that we ought to be developing with the benefit of the wealth we have produced? They are not here, or not many of them are.

Mr. Richard Holt (Langbaurgh) : They are in Cleveland.

Mr. Crowther : The hon. Gentleman says they are in Cleveland. He is extremely fortunate if they are in Cleveland, but there are not very many or we would not be running this massive trade deficit in information technology, electronics and telecommunications, the very industries on which any advanced country has to depend in the future to be able to revive the manufacturing base. It is an appalling tragedy that the country which led the first industrial revolution is now trailing so far behind many other countries in the world in the second industrial revolution.

Much of the problem stems from the fact that successive Secretaries of State for Trade and Industry--and, my goodness, we have had an awful lot in the last 10 years--have all failed to take the slightest interest in manufacturing. The Minister shakes his head, but it is a fact. We have met them all in the Select Committee on Trade and Industry. We have never managed to persuade any of them that manufacturing really matters. We have drawn attention to this problem time after time.

Lack of time will not allow me to quote very much, and I draw the attention of the House to only one of our reports, produced in May 1984, when we were very concerned about the great imbalance in trade in manufactures between this country and the rest of the EEC. It was already running at £8 billion a year, and our Select Committee, in its unanimous report, found it necessary to describe the attitude of the then Secretary of State, the right hon. Member for Chingford (Mr. Tebbit), as short-sighted and complacent, which indeed it was. The essence of what we were saying in that report five years ago was that if we did not do something urgently to revive our manufacturing industries, we would be in very serious trouble in a few years' time. The question we were putting to the House and to the Government was : what do we live on when the North sea oil starts to run out? Of course, the chickens have come home to roost in this record and still rising trade deficit.

I had always understood that this country was a trading nation--we were all told that at school--and I cannot, for the life of me, understand how it can be argued that a trading nation which spends enormously more buying goods than it receives for the goods it sells can be regarded as successful. I may be taking a very simplistic view, but that is certainly a simple concept, which I should have thought would be easily understood by the grocer's daughter who leads the Conservative party and has the benefit of being Prime Minister for another couple of years or so. I do not think that Alderman Roberts of Grantham would have stayed in business very long if he had operated on the basis of developing a huge and increasing deficit year by year. Traders do not stay in business that way, and I do not think that the Government can pretend that we are doing nicely on that basis.

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I greatly admire the companies that are exporting manufactured goods and struggling against the enormous difficulties created by high interest rates, for example, and the quite unrealistic exchange rate, to increase those exports, but they cannot compensate for the fact that we have an absolute flood of imports coming into the country, largely because our manufacturing industries in many important sectors have been completely wiped out ; they are just not there any more. In other fields they are being run down to the point at which they can no longer even meet the demands of the home market. When we relate all that to the profligacy of the Chancellor of the Exchequer's taxation policy, no one should be surprised at this huge inrush of imports.

Ministers frequently proclaim the virtues of private enterprise. If the Government had been managing any ordinary private sector company in the way that they manage the country, they would have been sacked years ago.

8.30 pm

Mr. Lewis Stevens (Nuneaton) : The hon. Members for Dagenham (Mr. Gould) and for Rotherham (Mr. Crowther) may have given to our competitors in Europe and elsewhere a picture of the British economy which they will be delighted to see. All the gloom that they portrayed was such that no one could believe that we now have a manufacturing industry that is likely to be able to compete with any worthwhile economy in the world. As my hon. Friend the Member for Wolverhampton, North-East (Mrs. Hicks) said, the picture of doom and gloom is completely false.

The pessimism of the Opposition about manufacturing industry is that it has not over the past 10 years come out of the shadows of the trade union domination in which it suffered for 20 years. In the last 10 years, improved technology, productivity and industrial relations have brought British industry to the position where it is able to engage in genuine competition better than at any time since the last war.

The impression that we do not want to invest in industry, that people do not want to know about engineering and that manufacturing is always the poor relation has perhaps an element of truth in it. Many things said by the Opposition often have. However, it is the emphasis on that which is so wrong. Companies such as Rolls-Royce have not only developing technology but are able to compete in world markets much more successfully than one would have envisaged even 10 years ago. The orders won by Rolls-Royce in the last few months are some of the most substantial that the company has ever had. We must congratulate the company, the workers on the shop floor and those in design and development and in other departments on their success. I have a Rolls-Royce company in my constituency. It manufactures marine engines, but in the near future it will move to other products. The Opposition tried to talk down the privatisation of Rolls-Royce. They said that it would not be able to do its job in the private sector, but it has proved that it can do a very good job indeed. The Opposition talk about the loss of manufacturing jobs, and the right hon. Member for Salford, East (Mr. Orme) mentioned textiles. Certainly the textile industry went through a rough time during the major recession. It is

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interesting to note that in my constituency some of the developing industries are textile companies that are competing and exporting. The second largest employer in my constituency is a textile company. It has built a new factory, is bringing in new techniques and is able to employ more staff than it did a few years ago. Not only are existing companies developing because of the better climate, but new companis are coming into an industry that was always in decline. Many companies, including those in textiles, have developed in the last 10 years because the Government have provided a framework that has encouraged large and small companies to develop and take part in the necessary development of our total economy.

Manufacturing has many more problems than most other types of industry, and it is necessary for Government to be conscious of the importance of an industrial base to the total economy. The wealth-creating aspect of manufacturing is fundamental to a country's development in terms of jobs and the balance of payments and in the general wealth of people. We can ensure that wealth creation only by continuing the attitude to development that we have adopted in recent years.

Some years ago we had a machine tool industry, in which, among others, I worked, but it largely disappeared. However, there should not be too much gloom about that, because anyone who attended the machine tool exhibition at the National Exhibition Centre will have seen that independent British manufacturers and British manufacturers in collaboration with other companies have developed British machine tools. Those tools have started to appear again on the market and to compete. From the ashes of the former machine tool industry there is now a growing industry. It is not as big as it was before, but it is growing.

We must also recognise that in order to develop as fast as we should like manufacturing industry may sometimes need special Government measures. The Government have provided such measures to help manufacturers, especially small companies to which they have given various grants, particularly to those involved in high technology projects. However, we may have to look at other measures to encourage some of the smaller companies. Measures that will assist cash flow and perhaps tax delays or even VAT delays may be necessary to allow some of those companies to develop rather faster. At one time, old-style apprenticeships were the best that we had, but that is no longer true. Some of the apprenticeships were superb, but others were weak, and that also applied to many of Britain's other training schemes. The Government have now developed a range of training that is wider than we have ever had, and it is available for people from the age of 16. That should greatly help manufacturers, because it brings together industry and education within the orbit of Government training. Such co-operation did not exist before, and that was why we had weak training systems in the 1950s, 1960s and 1970s. We have also encouraged the higher education available at polytechnics and universities where courses are geared more to the needs of individuals and industry than they were in the past. They are not purely academic courses. That is the kind of development that we want. Local polytechnics are now running courses which 10 years ago could not have been envisaged, but yet they are necessary because they provide engineering courses that

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are directly relevant to local companies. The picture is not gloomy. We can look forward to making all our industries competitive in Europe and in wider markets. If we adopt an attitude of, "Oh dear, we have problems, perhaps we had better stop", we will get nowhere. That often happened in the 1960s and when a company came up against a problem about introducing new technology or faced difficulty in finding workers projects were sometimes put off. I do not say that that was due to trade unions being awkward. It was a mixture of difficulties created by unions and management.

Today there is an acceptance by unions of flexibility within companies and an acceptance by management of the need to generate a movement that keeps going forward. The Opposition skipped over productivity, but it is one of the most fundamental aspects of competition. Productivity is not a static concept. One does not improve productivity, sit back and say, "We have done it. We are better now." It is an ongoing process, and manufacturing and all industries must recognise the need for continual productivity improvements as part of their businesses. That must be a major priority if business of all sorts is genuinely to compete in the markets.

We have a future in manufacturing. That is not to overlook the need for help and a drive on training and education. Much remains to be done, but a good start has been made under Conservative rule. The whole issue was ignored by the last Labour Government and the fact that a problem existed was not even realised by some Governments before that.

The Conservatives in recent years have appreciated the need for manufacturing to develop, and help has been provided in many ways and in various areas. By recognising the needs of manufacturers, we have already come a long way. There is still a long way to go before we are truly competitive, but the path which the Government have set will prove to be the path to a more successful and reliable manufacturing base.

8.41 pm

Mr. Charles Kennedy (Ross, Cromarty and Skye) : Despite some of the optimistic tones that predictably have been emanating from Conservative Members, I cannot but feel that an initial comment on those tones is to ask why, if things are so good, things are so bad, certainly in the part of the country from where I come.

I cannot claim to speak with knowledge of the part of the country represented by the hon. Member for Wolverhampton, North-East (Mrs. Hicks), but it sounds as though the manna from the Government is falling weakly from heaven there. The extremely encouraging picture she painted of her constituency is not mirrored in many other constituencies, particularly the further north one goes in Britain. Apart from being extremely supportive of Government policy, her remarks represented an eloquent underlining of the extent to which Britain has become a deeply divided nation, socially and politically, under Conservative rule.

The nation and its industrial base has been hit twice by the Government. It was hit first between 1979 and 1981 when they pursued massive deflationary Budget strategies which resulted in the wholesale rundown and closure of large sections of manufacturing industry. That was bad

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enough. But as a result, any figures that are now cited in support of the apparent manufacturing recovery begin at such a low base, as a result of the 1979-81 collapse, that it is easier to make any recovery look better than it is.

The economy has been, and is being, hit for a second time--and all the harder from the point of view of our economic base--by the tax-cutting strategies of the last two Budgets and by the consumer boom sucking in consumer imports. The Government have always displayed a tendency to change the basis of calculation when the figures show an unhealthy story. That has happened with unemployment ; there have been a series of changes in the method of calculating the totals. The Chancellor now wants mortgage interest costs to be removed from the inflation index because it puts up the index too high for his liking.

Casting one's mind back to the previous debate today and the willingness of the Government to indulge in propaganda at the taxpayers' expense, one wonders whether, if the balance of trade continues to decline, they will try to withdraw imports from the equation, so making our balance of trade position look not nearly so bad.

Mr. Crowther : The hon. Gentleman may be giving the Government ideas.

Mr. Kennedy : If I get a 10 per cent. return for feeding in that idea to the propaganda machine that Saatchi and Saatchi has developed in recent years, I shall be able to retire happy almost immediately. What can we do to improve our industrial performance and manufacturing base? There are three key problems to which I wish to refer--low productivity, high unemployment and high inflation, which is linked to poor competitiveness.

In 1960 we were the equals of France and Germany in productivity. We have now slipped way behind. Our productivity has a real impact on our people's standard of living, so we have by far the lowest pensions, we spend less on health and we have the smallest proportion of young people in full-time education. Our closest competitors in Europe are leaving us standing in all those respects.

Four main factors cause low productivity : shortages of skills and basic education, poor industrial relations at times, inadequate research and development and inadequate competition. Given our skill shortages and low levels of basic education, we should be moving towards a right to numeracy in our education system. In other words, it should become increasingly unacceptable for the teaching of maths in schools and colleges without ultimately a certificate of competency.

There should be training incentives. Employers who train less than the average for their industry--the Government should start thinking in these terms--should pay a tax equivalent to the extent of the under-training. Employers who train more than the average should be reimbursed to the extent of that extra training. The amount of training should be measured in terms of expenditure as certified by a company's auditors.

The Companies Bill began its Committee stage this morning. The Government displayed their open-mindedness in the first two and half hours of the Committee's deliberations by removing an amendment on political donations which was inserted in another place. I

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hope that the Government use some of the remaining time that the Bill has for its passage through Parliament by pursuing some of the ideas that I am putting forward.

Next, there should be a right to training. Anybody employing a person under 18 years of age should be encouraged to release that youngster for at least one day a week for education and training at the employer's expense. In the past, the Government have hesitated to introduce such a concept for fear of causing youth unemployment. Under the training incentive proposal that I have outlined, using the tax system based on a company's audited accounts, employers would no longer have an incentive to avoid employing young people with whom they had to enter into training commitments.

Those are some proposals by which the Government could begin to shake up the industrial base and contribute towards industrial, and particularly manufacturing, recovery. They should also look to civil research and development. Our education structures, compared with those of our main industrial competitors, are such that we are failing woefully to provide anything like the tertiary and skill education that, for example, Japan and north America manage to provide in competition with us.

It is attitudinal, and I agree with what hon. Members on both sides have said about education. About a year ago I spoke before a high school audience in Edinburgh, most of whom were going on to some form of tertiary education. One thinks of the proud and distinguished engineering traditions of Scotland. When I asked that audience how many would be going into law, medicine, the arts and so on, it was clear that the number going into engineering was a minute fraction of the total. In Japan, "engineer" is a social handle. It is a position in society in the way "doctor of medicine" is in this country. Our attitude must change.

High unemployment, high rates of inflation and poor competitiveness have dogged this country throughout the period of Conservative rule. We should be looking to full United Kingdom membership of the European monetary system.

There is a very interesting debate developing within the Conservative party, although I do not think that I can dignify it with the description "debate". There is a full stand-up, drag- em-out fight going on in the Conservative party. There is no doubt that the SLD had the good sense to get our little skirmish behind us in the first half of this Parliament and we will spend the second half being constructive. The Government look as if they are going to spend the second half of this Parliament involved in their own internal punch-up and I welcome that because it will help the Opposition parties generally.

We should be working towards full EMS entry because that would help our industrial base, help our exporters and create far better conditions for them to operate. Conservatives advocating that approach will, I suspect, by the time of the next election or not long after it be proved to be on the correct side in that argument. That, on an international basis in terms of the ability of this country to compete better internationally, would be a major attainment. It is well within the grasp of the Government. It now seems to be fashionable to assume that a move back towards something much closer to full employment is not attainable whatever economic system one adopts or whatever political goals one sets. But we should look at countries such as Sweden, where unemployment is close to being under 1.5 per cent., which is effectively zero unemployment given the flexibility of the labour market.

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I hope that, despite all the fiddling and fixing of the figures and the misplaced economic optimism of the Government about the economy, they will not lose sight of their tremendous, overriding social obligations to the millions who have lost gainful productive employment during their decade in office and of how important a priority it must remain to bring down unemployment by the production and creation of real jobs in the future.

I have one constituency appeal to make to the Minister. The greatest single manufacturing setback in my constituency was the closure of the Invergordon aluminium smelter. I will not rehearse the history now, but it closed because of a world slump in the price of aluminium and the inability to achieve-- [Interruption.] That plant went there with Conservative support in the 1960s. If the hon. Member for Langbaurgh (Mr. Holt) was not so woefully ignorant of recent political history he might know that.

It also failed because of the inadequacy, or ineffectiveness, of the power supply contract that had been negotiated. World aluminium prices have now substantially increased and British Alcan has commented publicly that electricity privatisation may create flexibility for a more favourable power contract to be negotiated. That being the case, I should be glad if the Minister would at least promise to keep his eye on that developing situation, because he will appreciate that any move towards reopening that plant in my constituency would be a major psychological and financial shot in the arm.

8.53 pm

Mr. Charles Wardle (Bexhill and Battle) : It seems to have become inevitable that whenever the House debates the state of British manufacturing industry an internecine clash follows about the correct interpretation of what has happened to manufacturing in the recent past. Today has been no exception. Opposition Members have made some strident claims about what they describe as the disintegration of our industrial base, the dramatic fall-off in manufacturing employment and the trade deficit in manufactured goods. My right hon. and hon. Friends point with much justification to a freer labour market, vigorous growth in output, greater productivity, higher profits and increased capital investment.

On both sides of the House, to my way of thinking, a rather too euphoric gloss is sometimes placed on industry's short-term prospects in Europe without what I would regard as sufficient concern for the devastating speed with which changes in technology will shortly be consigning even some of our more enterprising companies to iron-age-style obsolescence, and without enough awareness of what it will take to acquire a greater market share in the single European market ahead.

The trouble with a debate about what has already taken place is that it distracts attention from the important issues for industry's future and particularly the opportunities and challenges over the next decade. Nevertheless, any realistic assessment of where manufacturing industry's best strategy lies in the 1990s has to spring from an analysis of the key factors in our past performance. I shall try to keep my comments about that analysis as brief as possible.

There can be no doubt on either side of the House that captive markets in post-war Europe and the Commonwealth left British manufacturers complacent

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about order books in the 1950s and 1960s. That meant that they were later into new technology than our German and Japanese competitors. That had disastrous consequences for this country in the microchip revolution. But the real killer was inflation from 1972 or 1973 onwards because too many companies simply made for stock and watched paper profits accumulating on the shelf. Products remained unsold and simply rose in value, and that in turn encouraged poor cash-flow management, soft wage settlements and overmanning--a situation that was exploited with mindless shortsightedness and selfishness by many trade unions.

Ironically, one of the first people to signal the impending crisis was a trade union leader, Clive Jenkins of ASTMS--the Association of Scientific, Technical and Managerial Staffs. In a book that he published in 1979, before the winter of discontent--I think its title was "The Collapse of Work"--he predicted unemployment of 5 million or 6 million in the 1980s because he recognised the problems of overmanning. So, when the world recession began in 1980, British companies with too much stock, tight liquidity and bloated payrolls fell like ninepins and only the better managed companies managed to come through and survive.

No matter what Opposition Members may claim, from that time on the future of many traditional, steel-based, smoke-stack industries suddenly lay in the far east and the Third world, because even with automated production plant and efficient materials handling Europe could no longer compete with the direct and indirect labour costs of the developing world. So manufacturing in the west midlands and elsewhere was reduced to a rump eight or nine years ago. But, since then, with trade union legislation that has liberated individual workers, deregulation, lower inflation and more individual incentives, growth has accelerated, particularly in the defence field and in the hitherto sluggish state-run companies now in private hands. The Government have skilfully created a more positive business climate, with record output now being achieved from a much truncated manufacturing base. We have a leaner and fitter industry, better equipped and tightly controlled, but is it geared to win a greater market share in Europe, to ease the balance-of-payments gap and to make up the leeway on product innovation and manufacturing technology?

With continued realism and determination, it is certainly possible, but it will not happen if inflation is allowed to rise and recent hard-won progress is squandered. Nor shall we succeed unless industry and Government come to a clear understanding about several vital areas in which both have a part to play. I am talking not about collectivist nostrums or central planning but about the harsh realities of a highly competitive market place and the ability to create wealth.

First--with no disrespect to our excellent civil servants--Government have to take into account the importance of including in their official ranks people who understand markets, money-making and line management to add to Government's understanding of the realities of the task of running industry. Not that Government should run industry, but they need to understand how it is done and all too often there is a gap in that understanding.

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Secondly, industry must grasp the significance of research and development if our future is to be anything but that of a neo-colonialist subcontractor and national assembly plant in the medium-term future. Companies are making profits and they have to put a large share of those profits into research and development if we are to have businesses in the future. It is the companies' responsibility.

Thirdly, Government have to shed their dirigiste inhibitions in at least one respect. They simply have to understand that the creation of new standards for the European single market must be achieved in a way that helps British competitiveness. That cannot be ignored. Fourthly, excellent recent advances in training must be accelerated by employers, not by the Government. Employers must go to schools and colleges and participate in training programmes to woo the industrial workers of tomorrow. Fifthly, vast investment is required in our hopelessly inadequate transport infrastructure. We must emulate the efforts of our EC partners, and the swiftest and cheapest means of doing that is to give the job to the private sector and to private finance wherever it is practicable.

Finally, the City--and banks and institutional investors in particular-- must grasp the fact that, while takeovers can be strategically important and worthwhile, the companies meriting the highest esteem are those which successfully invest in in-house product development and marketing strategies of their own. Too many companies in our highly sophisticated stock market look for next year's growth in earnings per share from the issue of additional equity for acquisitions, whereas the real glamour should attach to the businesses that ruthlessly seek internal growth and expansion. That is the way to create market winners and perhaps even to win back our European market share of consumer goods.

If those challenges--which are management challenges for private industry and Government alike--are met, we have a realistic chance of taking the lead in Europe by means of our own competitiveness before the turn of the century. If we do not do so, this country, which led the way to the first industrial revolution, will be relegated to the second division of manufacturing in the second industrial revolution in the next century. We have the opportunity to succeed. It is up to us.

9.1 pm

Mrs. Alice Mahon (Halifax) : Try as I might, I cannot find an economic miracle in manufacturing, but some extraordinary claims have been made tonight and, with a first name like mine, I am reluctant to talk about wonderland, white rabbits and mad hatters. However, listening to the contributions of some Conservative Members, I feel that I am in that kind of world.

I will not tolerate the Minister or anyone else saying that the fine industries that were lost to my constituency in the earlier years of the Government's reign were lost simply because they were overmanned or obsolete. We made the finest machine tools in the world and could be doing so still had there been a decent economic policy and a Government committed to industry. Nevertheless, tonight I will settle for a reassurance that the Government will at least take manufacturing's next period of crisis seriously. Sadly, I do not think that they will. Everyone else seems to be doing so. A report from the British Textile Confederation published this week states :

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"It is staggering to realise just how much of trade in textiles is distorted, often by interventionist policies by governments world-wide rather than being carried out on the basis of normal commercial principles."

There is a message for the Government that has nothing to do with competitiveness but has everything to do with British business saying to the Government, "Will you help and stop unfair practices? Mr. Peter Booth of the Transport and General Workers Union textile group reports that 15,000 jobs were lost in the textile industry last year and predicts that another 20,000 will be lost this year. In a very good debate on manufacturing in another place recently, Lord Ezra commented that :

"unless we have a very strong manufacturing industrial base we shall not be able to balance our trade and our payments with the rest of the world. In order to achieve that, we have to build up that base."--[ Official Report, House of Lords, 26 April 1989 ; Vol. 506, c. 1313.]

Those who took part in that debate, almost without exception, expressed the same sentiments. Concern was also expressed about Britain's £15 billion trade deficit. I add my voice to their warnings. I am pleased that we are having this debate. I asked my party to arrange it.

In the travel-to-work area of the district council that covers both my constituency and Calder Valley, 1,000 jobs have been lost since Christmas across various manufacturing industries, including engineering, machine tools, a new brush company that opened with high hopes, bedding, furniture, and textiles.

One of the saddest cases is that of Crosrol, specialists in textile machinery, which lost hundreds of jobs in the early 1980s but fought back. As my hon. Friend the Member for Dagenham (Mr. Gould) might say, it became leaner, fitter and more competitive. Last year it won the Queen's award for industry, but is now again announcing job losses. All those firms attribute their situation to some of the Government's economic policies.

In 1987-88, we were already feeling the chill wind of the need to be more profitable in the run-up to 1992. In my constituency, there was a major closure with the loss of 1,000 jobs at KP Foods. Even though that company was profitable, it was not profitable enough to cope with the competition it anticipates that 1992 will bring. A further 500 jobs are still to go at that company. The Government know full well that their one-club economic policy of high interest rates seriously damages industry, particularly small companies. A town such as Halifax relies on the success of small companies. A large carpet mill, Dean Clough, closed, but was reopened, housing a number of small businesses. However, the Government's policy of high interest rates and high energy and water charges is harming those small businesses, which are finding it very difficult to compete. Towns such as Halifax suffer because the Government have no regional policy. The Government view local unemployment statistics as reliable indicators of the local economy but conveniently ignore the army of invisible unemployed, whose identity in the labour market disappeared down a departmental black hole of statistics as the need to get people off the unemployment register became paramount.

The Government do not allow councils such as Halifax capital budgets sufficiently large to help industry through infrastructure. No money is available except to inner cities or urban development areas. We have pleaded with the Minister for objective 2 status as a town surrounded by

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others having assisted areas status, and we suffer greatly from that situation. The economy is overheating in the south -east, with companies looking to relocate, but the Government's response is yet another local government Bill that will curtail the power of local authorities even further. They will not be allowed to help with infrastructure or assist industry to relocate.

As to manufacturing, the market has failed people miserably-- [Interruption.] I am glad that the hon. Member for Wolverhampton, North-East (Mrs. Hicks) has such a happy story to tell. Sadly, I have not. I am sorry that Conservative Members see fit to laugh. If they had seen 1,000 jobs lost in three months in their constituencies they would not find it very funny. Another 500 jobs are still to be lost, and the economic indicators are against further employment. We face a skills shortage in the run-up to 1992 in many of the industries that are doing well, which must raise questions about the Government's much-publicised training schemes, especially YTS and ET. We have not invested in research and development. Two years ago, the Prime Minister boasted that £210 million would be spent on the Link scheme, but only £60 million has been spent. I suspect that it is because the Government are not really interested in research and development or training for the manufacturing industry. The Government have to face up to the seriousness of the situation. Perhaps the very short debate this evening will enable them to do that but quite frankly, given the attitude of some Conservative Members, I seriously doubt it.

9.9 pm

Mr. Alistair Burt (Bury, North) : This evening we have had a good debate, sharpening up attitudes on both sides of the House, but with a good deal of moderation and acceptance of the basic ills in the manufacturing sector over the years.

As the House will know, my constituency is in a traditional manufacturing area, south-east Lancashire, the cotton workshop of the world, but no longer are Bury, Ramsbottom and Tottington exclusively manufacturing towns. We have not talked very much about the development of a more mixed pattern of employment in traditional manufacturing areas. In my constituency the index of manufacturing and service industries reveals that there are more than 1,000 firms in my constituency and the area immediately surrounding it. That represents a large number of companies of a wide variety of natures. The fact that manufacturing is becoming less important is balanced by developments in other sectors.

In a traditional manufacturing area there are bound to be mixed views about the changing nature of the towns. Tradition dies hard and industrial closures have hurt the area. When I first became a Member of Parliament unemployment in my constituency was something like 13 per cent. and rising. Now it is down to something like 6 per cent., but recently there has been one closure and some jobs have been lost in another firm. Unemployment hurts and is still hurting. In the past few years unemployment has fallen, but the Government must maintain their goal of reducing unemployment as much as possible.

There has been nothing sudden about the changing nature of my constituency. It has not happened post-1979. That is why I feel that the central thrust of the Opposition motion is misguided. The true damage to manufacturing

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industry occurred in the years of decline this century when the golden age of British manufacturing came to an end, either through no fault--as the closed markets of empire were opened up to other nations or as developing nations improved their economies--or through fault--learning late the post-war lessons about proper management, and failing to get industrial relations right on both sides of the industry. If the Opposition are genuinely looking for a Government to make a scapegoat, they should look nearer home, at the Labour Government between 1974 and 1979. The hon. Member for Dagenham (Mr. Gould) was talking about competitiveness and productivity. How did the appalling trade union legislation of 1974-79 improve our productivity? How much did secondary picketing do to improve British competitiveness and what part did double- digit inflation play in industrial regeneration? All those factors did enormous damage to manufacturing industry but have been neatly passed over by Opposition Members.

Since then areas such as mine have changed and have moved away from manufacturing. We should remember that some 200 years ago manufacturing businesses and companies were new. When John Kay's flying shuttle was invented in Bury, Bury had something like 2,089 inhabitants. There have been many changes. We look back nostalgically to that great industry. But at that time it was new. Therefore, we should welcome the new industries and the new employment into our areas. It may not be as romantic to look back at the creation of an Asda superstore or the construction of a Warner Brothers' multi-cinema complex, but they represent jobs and investment and will exist for a long time to come.

There has been nothing short of a reconstruction of the manufacturing industry in the north-west in the past 10 years. Of course the bulk orders to easy markets have gone, but in the wake of the protection that existed in the past we now have new technology, innovation, and improved attitudes towards design and customer relations. There have been improvements in quality and an increase in the manufacture of value added products.

Some firms in my constituency illustrate that change. In the textile industry, Bury is no longer involved in bulk textile manufacture, but it produces high value-added goods and companies such as Elton-Cop, part of the Coates-Viyella group, have followed the practice of good long-term investments that are now paying dividends. In the paper industry, Bury no longer manufactures paper in bulk, but specialises. A company called Cromptons specialises in teabags and sausage skins. The sausage skins are exported to Germany. If my right hon. Friend the Prime Minister ever does anything as indelicate as eating a sausage with Chancellor Kohl in Germany, I would bet a pound to a penny that the sausage skin was made in my constituency. In the paper-making industry, companies such as Holder-Pamac have developed their own market over the past 10 years because the quality of design and innovation are better than many of their competitors. In the ventilation and ducting industry, Henry Hargreaves has a world wide reputation because it is the best in its field.

In areas such as my constituency and other parts of the north-west, the manufacturing industry has survived because it has learned the basic lessons of good

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management, good labour relations, and a better attitude to success from the shop floor to the boardroom and an understanding that they are all in it together. I do not believe that there are two sides of industry any longer. Those that believe in two sides believe in conflict and division which bring industry to a halt. But more often people feel that they are all in it together. Politicians may talk, but those in the industry do not want to see division and know how important it is to fight the world markets together. Lastly, companies in the north-west have learnt the value of good decent investment over a long period of time.

I should like to flag up some vital issues to make sure that the Government get it absolutely right in future. There is no doubt that the reconstruction of the north-west has been helped immeasurably by Government policies. But in the short term the Government must address some vital issues. First, there is no doubt that the high value of the pound causes difficulty to our exporters. Secondly, our manufacturers need stability in the exchange rates. Thirdly, interest rates should be lower, but we already know that. Fourthly, the Government should take a more aggressive attitude to unfair foreign competition. The textile industry has been through a miserable time recently, particularly with Turkey. It has taken time to order an EC investigation, which is now taking place. But the Government must be more tough when they are confronted with unfair opposition from abroad.

Finally, I should like to refer to something that has been mentioned by other hon. Members--education and training. Last year, the Bow Group commissioned a survey among 160 major industrialists. We asked a range of questions about a variety of issues, but we were surprised at the emphasis that employers placed on education. We are surprised that the emphasis given to the role of education outstripped the more obvious targets for attention. We felt that it showed

"an acute grasp of a depressingly old problem--how to stimulate and prepare the young for an interest in industry in a nation whose culture has too often been seen as anti-industry".

We were impressed that of all the policies discussed, education was considered most important for the future.

The lesson is very clear. We have to prepare our children better for the manufacturing industry of the future. It is a disgrace that the British manufacturing industry is held in such poor esteem. The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) referred to that. It is true that for some reason, in a world which has been built by industry and in a region such as the north-west which has been built on the back of manufacturing industry, engineers are still despised as men in blue cotton overalls with oily hands wiping away the cotton waste. That is not the reality, nor will it be the reality in future. We must all get our attitude right towards education and towards industry.

In that same summary by the Bow Group 160 industrialists who were questioned said that the Government's performance was

"highly rated and was considered to have been better in the second term of Government than in the first."

There is no doubt that the policies on which manufacturing industry is based are sound and will provide a good base for the future. If the Government take note of short-term concerns, manufacturing industry will have a strong and secure base, providing, solid employment in the future.

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9.19 pm

Mr. James Lamond (Oldham, Central and Royton) : Government Back- Bench Members have tried to support their Minister's speech by painting a rosy picture of what is happening in their constituencies. It is not difficult to pick out one or two firms where productivity, efficiency and profitability have improved and investment has increased. But one or two such firms do not mean that the whole of manufacturing industry is doing well.

The unfortunate and important fact that spoils the rosy picture is what is known as the bottom line--the manufacturing industry deficit of over £14 billion a year. That cannot be ignored by any hon. Member. I remember great play being made in the 1970s by the Tory party and the press of a monthly deficit of £35 million that was to bring the country to its knees. No doubt the publicity given to that fact cost us many votes. It was important then and it is much more important now when £14 billion worth of manufactured goods are coming into the country each year. If all those firms are expanding so well, why must people go abroad to buy the things that they want? I am glad that the hon. Member for Bury, North (Mr. Burt) came at last in his speech to criticism of the Government. I had begun to think that he had forgotten that he represents an area where textiles are still important. Employment in textiles represents 9 per cent. of manufacturing employment. Hon. Members do not need to believe me when I tell them that things are bad in the textile industry ; they have only to read the annual statement of the British Textile Confederation that was issued this week. The president, Mr. Spencer, put his finger fairly and squarely on two matters that are causing problems--high interest rates and the over-valued pound. Both those are the direct responsibility of the Government. If they want manufacturing industry, and in particular textiles, to expand and provide employment, they have to revise their economic policy. It is the policy of the Chancellor to maintain high interest rates and to threaten us with even higher interest rates unless inflation comes down.

Tory Back Benchers have attempted to demonstrate that the trade union movement was responsible for all the difficulties in the past. Let me draw attention to the record of the trade unions in textiles. I admit immediately that there has been a small labour problem in the textile industry recently. Very unusually, the textile industry had its first strike for decades. What did the workers achieve? What were they determined to obtain that would bring the industry to its knees? At the end of their struggle and all the trouble they caused, they had to accept an increase in minimum earnings from £85 to £95 for a 39-hour week. I want anyone who says that the industry is being bled by the workers employed in it to tell me what his salary is and whether he could live on £95 a week.

The hon. Member for Bury, North mentioned other matters that concern the textile industry. The hon. Member for Macclesfield (Mr. Winterton), the employers in the industry and I are to see the Minister responsible for textiles at the end of the week to draw his attention to the inaction of the Government in protecting the industry against Turkish imports. In the opinion of Mr. Spencer and myself, Turkey's behaviour has been outrageous. The increased imports that we can expect in the EEC from China will kill the textile trade in this country and will end the manufacturing industry which employs 9 per cent. of

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our people. I hope that the Minister, in whom I still have some faith, will get some action. Now and again he shows a little independence and determination to stand up for the country. I look to him to do something when we come to see him on Thursday.

9.25 pm

Mr. Richard Holt (Langbaurgh) : It is my privilege to be the only Member from the north-east of England to speak in the debate. I suppose that that in itself is significant. The Labour party in the north-east has abandoned debates on this subject because it does not wish to cross swords. We have not had a debate but rather a series of well-read, or in some cases not so well-read, speeches. That disappoints me when we are supposed to be a debating Chamber, with the cut and thrust of debate. The tone of the debate was set by the hon. Member for Dagenham (Mr. Gould) who opened for the Opposition. He did not wish to be interrupted because he did not want to have to answer any of the questions that would have been put to him by Government Back Benchers.

Last week there was a television programme on Tyne Tees produced by the Northern development corporation. It was a debate in the north-east about the north-east, dealing with why we are not projected nationally as well as we should be. It must have been an important debate because Brian Redhead was imported to compere the programme. The cat was let out of the bag during the debate when the regional organiser of the Transport and General Workers Union, Joe Mills, said :

"Of course things are better in the north-east now. It hurts me to have to say so but begrudgingly I have to say that Margaret Thatcher has been responsible for this."--(Points of order, col. 958, 24 May 1989.)

Up to 1980, a total of 47,000 people worked in British Steel and ICI on Teesside. After 1980 the numbers went down. Now only 12,000 work in those two industries. I was interested to hear John Harvey-Jones' virtue being extolled by the Opposition. He did a magnificent job for ICI. He saved the company and made it into the great world leader that it is today, but he did it at the expense of putting 18,000 to 20,000 people on the dole in two years. If we consider the history of British Steel, we see that overmanning continued in that industry until we grasped the nettle in 1979 and 1980. The result is that the figures for British Steel today show that it is producing 110, 115 and 120 per cent. of what was being produced when the labour force was four times greater. That is a measure of the improvement in productivity that we have seen over the past 10 years.

I hear Opposition Members say, "They are speaking for their own little patch." I can speak for the entire area of Cleveland, and I am not quoting from the Conservative piece of literature. The headline reads : "Teesside economy still booming". It is booming, as hon. Members will see if they go up there and have a look. The trouble is that very few Opposition Members bother to go and see for themselves.

Only last week it was announced that a new American company, Millecom, was coming to Darlington and bringing with it 1,000 jobs. That is on top of all the other investment that has come into the north-east over the past six years. The area still has high unemployment--judged, perhaps, according to different yardsticks from one day to

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