House of Commons Hansard Debates for 16 May 1989

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another--but, if I may speak parochially, unemployment in my constituency has fallen by 41.66 per cent. in the past five years, and that is quite a reduction.

Opposition Members may say that we are talking only about small areas. The pharmaceutical industry in the north-east now receives 50 per cent. of all the fixed investment in the region. More than 200 new electronics firms have been established, along with more than 300 companies associated with offshore technology. We have 60 companies working on advanced materials. Investment is coming in all the time : £300 million of investment and 4,000 jobs. Fujitsu is said to be the latest, but it has been superseded by Millecom, and I believe that British Telecom itself will be making a similar announcement in the not too distant future.

What is new and remarkable about what has happened in the north-east is that self-employment has become an option that people take up. Historically, people in the north-east have left school, gone to work, taken their apprenticeships and worked for one company all their lives until they retired. Those days, however, are no longer with us ; that type of industry is gone. [Interruption.]

Mr. Patrick McLoughlin (Derbyshire, West) : Opposition Members are not interested.

Mr. Holt : I know that. I was more interested in the fact that Mr. Speaker was looking at me, because I was told that I could speak until 9.35 pm. As I am now receiving different indications, I apologise. I accept your stricture, Mr. Speaker, and I will stop speaking if another hon. Member wishes to speak.

Let me say merely that the message from the north-east is not gloom and doom ; it shows a future built on new industries. Our old, overmanned heavy industries have gone. The future is ours, and that is why the Conservative party will sweep the north-east of England from now on.

9.31 pm

Mr. Michael J. Martin (Glasgow, Springburn) : I am interested in the rosy employment pictures painted by Conservative Members when they talk about their areas. I do not think that anyone would deny that Glaswegians are triers : they have tried immensely hard to improve their city, and have succeeded in many respects. But hon. Member should not kid themselves by painting such rosy pictures. Unemployment in my constituency is more than 24 per cent., which is a national disgrace.

My hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond) spoke of the decline of industry. I served my apprenticeship as a young sheet metal worker in my constituency. It was a small company employing 70 people, surrounded by others employing 300 or 400--foundries and heavy engineering firms. The only company left now is the one in which I served my apprenticeship. All the others have gone, partly because of the decline caused by the present Government.

An interesting fact of which I have been told by the secretary of the sheet metal workers branch of my union is that there is a shortage of skilled sheet metal workers in the Glasgow area. As my hon. Friend said, we have not invested in training, and as a result firms are desperate for skilled workers. When I arrived here 10 years ago as a new

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Member, I said that if the economy improved we would need skilled people, and that we should already be investing.

It is nonsense to say that the training schemes that we have are the best that the Government can offer. We cannot obtain good apprenticeships unless people are working with the materials and tools of the trade, and rubbing shoulders with skilled workers. This Chamber would not have been built if it had not been for the traditions passed on by craftsmen, and the same is true of industry. We would be failing in our duty if we did not think more carefully about adult apprenticeships. Australia, New Zealand, Canada and America are interested in adult apprenticeships, yet we have people who have been without a proper job for five or six years and who are not getting the opportunity to serve an apprenticeship, which would be the least we could do for them.

It is nonsense to say that industrial relations improved only when we had a Tory Government. The Government should tell that to the people who work in the shipyards, to the women and the contract cleaners who have been exploited. Tory legislation has done away with the rights of the low paid, who had few rights to start with. Let no one fool anyone that Tory legislation brought about good industrial relations. In my constituency, factories have closed despite excellent industrial relations and increases in productivity. The companies wanted to centralise and so closed down their Glasgow offices. It is nonsense that factories that were profitable and had increased productivity were closed.

I hope that the Minister will take on board the views that we have expressed in this debate.

9.36 pm

Mr. John Garrett (Norwich, South) : This has been a brief but important debate. I do not think that anyone could deny that there has been a decline in manufacturing industry. One fifth of it disappeared between 1980 and 1982 and the growth thereafter has not replaced that loss. We have had examples from my right hon. and hon. Friends of the continuing loss in manufacturing. My right Friend the Member for Salford, East (Mr. Orme) talked about engineering and car manufacturing, my hon. Friend the Member for Rotherham (Mr. Crowther) spoke about the steel industry, my hon. Friend the Member for Halifax (Mrs. Mahon) spoke about the textile and other industries, my hon. Friend the Member for Oldham, Central and Royton (Mr. Lamond) spoke about textiles and my hon. Friend the Member for Glasgow, Springburn (Mr. Martin) spoke about engineering.

The decline in manufacturing industry derives from major structural changes in our industrial base for which the Government appear to have no remedy. In addition to adverse structural changes, we have wholly inadequate management and vocational training systems, which are required to support a modern manufacturing country. Clearly, that is the Government's responsibility. The immediate problem is the remarkable deterioration in the United Kingdom trade balance last year, which was caused primarily by a massive increase in the import of consumer goods such as cars, clothing, textiles and household electronic goods. The Government's claim that rising imports are largely capital goods to re-equip British industry simply is not true. Even if it were, it would simply

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illustrate the collapse in our capital goods and equipment industries and our inability to supply. I have never understood why the Government feel that that is something to boast about. This country now has to import machinery to equip our industries and we pay for those imports of equipment in oil exports. In other words, we import equipment and export commodities--a trade pattern far more common in an underdeveloped country than a modern manufacturing country. The late Austen Albu, who some may remember as a Labour Member of Parliament, said some years ago that we export bulk and import refinement. The problem he identified then is much worse today when we import equipment and export oil.

The three large sectors of manufacturing in which we are weakest are cars and parts, where the deficit was £5 billion last year, clothing and textiles, in which the deficit was nearly £2 billion, and consumer electronics, in which the deficit was £1.5 billion. Twenty years ago those were staple industries in Britain and a decade ago we still had a substantial international presence in all of them. We no longer have a major international volume car manufacturer. The French have two and produce twice as many cars, trucks and other vehicles as we do. The penetration of imported cars into the domestic market reached 56 per cent. last year and commercial vehicle imports reached 40 per cent. As a percentage of the domestic market, imports of buses and coaches rose in the past decade from 3 per cent. to 38 per cent. When I worked in the motor industry, we used to be the suppliers of trucks and buses to the world. The standard truck throughout the world was the Bedford truck, made by Vauxhall. Today we import most of our vehicles. It is remarkable that our vehicle manufacturing industry has declined so much that we now have only a minor share of our home market.

Domestic market penetration of imported textiles and of footwear has reached 50 per cent. Footwear used to be the basic manufacturing industry in my constituency but it is now reduced to one tenth of its former size. We are still losing jobs because of the exchange value of the pound and because of interest rates. That is what my local footwear manufacturers tell me.

All that could have been judged as a necessary or natural adjustment as we got out of industries for which we were no longer suited and moved into new industries. One could understand that, but our performance is no better in the new technically advanced industries. Let us take as an example information technology, in which we were pioneers. We now have an adverse balance of payments in information technology equipment and services of £2 billion per year. That is now the basic industry of a modern manufacturing country. That growing deficit occurs in a number of other high-tech R and D sectors, such as medical equipment in which, again, we used to be pioneers but where 60 per cent. of the home market is now accounted for by imports. Import penetration in chemicals, in which we have one of the world's leading companies, is now 41 per cent., up from 28 per cent. 10 years ago.

The Government make other claims about the health of our manufacturing industry. The recent increase in manufacturing investment, which appears now to have petered out, and about which we hear so much, has taken investment to barely the 1979 level. Manufacturing investment today is still well below its 1979 level as a percentage of GDP. The Government boast of the rapid

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growth in manufacturing productivity, but the fact is that at absolute levels our manufacturing productivity is still the lowest of any of the Group of Seven countries.

The Government clearly consider that our manufacturing trade balance, our manufacturing investment, our productivity, and our R and D should be left to the free play of market forces and that they have no duty to produce an industrial strategy, objectives or programmes of action. They may feel that they have no responsibility in those areas, but surely they have a responsibility in providing the education and training infrastructure for manufacturing. Indeed, from time to time, the Government appear to recognise their responsibilities for creating the skills that we need. I am deluged by press releases from the DTI and only the other day I noticed that the Government are giving their full backing to management training and to what is called the "management charter initiative". It is in that area that our weaknesses are most obvious.

The Confederation of British Industry recently carried out a comparative study of British and West German industrial performance. The reasons for our markedly inferior productivity compared with the Germans were not the traditional ones of older machinery, higher overheads, bad industrial relations, higher tax burden, less spending on R and D. The main reason was that West Germany's work force is better educated and better trained and is led by a management boasting a higher percentage of university-trained managers and using more advanced information technology. Germany has three times our percentage of workers with post-school qualifications, double our percentage of supervisors with post-school qualifications and double our percentage of managers with degrees. In Britain, only one in three managers has ever had any training and 70 per cent. of that was for less than five days a year.

A British Institute of Management survey in 1987 showed that half our managers started work at the age of 17 or younger and received no subsequent education. Professor Handy's report for the National Economic Development Office on management education said : "much of executive education is the teaching of sixth form subjects to middle aged executives ; it is remedial education instead of executive education."

At all levels British managers and workers have inferior education and training than our competitors. We no longer have the education and training to meet the needs of a manufacturing nation. In autumn 1988, the Oxford Review of Economic Policy summed it up when it stated that Britain is

"trapped in a low-skills equilibrium in which the majority of enterprises, staffed by poorly trained managers and workers, produce low quality goods and services".

With 1992 on the horizon, those weaknesses will become more apparent. I am sure that hon. Members of all parties will have received complaints that West Germany's industrial interests are dominating the engineering product standard-setting processes. Apparently representatives of the French chambers of commerce and of the West German trade associations turn up to the committees that set standards where, more often than not, we are not represented. We shall find our engineering industry dominated by German product quality standards.

Another worry about 1992 is the susceptibility of British firms to takeover, because of the relatively strong reliance of British companies on equity finance. There is a strong possibility of takeovers of British companies in

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areas of strong comparative advantage by predators from Europe, the United States and Japan, who want to establish themselves within the boundaries of the EEC in order to launch their attack on western Europe. That will be of no great advantages to our manufacturers, especially if the research and development and design is done back in the home countries of those predators.

Once the barriers are removed in 1992, price will become more important. The Government's cost burdens on industry--water, gas, the unified business rate and interest rates--will continue to be a massive handicap. Without any strategy for our manufacturing industry, and with a complete disregard of the need for industrial training and management education, the Government are leaving British manufacturing industry grossly under- prepared for 1992.

If we lurch along as we are at present, underinvested, under-researched and under-trained, British manufacturing industry's future is clear. We shall be an EEC bridgehead for the Japanese. We shall be assembling cars and electronics imported as kits from Japan. In addition, what is most valuable in British manufacturing industry will be under German or American control in joint ventures or in merged corporations in which Britain has a nominal share. Control--what the Germans call mind and management, of which they rarely let go--will be in foreign hands. It is our contention that the Government are presiding over the end of Britain as a manufacturing nation.

9.46 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Robert Atkins) : We have had a fascinating debate, albeit that one would not have guessed from the number of Opposition Members present that there was a three-line Whip for Opposition Members. None the less, many interesting points have come out of the debate, not least those contained in the speeches of my hon. Friends the Members for Wolverhampton, North- East (Mrs. Hicks), for Nuneaton (Mr. Stevens), for Bexhill and Battle (Mr. Wardle), for Bury, North (Mr. Burt) and for Langbaurgh (Mr. Holt). They all spoke with a considerable knowledge of the real world as they see it and of the industrial achievements in their constituencies.

One point that I suspect would be agreed across the party divide is the need to get across to young people the importance and the attraction of manufacturing industry. Perhaps if we were to get them a little younger-- for example, in the primary schools--to realise that manufacturing industry and things that are made by hand are important to the future of our country

Mr. Dobson : The hon. Gentleman should teach the Chancellor of the Exchequer first.

Mr. Atkins : The hon. Member for Holborn and St. Pancras (Mr. Dobson), who has just walked in, missed the part of the debate in which his hon. Friends also made that point. The hon. Gentleman would be wise to consider the position before making interventions from a sedentary position.

Unlike my hon. Friends, the Opposition have sought to paint a picture of unrelieved gloom. As one who is in daily

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contact with industry and who travels the country every week talking to those involved in manufacturing industry, that is a picture that I do not recognise.

I want to turn my attention to one or two touchstones of economic success which highlight the achievements of the Government and which perhaps have not had the attention that they deserve. Hon. Members may not be surprised to learn that my first example is that of the aerospace industry. The Opposition's motion suggests that there is something wrong with the aerospace industry. The British aerospace industry is by any standards among the world leaders. The picture here is anything but gloomy.

The output of our aerospace companies has been growing at about 10 per cent. a year since 1983. In the 1960s our share of world trade in aerospace products was about 10 per cent. It is now 17 per cent. More than 60 per cent. of the industry's output is exported. In 1987 the industry had a balance of trade surplus of £2 billion.

This year, as with last year, will see record orders for civil aircraft. British industry will receive a large share of that business. [Interruption.] Opposition Members should listen to the facts about some of the successes instead of muttering and ignoring what is in front of their faces. British Aerospace will share in the success of the A320, the A330 and the A340.

Mr. Rhodri Morgan (Cardiff, West) : Will the hon. Gentleman give way?

Mr. Atkins : I do not have time. At least I have provoked the hon. Gentleman into listening.

Rolls-Royce is now supplying engines to all three major airframe manufacturers and a wide range of equipment companies are consolidating--

Mr. Morgan : What about launch aid?

Mr. Atkins : The hon. Gentleman is wrong. He should do his investigations.

The industry is also investing in the future-- [Interruption.] Opposition Members should listen. It is no good ignoring the facts. I am telling them about a success story and they do not want to hear it.

Let us compare the aerospace industry in 1979 with 1988. In 1979 it had a turnover of £3.1 billion and exports of only £1.2 billion. Now it has a turnover of £10.3 billion and exports of £6 billion, the highest of all time. We did not hear much mention of that from Opposition Members. There has been no decline in the aerospace industry and the House- -at least, Conservative Members--will want to join me in congratulating the aerospace industry on its excellent record and to spur it on to even greater efforts in the future. The steel industry illustrates more clearly than almost any other the transformation of Britain's industrial climate and its prospects. There were no great days here in the late 1970s and early 1980s. Steel production has grown by almost 30 per cent. over the past two years. In 1980 British Steel achieved notoriety with an entry in "The Guinness Book of Records" for the largest ever company deficit-- £1.8 billion over the year. No one could have seriously believed that that position could be reversed, but the company is now making a profit and 500,000 private investors have bought a stake in it. It has gone from being Europe's least successful company to being one which others envy--another success story to which Opposition Members do not want to listen.

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There has been much mention of vehicles. The vehicles industry is another barometer of change for the better. Since 1980, productivity has risen by 70 per cent. and all the United Kingdom's industries in that sector have been in profit since 1986. The production of cars has been rising strongly in recent years and the performance of the commercial vehicles sector has been particularly encouraging. [Interruption.] I suggest that Opposition Members consider one company that I know well and which featured large in their considerations in years gone by. Leyland is the name of the company, with its headquarters in my constituency. Following the merger between Leyland Trucks and DAF in 1987 the output of trucks has increased from 8,000 in 1986 to 15,500 in 1988--an 83 per cent. increase in productivity. That is another success story that Opposition Members will not accept.

Not all our manufacturing successes have been stories of recovery. The chemical industry has been successful throughout, with an annual trade surplus of over £2 billion since 1985.

In 1979 production in the telecommunications industry was about £800 million, with exports of about £81 million. Last year production was £1.839 billion and exports £266 million--another success story. There is success story after success story, and the Opposition do not like it.

But the proof of the pudding is in inward investment. In 1979, inward investment in the United Kingdom was running at about 183 companies a year. It is now up to 330 companies a year. More than 2, 500 companies from abroad have invested in the United Kingdom, and in so doing they have protected or created about 300,000 jobs. I have recently returned from the United States where I conducted an inward investment tour on behalf of this country. Some of the companies that I saw-- [Interruption.] Why is it that when Ministers tell the truth as they see it and give the success stories the Opposition do not want to listen? I would remind the House that this is an Opposition Supply day debate, on which they have a three-line Whip, but they cannot even be bothered to turn up and if they do they do not listen. I am telling the House about inward investment. The companies that I saw in the United States wanted to provide about 10,000 or more jobs in the course of the year. I heard comments from the chairmen of the Ford Motor Company, Chrysler and General Motors. They told me that attitudes amongst the work force had been transformed in the past 10 years. The hon. Member for Glasgow, Springburn (Mr. Martin) referred to our concerns about industrial relations. In 1979, 29.4 million working days were lost in strikes. In 1988, the figure was only 3.7 million. That demonstrates what Americans think of this country.

The chairmen of those major companies also said that Britain was the best location in Europe for siting manufacturing plants in terms of cost and good labour. Ford has invested £1.1 billion in Bridgend. Nissan, Toyota, Bosch, Fujitsu and Millecom are just a few of the companies which, in recent months, have recognised that Britain is the place to come to because of what the Government have achieved in manufacturing industry over the past 10 years.

There has been a depressing familiarity about the Opposition's contributions to this debate. We might have hoped for some constructive comments about areas in which manufacturing industry still has scope for improvement, as it always must have. Instead, we have

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been treated to selective statistics and misinformation-- [Interruption.] Oh, yes. We have been given misinformation about aspects of manufacturing industry which my hon. Friends have demonstrated to be facile and to have avoided the point.

Opposition Members' comments belittle the achievements of British industry rather than help it. They should recognise that they will not serve their country or industry well by continuing with that approach. My hon. Friends from the north, west, east and south of the country have all spoken with authority about what has been achieved by industry throughout the country.

The Opposition's interventions have spoken volumes about their ignorance of what is happening in manufacturing industry. They have not been prepared to listen to the facts that they know demonstrate all too clearly the sterility of their arguments. When it comes to industry, the Labour party is still living in the late sixties and seventies.

The hon. Member for Dagenham (Mr. Gould) represents a south-east constituency. Those of us who represent the north-west and Lancashire wear the red rose of Lancashire with the pride that it deserves. If the hon. Member for Dagenham and his hon. Friends have anything to say to the electorate, they should open their eyes and realise the transformation in performance and morale that has taken place in manufacturing in recent years and understand the reasons for it. Until they realise what has been achieved, and until they speak with the authority that is needed on the subject, they will not be taken seriously and will not, in any circumstances-- [Interruption.] Opposition Members may intervene, but the fact is that they are ignoring what I have said and ignoring the success stories throughout the country of the past 10 years. The Opposition's motion is such that we can vote against it with every confidence that our story will demonstrate the success achieved by this Government over the past 10 years.

Question put, That the original words stand part of the Question :--

The House divided : Ayes 201, Noes 274.

Division No. 202] [9.59 pm

AYES

Abbott, Ms Diane

Allen, Graham

Archer, Rt Hon Peter

Armstrong, Hilary

Ashley, Rt Hon Jack

Ashton, Joe

Barnes, Harry (Derbyshire NE)

Barnes, Mrs Rosie (Greenwich)

Barron, Kevin

Battle, John

Beckett, Margaret

Benn, Rt Hon Tony

Bennett, A. F. (D'nt'n & R'dish)

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boateng, Paul

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)

Buckley, George J.

Caborn, Richard

Callaghan, Jim

Campbell, Menzies (Fife NE)

Campbell, Ron (Blyth Valley)

Campbell-Savours, D. N.

Canavan, Dennis

Carlile, Alex (Mont'g)

Clark, Dr David (S Shields)

Clarke, Tom (Monklands W)

Clay, Bob

Clelland, David

Clwyd, Mrs Ann

Cohen, Harry

Coleman, Donald

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbett, Robin

Cousins, Jim

Cryer, Bob

Cummings, John

Cunliffe, Lawrence

Dalyell, Tam

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

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

Dewar, Donald

Dixon, Don

Dobson, Frank

Doran, Frank

Douglas, Dick

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