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solutions. The Government, however, have had time enough and they have only got us deeper into our economic mess and have not brought us any nearer to resolving it.

It was interesting that, when during his speech the Chancellor felt himself to be in a position of weakness, he turned to what he called some area of common ground. He said that he recognised the problems to which we have pointed, such as those in education and in training, but the point is that after 10 years of this Government and four years of the right hon. Gentleman as Chancellor we are no nearer resolving any of those problems.

My right hon. and learned Friend the Member for Monklands, East (Mr. Smith) cited the very telling example of the level of training in this country as compared with West Germany. In West Germany 70 per cent. of the working population are trained to the equivalent of having at least one O-level, whereas in this country it is 30 per cent. That is after the Government have been in office for 10 years, so it is no use Conservative Members saying that solutions take time or the Chancellor saying that he recognises the problem--the Government have had 10 years to deal with the problems and nothing has been done.

Mr. Allen : I must have misunderstood the Chancellor's remarks, because I thought that the common ground that he was seeking was between No. 11 and No. 10 Downing street, as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) elucidated.

Mr. Macdonald : I think that the Chancellor has given up on that. That is why he was hoping to strike up a friendship with my right hon. and learned Friend the Member for Monklands, East.

The policies that the Government have pursued to try to fight their way out of the economic hole that this country is in boil down largely to privatisation, reform of industrial relations and taxation policy. I do not believe that anyone could sensibly argue that privatisation has made an iota of difference to this country's competitive performance. The Conservative party has made much the same mistake that we tended to make at one time, which was to think that a simple operation in nominal ownership would actually introduce some zest and vim into trading performance. It did not happen when we nationalised, and it certainly has not happened after privatisation. This summer of strife must take its place among other famous seasons of industrial discontent. That shows how weak, one-sided and inadequate the Government's approach to industrial relations has been. Industrial relations are still characterised by a mediaeval culture of industrial lords and industrial serfs. There is still the primative indignity of separate canteens and toilets in too many factories. All that there has been in the past 10 years is an alteration in the balance of power between management and labour. There is still the old situation of conflict--the subdued warfare that is peculiar to Britain. It is one of our great social shames and a great source of industrial weakness.

Despite everything that has been said today by Conservative Members, the Government have still failed to reduce taxation. They have, indeed, increased taxation as a proportion of national wealth. Moreover, it is an entirely false goal to consider that the simple totem of reducing taxation will reinvigorate the economy. Sweden


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has high taxation rates, but it has one of the richest economies in Europe. One should not conclude, however, that if one increases taxation one will have a wealthier society. Nevertheless, the example of Sweden certainly makes people think twice about making a simple equation between reducing taxation and increasing wealth and industrial initiative.

The Chancellor likes to think of himself as a tax reforming Chancellor. We have also heard a great deal from the Government about how keen they are to improve efficiency in various sectors. They often talk about the National Health Service in this context. I was surprised, therefore, to discover how poorly the efficiency of the Inland Revenue compares with other countries. The collection costs of the Inland Revenue service absorb 2 per cent. of income tax receipts--twice the amount absorbed by the similar service in Sweden, a country often cited as an example of administrative efficiency. It is staggering that our collection costs are four times greater than those in the United States of America which employs the same number of people to handle twice as many taxpayers. The tax reforming revolution is a sham, the industrial miracle is a sham and, day by day, those shams are ever more exposed.

9.16 pm

Mr. David Nicholson (Taunton) : This is, after all, an Opposition Supply day, but we have heard little from the right hon. and learned Member from Monklands, East (Mr. Smith) or from the hon. Member for Western Isles (Mr. Macdonald) who spoke of shams, about Opposition policy.

During the speech of the right hon. and learned Gentleman, I was struck by the appearance of the Leader of the Opposition trying to show his weight and, perhaps, to overshadow his shadow Chancellor. The bicentenary of the French revolution is coming up next month and I was struck by the contrast between the two right hon. Gentlemen--one representing the great voice of Danton and the other the trim figure of Robespierre. Every French pupil and perhaps one or two English pupils know what Robespierre did to Danton and what eventually happened to Robespierre.

To run an economy and to present an alternative economic policy a degree of comradeship, agreement and fraternity is needed. When I observe the Labour party I am reminded of a remark about the French revolution that my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) is often fond of quoting :

"Having seen what was done in the name of fraternity,

If I had a brother I should call him cousin."

Mr. William Powell : Will my hon. Friend give way?

Mr. Nicholson : I am sorry, but I only have two minutes to go. Reference has been made to trade deficits and to various business forecasts. It is interesting to refer to the British Chambers of Commerce quarterly economic survey for the first quarter of the year, which was published last month. That showed that, after a slack growth in export orders towards the end of last year, in the first quarter of this year export orders were firmly up. That survey covered 3,000 businesses in 12 regions. I was particularly pleased to notice that in the south-west there was an increase in the export orders. The hon. Member for


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Leeds, West (Mr. Battle) spoke about regional imbalance, but I was pleased to note that that increase in export orders also occurred in the north-east.

The survey report also stated :

"There is now clear evidence that the effect of interest rate rises has now put the trend in home orders growth firmly on a downward path."

This will encourage my right hon. Friend the Chancellor, who has been looking to high interest rates to cool down home demand. Despite the difficulties which have been caused for many people and businesses, the first quarter survey also shows that business confidence in increased growth in turnover is increasing, as is confidence in profitability growth, and I am pleased to welcome that.

I receive many letters from retired people in my constituency. Often, they are from solid Conservative voters who are not entirely happy with aspects of Government policy. One thing which they absolutely emphasise, and which concerns them because they lived through the Labour Government of the 1970s, is that the Government must reduce inflation.

I hope that this debate will show the whole-hearted support for my right hon. Friend the Chancellor which comes from his colleagues in the Conservative party and in the House.

9.20 pm

Mr. Bryan Gould (Dagenham) : We have had a valuable and interesting debate, of which one of the most interesting features has been the marked change of mood as we discussed today's economy. We have certainly heard some assured and skilled contributions from the Opposition. It has been noteworthy that the Government have had some difficulty in finding enough speakers to keep the debate going. Perhaps that was because those Government Back Benchers who have contributed have exhibited some anxiety about the current state of the economy. There has been some tendency towards admitting mistakes, even a little self-criticism.

The Chancellor was largely immune to that trend and was his usual boastful self. However, even the Chancellor was just a little muted. I also noted that his speeches contained no blips. A year or six months ago his speech were full of blips. There were so many blips that his speeches often sounded like the Greenwich time signal, but he now finds it a little more difficult to dismiss some of his handiwork as mere blips.

He forecast 4 per cent. inflation, then 7 per cent., then 8 per cent. and he was constrained to admit today that it may go beyond 8 per cent. That can hardly be regarded as a blip. He has raised interest rates no fewer than 10 times, to their current level of 14 per cent., and he assures us that he stands ready to raise them yet further. That is hardly a blip. A trade deficit, which he forecast as £4 billion last year, turned out to be £14 billion. He said that it would be £14.5 billion this year, it is already heading for £18 billion and he concedes that it will take some time to deal with it. That can hardly be regarded as a blip. From Conservative Members today we have heard, not a series of blips, but a long cry of pain, which has been echoed by many families in Britain and much of British industry.

That is not the only change that we have noticed in the Chancellor's presentation of his policy. Barely a year ago the Chancellor was forecasting inflation of 4 per cent. and a balance of payments deficit of £4 billion. He was saying, by implication, that the correct rate against the


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deutschmark, which he was implicitly shadowing, was 3 deutschmark to the pound. When asked to pronounce on the subject he made it clear that 3 deutschmark 10 pfennigs was unsustainable, and he may be right.

A year or so later, our inflation rate is twice that of Germany. If a rate of 3 deutschmark 10 pfennigs was unsustainable a year ago it must be doubly unsustainable today. The Chancellor goes to the barricades in defence of an exchange rate against the deutschmark of 3 deutschmark 10 pfennigs. The Chancellor may be prepared to spill his last drop of blood in defence of that new target, but it comes a little hard when he is prepared to spill the blood of others in support of something which he so recently invented.

Not often do I feel a twinge of sympathy for the Prime Minister, but even the hardest-hearted among us can feel a little sympathy for her if she feels a little bemused by these gyrations on the part of her Chancellor. She herself has changed her stance somewhat. We do not hear too many references these days to her brilliant Chancellor. Her comments are decidedly less flattering. She vouchsafed to the World Service that mistakes had been made, and that the mistake had been to shadow the deutschmark, for which we know exactly who was responsible. It was that mistake which pushed up inflation, so the prime ministerial finger was pointed directly at her Chancellor. On 23 May the Prime Minister said in this House that she saw no reason to put up interest rates. Less than 24 hours later she was directly contradicted by the Chancellor--one assumes that she went along with it--who promptly put up interest rates. That was more evidence of the growing divergence between the Prime Minister's view of the economy and what the Chancellor thought was required and desirable--

Mr. Tim Smith : Will the hon. Gentleman give way?

Mr. Gould : I want to conclude this little catechism.

Underlying all this is the Prime Minister's famous nostrum, "One cannot buck the market." As we see the Chancellor wrestling with the foreign exchange markets, urging them to support the pound and pushing up interest rates, we realise that he is trying to do exactly that--buck the market. He is engaged, as the central tenet of his economic policy, in trying to do something which the Prime Minister says cannot be done--and that encapsulates the nub of the problem, which is that the Chancellor and the Prime Minister were fair weather friends. They would stick together while the going seemed good, but as soon as it got tough they set off on different paths.

We know what path the Chancellor is on. He may sometimes strike a rather undignified posture as he proceeds along it, trying to stand on his head as he moves along, but at least the path is clear. He continually tells us--he said so again today--that he is determined to push up interest rates every time there is bad economic news and every time sterling comes under pressure. There is no shortage of bad economic news ; the problem for the Chancellor is that he is so often called to account to make good that threat, promise or boast, whichever it is. The problem is that promising in advance to be tough and to ask others to take the necessary medicine is good tactics and policy as long as the action does not have to be taken.


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When it has to be taken, and then taken again and again and again and again and again and again and again and again and again, it starts to lose some of its magic. It also starts to lose some of its credibility.

The markets have called the Chancellor's bluff, and they now demand thick and fast, almost day by day, that he should make good his threat, promise or boast. If he does not, they will conclude, as we shall, that the Chancellor's stated policy is no longer the policy being applied by the Government.

Having raised interest rates no fewer than 10 times, the Chancellor now faces the following comment from a respected City adviser--not a teenage scribbler, but Roger Bootle of Greenwell Montagu, who said on 5 June :

"To all intents and purposes the policy of relying solely on short-term interest rates to effect a major turn-round in the United Kingdom economy has failed".

That is the judgment of the City. The Chancellor persists with his one-club policy, however damaging it may be to personal and family budgets or to British industry. The CBI survey, the most pessimistic in two years, shows that business confidence and export orders are at their lowest ebb for two years.

Mr. Tim Smith : Will the hon. Gentleman give way?

Mr. Gould : I shall give way in a moment.

The Chancellor persists with interests rate hikes even though they have been shown in recent months to be almost totally ineffective in securing his own stated policy objectives. High interest rates have not reduced inflation. So far as we can measure their impact, they have pushed it up. Interest rates are a price, and like other prices will feed through into the RPI as the Chancellor well knows. Why else is he so anxious to get mortgage rates out of the RPI? He persists with interest rate rises even though they have notably failed to reduce demand. Vehicle sales are at their highest ever level and yesterday consumer credit was still soaring ahead. The Chancellor has found that increasing interest rates and pushing up the value of the pound does not reduce demand. It stimulates it because every over-valued pound will buy more cheap imports than it should. He is caught in that cleft stick.

Mr. Tim Smith : What is the hon. Gentleman's view on the value of the pound? Does he want to see it go up or down or would he prefer to see it stay the same?

Mr. Gould : I am inclined to say that it is difficult to buck the markets. The Chancellor insists on pushing up interest rates to ridiculous and dizzying levels which do great damage, and one of the consequences is that the pound is held at an over-valued level. As the CBI makes clear, that makes it difficult for British industry to compete. The paradox is that the Chancellor uses interest rates to try to dampen demand, but as fast as demand comes down, the supply side of British industry is damaged. That discourages investment, reduces our competitiveness and makes it more difficult for British industry to meet demand.

The Chancellor persists with an interest rate of 14 per cent. and threatens us with 15 per cent. I invite him to tell us why it is that, after 10 years of Tory stewardship, with inflation at the highest level in the G7 countries and a record trade deficit, we have to have an interest rate of 14 per cent.--twice as high as the German interest rate. What is the purpose of that? Why is it so essential for us to have the interest rate at such a level? We are entitled to a


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straightforward and simple answer, and the Chancellor has the opportunity to put the answer on the record. I invite him to do so. The Chancellor's problem is that, every time he pushes up interest rates, he makes the basic situation inherently more unstable and makes us more and more dependent on hot money. He makes the rate for sterling more and more vulnerable and makes the prospect of a hard landing more and more likely. No wonder the Prime Minister is distancing herself from a Chancellor who seems to have lost control. No wonder her office briefs the weekend press to the effect that the Chancellor is now under threat. Is it surprising that she told the Glasgow Herald that, although he is a good neighbour, she will go no further? When the hard landing that the Prime Minister now expects occurs, she has decided that part of the wreckage that will have to be cleared off the runway is the Chancellor himself.

The problem is that the evidence is mounting daily that the Chancellor has lost the argument. Since rates went up on 24 May, sterling has continued to be under pressure. Every day that goes by without the Chancellor making good his boast suggests more and more strongly to the markets that the Chancellor is no longer running the show ; that other counsels now weigh the Prime Minister. If we continue to see pressure on sterling for the remainder of the month and we do not see the Chancellor raising interest rates, we can all afford to draw the obvious conclusion.

The Chancellor is in trouble and that may be why today he chose--unwisely some may think--to fight back. First, he ticked off the Prime Minister for her indiscretion on 23 May. Judging by the expression on her face, he did nothing to make his position more secure.

The Chancellor then decided to conduct a little seminar on the practical deficiencies of monetarism. There was a delicious irony about his dismissal of monetary-based control and over-funding, but what was remarkable about that was that it must have been the first time that any hon. Member present could recall a lesson in economics being delivered by a Chancellor to the Prime Minister in public and on the Floor of the House.

Then, perhaps most unwisely of all, the Chancellor assented to the proposition that there is no alternative. Those of us who could see the Prime Minister's expression and who also noticed some of the occupants of the Government Front Bench will fear that, in that as well, he may prove to have been mistaken.

The problem is that all this is too late. The Chancellor has lost the argument because the Prime Minister is now listening to other advice. Sir Alan Walters is telling her that a mistake was made in shadowing the deutschmark, that the price for that mistake has to be paid, that a fall in sterling as a consequence of that mistake cannot be avoided, so it is impossible and futile to try to buck the market by pushing up market rates in order to defer the evil day. I would not embarrass right hon. and hon. Members by naming them, but I see that there are those on the Government Benches who entirely agree with that analysis.

That is bad news for the economy because it suggests that the Prime Minister, with her new advisers, is now intent on a return to the basic rigours of monetarism. That is bad news because it means that we are about to re-enter the sort of recession that was created in 1980-81, which wiped out fully one fifth of British manufacturing industry.


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But that is even worse news for the Chancellor. It means that the Chancellor's strategy is in tatters and his reputation in shreds, and with very good reason. His legacy is an under- invested, ill-equipped badly trained economy, saddled with an inflation, interest rate and trading deficit burden, which means that we are in no shape to face the fierce competition of the 1990s and the single European market. The only hope for the economy is that we should make a new start, and the European elections on 15 June give us the chance to take the first step towards it.

9.37 pm

The Chancellor of the Duchy of Lancaster and Minister of Trade and Industry (Mr. Tony Newton) : I had intended to start by saying that we had a wide-ranging, if in some respects rather predictable, debate. It has certainly been predictable, not least the last thirty seconds or so of the speech made by the hon. Member for Dagenham (Mr. Gould), but it has certainly not been wide-ranging enough to give us one second's insight into the policies of Her Majesty's Opposition. That has been the most striking single fact about the whole debate. [Interruption.]

Mr. Speaker : Order. The Opposition Front Bench spokesman was heard in silence.

Mr. Newton : In a speech that made a ritual genuflection to the terms of the Opposition motion, which at least purports to have something to do with economic policy, the hon. Member for Dagenham made reference to what I know he is prone to describe as "the real economy", which the motion also mentions--and the neglect of which is one of the themes of that motion. I leave aside the question of what that phrase is supposed to mean, although the more I listen to or re-read the speeches of the hon. Member for Dagenham, the more difficult I find it to discern the distinction that he draws between one aspect of economic activity and another.

Whatever distinction the hon. Gentleman draws, it is clear that by any measure of output, jobs or investment, the real economy--and I presume that output, jobs and investment are what he means by "the real economy"--shows no sign of neglect. On the contrary, over the past two years unemployment has fallen. My right hon. Friend the Chancellor remarked how interesting it is that we hear so little from the Opposition about unemployment.

Mr. Battle : As the Minister did not hear some of the contributions made by my hon. Friends, perhaps he will say why unemployment under the present Government has been higher every single year than it was under any Labour Government.

Mr. Newton : Over the past two years the rate of unemployment in the United Kingdom has continued to fall faster than in any other major industrialised country. On agreed international definitions the United Kingdom's unemployment rate is about 2 percentage points lower than the European Community average. The United Kingdom has a lower unemployment rate than Spain, Italy, France, Belgium, Ireland, Greece and the Netherlands.

What is more, we have enjoyed much greater success than other European countries in creating jobs. Since March 1983, the number of people in employment increased by nearly 3 million to more than 26 million,


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which is the highest number of people at work ever in this country. The latest available international comparisons-- I know how keen Opposition Members are on international comparisons--show that the increase in the number of people in employment in the United Kingdom between 1983 and 1987 was greater than in the rest of the European Community put together. That is one of the achievements of the real economy.

Mr. Kevin Barron (Rother Valley) : Will the Minister give a British comparison and say when unemployment in this country is likely to return to the numerical level of 1979?

Mr. Newton : Given the speed at which the economy has been growing and the pace at which unemployment is falling, we can certainly look forward to a further reduction. The hon. Gentleman knows very well that it would not be right for me to make a prediction of the kind that he seeks. He knows also that under this Government unemployment has fallen faster than the rate promised by the Opposition at the time of the last general election.

All United Kingdom regions have shared in the downward trend in unemployment, with the west midlands and Wales experiencing the biggest reductions over the past year. That reflects the fact that, during the 1980s, the United Kingdom has grown faster than all other major countries of the European Community, whereas in the two previous decades it was at the bottom of the growth league. The same holds true for investment. We have heard a great deal from Opposition Members about investment. In the 1980s the growth of total investment in Britain was higher than in any major European country, after being very much lower in the 1960s and 1970s. As my right hon. Friend said, last year alone the growth in business investment was more than 14 per cent. and we expect a further substantial rise this year.

Mr. Mullin : Yesterday, the Minister's Department supplied me with figures for the level of manufacturing investment in the north-east of England, which includes my constituency. In 1987 they were 53 per cent. of what they were in 1979. Those figures were supplied by the Minister's Department. I drew them to the attention of the Chancellor of the Exchequer but he chose not to address them. Would the Minister care to do so?

Mr. Newton : Since the period to which those figures relate, there has been a substantial further increase in investment. One has only to go to Newcastle and the north-east to know how much investment is being made there and how the spirit and confidence of industry in the north-east has increased.

Mr. Pat Wall (Bradford, North) rose--

Mr. Newton : I shall not give way for a moment.

The hon. Member for Dagenham and the right hon. and learned Member for Monklands, East (Mr. Smith) have persistently failed to acknowledge the extent to which we have achieved a substantial increase in investment in the economy and we have changed the pattern of decades in which our consumption consistently rose faster than our investment. In the past seven years we have produced a pattern in which, for the first time in a generation,


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investment has grown twice as fast as consumption. During the 1970s, consumption rose almost five times faster than investment. Mr. Wall rose--

Mr. Newton : In view of the hon. Gentleman's persistence, I shall give way.

Mr. Wall : The Minister talks about patterns of investment. Investment in manufacturing industry has barely reached the level that it was in 1979. Investment in financial and service industries has doubled in that time, but investment in the infrastructure has halved. Surely anyone can understand that if we do not create wealth and support the infrastructure we shall be unable to support the banking and service side of the economy for any length of time.

Mr. Newton : I have two points in response to that. First, the shifting pattern between manufacturing industry and other aspects of the economy is part and parcel of the development of all advanced industrial economies. The strength of the financial services and other sectors so despised by Opposition Members is not the least of the achievements of the present Government in the past decade. Secondly, just a few weeks ago we had a debate on manufacturing industry and the hon. Member for Dagenham made a speech in which virtually his entire argument was that manufacturing industry was not stronger than it had been for a considerable time. He said that the level of investment in manufacturing had still not quite reached the level that it was in 1979. I said to him then that that argument was a figleaf which would last very little time. Indeed, within a week, the figures showed that manufacturing investment in Britain was at a record level.

Mr. Gould : I am glad to welcome the Government's achievement in at last bringing manufacturing investment back to the level that it was in 1979. But the Minister misrepresents my speech. My major point to show the decline in manufacturing industry was the turnround of £19 billion in our trade in manufactured goods. I wonder whether the Chancellor of the Duchy can explain that away.

Mr. Newton : I was about to deal with the balance of payments position. It is not in dispute between the hon. Member for Dagenham and me- -whatever view we take about the right position of manufacturing industry in the economy and what I regard as the rather antique approach of the hon. Gentleman--that manufacturing output has risen steadily and now stands at record levels ; that manufacturing productivity has increased at a pace not experienced in the economy for decades ; and that manufacturing investment has risen sharply, not least over the past few years.

The hon. Member for Dagenham ignored the fact that not only the quantum but the quality of investment and what it achieves for productivity and output is important. The increase in productivity of British manufacturing industry bears witness to the greater profitability and higher quality of investment since 1979. For British manufacturing industry, the 1970s were a period of overmanning, stagnant productivity, declining profitability and dismal industrial relations. Many companies were not gaining the full benefit from their investment. During the 1980s, the growth of productivity


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in manufacturing has been faster than in any major manufacturing country, and manufacturing productivity has improved 50 per cent. since the beginning of the decade.

The hon. Member for Dagenham spoke little about what he termed the "real economy". He did not refer to the substantial turnround that has occurred in some of our important industries, not least our important manufacturing industries. I shall take one example to which Labour Members frequently devote attention--the vehicleindustry. The production of passenger cars in 1988 was 7 per cent. higher than 1987. More cars were produced in this country last year than since 1977, and that trend is continuing. The same pattern emerges for commercial vehicles, with 318,000 being produced in 1988, which was no fewer than 29 per cent. more than in 1987. The success stories of the individual companies can be seen.

Mr. Rhodri Morgan (Cardiff, West) rose --

Mr. Newton : I shall complete this point, which is of some significance, not least in relation to the questions that the hon. Member for Dagenham asked.

Just under 1.25 million motor cars were produced last year, compared with just over 1 million in 1979.

Mr. Gould : What about the trade balance?

Mr. Newton : I shall come to that in a moment.

In 1974, 1.5 million cars were produced. During the period of the last Labour Government, the production of cars fell by about 300,000 or 500,000, but it has recovered by about 200,000 since the Government took office.

I shall tell the hon. Member for Dagenham what happened to the import penetration of motor cars. In 1988, it was almost the same as in 1979, but between 1974 and 1979 it doubled from 27.9 per cent. to 56 per cent. That is when the worsening of trade in that crucial sector occurred, and it is clear from what is happening to production and investment, not least inward investment, in the British motor car industry that we are now beginning to recover from that disastrous position that the last Labout Government created.

Mr. Morgan : The Minister keeps reeling off trade deficit-defying, wondrous success stories. He leaves us with a question. If our batting averages are so good, how come we are losing all the test matches?

Mr. Newton : The point is almost exactly illustrated by what I have just shown in respect of motor cars. During the 1970s and to a substantial extent the 1960s as well, the policies, in so far as there were any, advocated by Opposition Members led to poor industrial relations, low increases in productivity and low increases in investment. Not least, credit controls such as the Labour party now advocates had a serious effect on many consumer goods industries. One industry after another began to sink in the same way as the motor car industry sank, as was shown clearly by the figures that I have given.

Of course, it has taken time to make inroads into the problems and to turn things round, but it can be seen clearly not only in the motor car industry but in other industries that productivity and output have been rising and that there is more investment. The scope for an improvement in performance that we all want to see has increased steadily.


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The hon. Member for Clydebank and Milngavie (Mr. Worthington) spoke of the loss of the television industry. In the light of the point that the hon. Gentleman made, it is worth noting that in the first quarter of 1989 we had a trade surplus in colour television sets and video tape recorders. That reflects in part the contribution being made by inward investment which shows that people around the world do not accept the analyses of Her Majesty's Opposition of the British economy, and that they are voting with their feet by coming to do business with us in the construction of factories.

The fundamental strengths of the economy are clear from the record to which I have referred, with its sustained growth, its falling unemployment, its surge in investment in manufacturing and throughout the economy, and the extent to which people from other parts of the world are voting with their feet by doing business here. That strengthening results from the policies that the Government have pursued.

The debate has been remarkable for its confirmation that the Opposition have no serious policy. The right hon. and learned Member for Monklands, East told us that he would be coming to his policy and to what he would do about inflation. He never did ; he could not because he does not know. In that he has at least achieved unity with his leader. We have already heard about the celebrated interview with James Naughtie. I am in the unhappy position of not being able to quote most of it because, even if it were printable in the Evening Standard, it would not be quotable in the House within the terms of order. I can quote the reporter's magnificent description of what happened :

"The disagreement began after Mr. Naughtie, a respected and experienced journalist, asked Mr. Kinnock what would be his plans on bringing down interest rates. A long silence followed".

The approach of the Leader of the Opposition is not just that he has not got a policy, but that it is not even fair to expect him to have one. His excuse is that he would not be starting from here. Of course he would not be. We know where he would have started. He would have started where the last Labour Government left off, with inflation higher, with investment lower, with growth slower and with the country's industrial relations in a shambles. Neither the House nor the country has any intention of going back down that road with him.

Mr. Derek Foster (Bishop Auckland) rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to. Question accordingly put, That the original words stand part of the Question :--

The House divided : Ayes 184, Noes 315

Division No. 231] [10 pm

AYES

Adams, Allen (Paisley N)

Allen, Graham

Alton, David

Anderson, Donald

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

Beith, A. J.

Bell, Stuart

Bermingham, Gerald

Bidwell, Sydney

Blair, Tony

Blunkett, David

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (D'mline E)

Brown, Nicholas (Newcastle E)


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