House of Commons Hansard Debates for 19 Feb 1991

Mr. Roy Beggs (Antrim, East) : Does the hon. Gentleman agree that the job loss figures do not include those for Northern Ireland? It is a disgrace that, after so long, Northern Ireland employment figures are not available with those of other regions.

Mr. Eastham : I readily agree with the hon. Gentleman. We often forget to include the dreadful Northern Ireland figures. When he replies, perhaps the Minister will spend a little time trying to explain the Government's position in relation to the whole of Britain, including Northern Ireland.

The job losses I mentioned will be in spite of the sacrifices made by, and the co-operation of, people in industry. Employers called for flexibility and co-operation and the Government spoke about it time and again, but we now face massive job losses.

The British Foundry Association has just completed a report, which was published in January 1991. The foundry industry is important, despite its serious problems of the past 10 years. The report stated that in 1988 the industry

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employed 52,000 workers, many of whom now find their jobs under serious threat. Coming as I do from the engineering industry, I am conscious of the foundry industry's special problems in relation to the environment and pollution. Those problems are serious, but they could be dealt with if there were Government support.

Countries such as Germany, France and the Netherlands also have foundry industries, but they are given considerable Government support to overcome the pollution problems. My question to the Government and the Minister is : why does not British industry receive the same support as Germany, France and the Netherlands? Within the foundry industry there is also increasing competition from India, China, Poland and Turkey.

A simple example of the day-to-day problems in the industry involves a rather humorous but important aspect of the

industry--manhole covers. The current output of manhole covers in the foundry industry is 80,000 tonnes a year, but 60,000 tonnes of covers are under threat from imports from third-world countries. In 1986 only 622 tonnes of manhole covers were imported from India and China. However, in 1990 the figure increased to 12,000 tonnes worth £3.2 million. The Government must recognise that the foundry industry is vital and that it deserves valid and serious support.

A few years ago the British machine tool industry was considered to be the world leader. Only this morning I spoke to representatives from that industry and I asked them about the current position. One representative told me that it was absolutely horrible. He told me that in December 1990 new orders for the last quarter of that year were down 31.5 per cent. in comparison to the same quarter in 1989. He put that down to interest rates, exchange rates and a lack of confidence generally in the industry. The machine tool industry is suffering as a consequence of the lack of confidence in the engineering industry generally. There is no opportunity to plan for the future.

Last December I attended a meeting in the House with Professor Roland Smith about British Aerospace and the declaration that 3,000 jobs would soon be lost in the industry. Professor Smith outlined the grave situation facing the industry and said that there was a serious possibility that two factories would close. During the meeting he said that, with the present combination of high exchange rates, high interest rates and high inflation, not even the Archangel Gabriel could manage a business successfully. He said that, of those three factors, the exchange rate was the most serious. He said that politicians and the Government must decide whether Britain wants an aerospace industry which at present is number one in Europe. It is obvious that the Germans are waiting in the wings hoping that the Government will ultimately destroy our aerospace industry so that they can become prominent in that vital industry.

On the industrial front nearer to home, Ferranti's Moston factory is in my constituency. The company was established in about 1906 and now 650 jobs are threatened at the factory. Earlier today the trade union representatives advised me that they no longer have craft apprentices in the company and there are no plans for them in future. There are two other Ferranti companies close to Manchester. At the Cairo mill 400 jobs are at risk, and at the Derker mill another 200 jobs are seriously threatened.

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Workers were encouraged to buy shares in Ferranti when the shares were selling at about 70p each. Some workers spent their life savings on shares. Those shares are now valued at about 9p. As we see Ferranti tottering under this Government, it is interesting to note that the Labour Government, through the National Enterprise Board, saved Ferranti from liquidation. They revived it. After 10 hard years of this Tory Government, Ferranti is once again tottering and may collapse completely.

There is no doubt that there is a national haemorrhage of jobs. The newspapers are full of the complete loss of confidence in commerce and industry. Indeed, when I read of bartering for goods in the high streets, I am reminded of my days in the Army. British shopping centres now seem like Arab bazaars, thanks once again to this very unsuccessful Tory Government.

We all recall that everything was swinging during the 1980s. The yuppies used to do well. They would tank it up and buy bottles of champagne at lunchtime and tell everyone that they were so successful. However, they did not produce anything. One of my old friends who used to be a Member of this place died a few months ago. He told me that all those yuppies, spivs and wheeler-dealers in the 1980s never made anything ; in fact, they did not even make a mousetrap. However, they made all the money during the 1980s. I wonder where they have gone now because they are certainly not around at the moment. They have disappeared as industry and commerce and the general industrial base of this country have collapsed.

During the early days of the Government in 1980 and 1981 a Tory told us that the unemployed should get on their bikes. Someone else said that people should get ladders and buckets and clean windows. He said that he would clean our windows and we would clean his. We would not produce anything, but that was a solution for the unemployment problem in 1980-81. Alas, we have come full circle and we face the same problem.

We have 300 years supply of coal, we have our own natural gas, and we are one of the world's leading oil producers, but we still cannot compete with other European countries. That is absurd. There must be something wrong in our economy if that is the position in which we, a so-called industrialised nation, find ourselves.

It is obvious, as my hon. Friend the Member for Dunfermline, East (Mr. Brown) said, that we must get down to producing quality goods and exporting goods. The conspiracy of not facing up to our economic position must change. There is no doubt that that will happen only with a change of Government.

8.39 pm

Mr. Charles Wardle (Bexhill and Battle) : I listened carefully to what the hon. Member for Manchester, Blackley (Mr. Eastham) said about job losses in engineering. I hope that he accepts that the greatest threat to jobs in engineering, as to any sector of industry, is inflation.

Whenever the House debates manufacturing, strident claims fly from one party to another about who would do what for the benefit of industry. However, when the hon. Member for Dunfermline, East (Mr. Brown) spoke, he did

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not make it clear which he regarded as the greater evil to manufacturing industry--high interest rates or high inflation. He appeared to skirt that point.

Whether those who work at the sharp end of manufacturing industry and who have to cope with the dynamics of the market place day in and day out would set much store by what is said on these occasions is not for me to speculate on. I have no doubt that those who work in manufacturing would tell the House that there is one abiding fact of industrial life that transcends all debates about productivity, about marketing, about technology and about supply-side reforms and the rest. The single greatest contribution that any Government can make to private sector manufacturing is to contain inflation.

The ability to keep inflation down to negligible levels allows well-run companies and highly motivated work forces to make a worthwhile contribution within the virtuous circle of price stability, low interest rates, competitiveness and a strong balance of payments. I imagine that few hon. Members would dispute the fact that the root cause of the current recession was the need to cope with an economy that overheated after the G7 countries agreed to relax controls following the 1987 stock market crash. In the debate on the Gracious Speech in November 1989, I predicted that the recession would begin in late-1990.

In spite of a three-year boom for industry, with record levels of investment during those three years, there had to be a day of reckoning if inflation was not to run riot with all the disastrous consequences of that scenario. That is why my right hon. Friend the Chancellor of the Exchequer places so much emphasis on tight fiscal policy and on the need to maintain high interest rates until inflation canbe seen to be falling sharply. In that regard, the exchange rate mechanism and the present sterling- deutschmark exchange rate is not a trap. It is a worthwhile discipline because the currency markets will sell sterling at the slightest hint that the Chancellor's resolve is weakening in the fight against inflation. By complete contrast, Opposition Members, especially the right hon. and learned Member for Monklands, East (Mr. Smith) in a debate on the economy last week, appear to want a large cut in interest rates now, plus fiscal incentives for more capital investment and still more spent on the infrastructure. All that that would achieve would be a little instant relief for industry. There would then be a painful resurgence of inflation a little later with many more receiverships and bankruptcies, and still higher unemployment than is now in contemplation.

In 1974, the Labour Government made the same mistake of softening their approach when it would have been wiser to impose tough disciplines in which industry could have operated. The result was capital investment allowances for more plant and machinery than was justified by market demand and tax relief on the inflationary increase in stock values which encouraged manufacturers to build merely for the warehouse shelves. It left industry in 1979 overmanned, overstocked and vulnerable to the worldwide downturn which came in 1980.

Yet once again, Labour policies are for instant relief from the pain of recession today without any regard to the even greater setback to competitiveness and to industrial strength that would swiftly follow. If some distinguished economists and, perhaps, some of my hon. Friends have similar faith in those nostrums, I must say, with respect,

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that there is no painless path from an inflation-ridden economy to one that emulates the German success story. The French learned that a decade ago to their cost.

I do not dispute the uncertainty, anxiety and discomfort of the recession, which is likely to get worse in terms of company failures and of job losses before it gets better. However, things will improve most rapidly if the Chancellor sticks to his policies with a tight grip on public spending and cuts in interest rates only when inflation falls away, as it surely will this year.

There are many problems in any recession. Perhaps none of them would have occurred this time if Britain had entered the ERM with lower inflation and lower interest rates in 1985. However, there is no point in jobbing backwards. Manufacturers might be helped if an independent Bank of England were to assume control of exchange rate policy at a full arm's length from politicians of all parties. The sterling-dollar exchange rate undoubtedly still puts British industry in a seriously uncompetitive position, but that will not change overnight either.

Difficulties also exist in industry because too little attention was paid in the recent boom to the cash-flow requirements for tax, dividends and investment. As a result of that and of a manic taste in some quarters for takeovers financed by junk paper, industry is now far too highly geared for its own good. The bankers, whose soft lending policies helped many companies into their present financial mess, do themselves no credit by denying responsibility for helping the greedy and for ignoring the belt-and -braces fundamentals of lending against good asset cover and strong interest cover. Whatever the difficulties, there is only one sure way to economic recovery, and renewed growth and competitiveness for manufacturing industry. It is to stick with the Government's present policies, no matter how painful they are in the short-term, and to show the world, especially the currency markets, that we are determined to reduce inflation once and for all. On that basis, good management and properly motivated work forces will be able to combine their skills to build future prosperity.

8.46 pm

Mr. Alex Carlile (Montgomery) : Like most hon. Members, I find myself from time to time, either face to face or by letter, responding to a request for advice from a young man or woman who asks me what sort of job he or she should go into. As I am a lawyer, young people often ask me about careers in the law, and in accountancy and related matters. The best advice that anyone who is asked that question can give at the moment is that a young person should become an insolvency practitioner. That is the one part of the legal and accountancy professions in which redundancies are not taking place, in which there are plenty of openings and in which high salaries are available. An insolvency practitioner administers the affairs of failing companies and tries to realise assets. What he is really doing is presiding over the demise of industry, and over the collapse of local enterprise and the loss of jobs.

At lunch time today, I was in one of the great department stores of this city, in Oxford street. It was empty. I went to a number of tills to pay for various articles and I did not have to wait at any of them as one would expect to do at the busiest time of a weekday. If one goes into a car sale room in any part of the country to buy

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a new car, the state of the market is such that it is possible to obtain discounts even on cars that were sold at a premium a year or two ago. A proprietor of a business dealing in second- hand cars told me a short time ago that if one went into a garage where second-hand cars were for sale, especially large ones, one could buy them at huge discounts because the motor market was utterly depressed. In my constituency of Montgomery, we have experienced two major industrial problems in recent months. The most recent announcement in my area was to the effect that the Tootal tie factory in Newtown would be closed. I assure those male hon. Members who wear five different ties a week that the chances are that on at least one day they will have worn a tie made in Newtown, under whatever brand name it was sold. More than 100 jobs were to be lost in the closure. Fortunately, the Development Board for Rural Wales introduced another company and, at any rate for the time being, 50 jobs have been saved. The Tootal factory had been there for a long time and seemed as safe as any industry in the area.

The largest manufacturing company in my constituency, the Laura Ashley group, faced considerable restructuring recently, which was rationalised only by a Japanese conglomerate taking a significant shareholding in the company. The other part of the Laura Ashley rescue plan, apart from the injection of Japanese capital, was simple--stop manufacturing clothing in the United Kingdom and make the articles abroad, though not elsewhere in the European Community. Factories have been closed not only in Wales but elsewhere in the Community, and the company is now manufacturing goods in Hungary. Soon it could be manufacturing them in Poland, or elsewhere. I know that that is excellent for the economies of east and central Europe, but it shows a malaise in British industry.

As the Secretary of State suggested, industry has reformed itself in many ways, and that is to be welcomed. Manufacturing processes have been reformed in a way that has made them more efficient, and industrial relations have been transformed, with archaic practices being expunged from British industry. I acknowledge the part that the Government have played in that.

That having been achieved, those running industry are now saying, "We have done what we were asked to do. We have swallowed the medicine over the years. Why are we now suffering yet another recession? What more are we supposed to do to meet the requirements placed on us by the Government? After all, the Government assured us that their policies were right."

Industry is not helped when it sees, as has happened in this debate, a Minister and the Front-Bench spokesman of the Labour party cooking the books as they spoke. An exchange that occurred earlier about the technology transfer budget should be revealing to the great British public. The Conservative party says that when something goes down, it has gone up, whereas the Labour party says that when something goes up, it has gone down, and they are both wrong-- [Interruption.] They cook the books in such a way that their efforts are about as sophisticated as the cookery involved in a hard-boiled egg. Both sides should be telling the truth. British industry is entitled to be told that part of Government policy has been to raise the technology transfer budget, but, for reasons which I hope will be explained by the Minister later in the debate, having raised it-- presumably because they thought it needed to be raised--they then decided to

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cut it back by £1 million. It seems an extraordinary state of affairs that we cannot have straight speaking on such matters. It is meretricious for the Government to say that their policy is working. If it were working, we would not have both high inflation and a slump in manufacturing output and employment. It would be more forgivable if we were watching a Government sticking either to Adam Smith or Maynard Keynes, to some principle. Instead, we see the Government sticking to sticking plaster.

Today we had an announcement about some small programmes simply because we are having a debate in the House on trade and industry. A little extra technological help is to be given to small companies. I wonder why that announcement was made today. Last week we had a debate on the economy, and on the morning of that debate an announcement was made of a reduction of 0.5 per cent. in interest rates. Why was it made on that day? On the eve of the Conservative party conference last year there was an announcement of a reduction in interest rates. I wonder why it was made on that day.

That is not policy. It is sticking plaster, and industrialists realise it. They have no confidence in a Government who use that approach and who seem bereft of clear policy. I suspect that something similar will occur in the coming few weeks. The Budget is next month, and we shall witness at least a significant cut in interest rates and a prospective cut in local taxation, not for the sake of sound, structured, well argued policy, but because an election is coming up, and it will occur probably sooner rather than later.

Massive interventionism will not work any more than sticking plaster. I hope that the Labour party will not subject us, as one might suspect from what has been said in the debate, to an economic policy which will make us recall what happened to companies such as the Rootes group in the 1960s and De Lorean subsequently. It is not fair to blame the market place. Germany, Italy, France and all our other competitors in the European Community work in the market place, but they are not affected to anything like the same extent by the depression and malaise that are affecting British industry. We need a more ambitious approach by Government to the future of British industry.

Mr. Budgen : What does that mean?

Mr. Carlile : There is plenty of which to be proud in British industry. As has been said, we have one of the most inventive scientific work forces in the world, but unfortunately, as people see money being taken out of science and technology, they are going abroad. We recently debated the Science and Engineering Research Council. It is clear that the cuts that were discussed during that debate will lead to a new brain drain of our brightest and best young PhDs who should be here to develop British industry for the future. Of course, the Government have a part to play in industrial policy. It is not enough to stand by and simply let things happen on a free-for-all basis. The Government's role is, in part, to do those things that industry cannot do for itself. That means providing a stable macro-economic environment, especially with regard to inflation, interest rates and the exchange rate. The Government can

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intervene by ensuring that competition policy--I mean both pro and anti-competition policy, as appropriate--is enforced rigorously, nationally and internationally, and especially in Europe. The Government also have a role to play in influencing the way in which the City of London operates. I do not share the Labour party's knee- jerk criticism of bankers, stockbrokers and insurance underwriters as I think that they do a valuable job in earning foreign exchange and in ensuring that the United Kingdom is at least a major financial market. The financial market earns good and meritorious money for this country. However, I do criticise the way in which the City attempts to make its money in connection with venture capital. There is a need for a much more well-devised venture capital environment in this country. City merchant bankers spend much of their time doing nothing much more than churning fees. The takeover and merger booms that we have experienced recently are not beneficial to the efficient performance of manufacturing industry, but they are beneficial to fee-earning in the City of London. The Government should go to the City and say, "Spend a bit less of your time trying to change the structure of British industry and a bit more of your time trying to put venture capital into British industry to develop its continuing growth and success."

The Government should also tackle many other policy areas. They should remedy the flaw in the 1984 corporation tax reforms, which has resulted in corporate tax bills increasing with inflation. In our view, they should support the move to a single European currency. They should reduce the bureaucracy of Government Departments dealing with taxation. They should increase investment in the transport infrastructure.

British manufacturers are not asking the Government to do their job for them ; they are not asking for hand-outs. They want a Government who recognise their economic importance and who are prepared to play their part.

9.2 pm

Mr. Nicholas Budgen (Wolverhampton, South-West) : Before becoming a Member of the House, I spent many happy days in opposition to the hon. and learned Member for Montgomery (Mr. Carlile), and I used to admire him in those days. However, I did not find his speech this evening as brisk, detailed or compelling as some of his speeches that I heard before we were elected to this House. The hon. and learned Gentleman seemed to rest his argument tonight mainly on vague generalities.

However, there was something much sadder about the speech of the hon. Member for Manchester, Blackley (Mr. Eastham), who spoke most movingly about the recession in his constituency. He seemed to imply that the Government had wished for such a recession. There is, of course, an intellectual vacuity at the centre of this debate, because it is distorted and darkened by the agreement between the two Front Benches about entry into the exchange rate mechanism. The attachment of a fixed exchange rate is the crucial factor that has brought this country and our manufacturing industry to its present state. The hon. Member for Blackley rightly said that we had a great boom between 1986 and 1988, that we are now correcting that and that that correction is unpleasant. However, we must ask why we had that boom. Why was it so excessive? The answer is at least in part because we

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were then informal members of the exchange rate mechanism. We were shadowing the deutschmark and, as a result and for domestic reasons, our interest rates were much too low.

There were other reasons, such as an over-correction of the stock exchange fall in October 1987. But the principal reason was the shadowing of the deutschmark. Why are monetary conditions too tight now? Why is manufacturing feeling such an excessive squeeze? It is because we are constrained by being formal members of the exchange rate mechanism now and we cannot reduce our interest rates as quickly as we would wish.

The Labour party, desiring so much to appear middle class and respectable and believing that to appear European is to appear respectable, has lost all intellectual rigour and cannot explain that, having changed its position, it has made as big a mistake as the Government have made in entering a fixed exchange rate mechanism. But there is also a great deal that is ironic in this mock debate between the two Front-Bench teams in which each complains about the level of subsidy and distortion that will occur in the future. What will happen if we stick to the exchange rate mechanism? I am pleased to see my hon. Friend the Member for Carshalton and Wallington (Mr. Forman)--such a noble exponent of the exchange rate mechanism--come into the Chamber. If we enter the next stage of economic and monetary union, it will not be until 1 January 1994 when we shall enter a system of irrevocably locked exchange rates. A great deal of instability can occur between now and 1 January 1994 because ours is such a big, important and much-traded currency to enter the mechanism and the process of waiting is inherently unstable.

Let us assume for the sake of argument that we are stuck for some time in the fixed exchange rate mechanism. What will happen? Let us consider the distortion that will spread throughout the economy. At present we have a pay policy in the private sector which is being run by illegal exhortation. The Government keep attempting to persuade private employers that they should pay less. Yet we have the irony that the Government have offered to pay their employees pay increases of between 8 and 12 per cent. per annum.

We saw the whole process of distortion in the economy given a respectability by my right hon. Friend the Member for Worthing (Mr. Higgins) who suggested in a recent debate that we should have some form of formal pay policy. But it will not stop there, because, of course, when my right hon. Friend the Prime Minister finds that we have the same rate of inflation as the other European countries, he may find that the speculators, for other reasons, still put pressure on the value of the pound as against the deutschmark.

So we shall find that the old arguments about import substitution and encouraging exporters come along. We shall be back into the old round of supporting one lot of industry or another and one lot of subsidies or another. When he opened the debate, my right hon. Friend the Secretary of State talked about the grants and subsidies that the present Government are giving to manufacturing. All that will become much worse if we stick to the fixed exchange rate mechanism. A floating exchange rate is not merely a symbol of a free economy. It is a necessity of a free economy. If we have a fixed exchange rate, it will work its distortion throughout every element of the economy. We shall have to have

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subsidies and distortions everywhere. It will be damaging to British manufacturing industry and it will distort manufacturing industry. When we return to floating exchange rates, we shall find that manufacturing industry is in a weakened condition, as, indeed, it was in 1979. It will be quite unable to stand up to the competition that inevitably comes with a return to floating exchange rates. It is a great tragedy that there is no proper debate about that in the House.

In order to appear respectable, middle class and European, the Opposition adopted the policy of supporting the ERM. That was a great mistake. They should remember the humiliations of poor Mr. Wilson when he tried to defend a fixed exchange rate. Similar humiliations will come the way of this Government.

9.10 pm

Mr. Robert Litherland (Manchester, Central) : The Secretary of State for Trade and Industry said that manufacturing has been transformed. I suppose that is one way to put it. We in the north-west would say that it has been decimated. Since the industrial revolution the north-west has played a vital role in our country's economy. Manchester and its conurbation were once thriving, vibrant areas offering employment in heavy and light industrial engineering, in chemicals, wire manufacturing and textiles. Name it, and the north-west could provide it. All that has changed with the collapse of manufacturing in our area.

Firms with household names and international reputations vanished overnight. Workers were thrown on the streets and the factory gates were slammed in their faces. Firms closed for ever. Week after week in the late 1970s and the early 1980s, companies were closed. Some factories that had provided jobs for workers' fathers, grandfathers and even great- grandfathers ceased production. One firm that had been in existence for more than 200 years finally succumbed and went under. Most of those firms were stripped of all their assets and the machinery was sold to the Chinese and others. The area was deprived of its dignity and the consequences for workers' lives were disastrous. Workers who derived a living, however meagre, were deprived of the opportunity to use their skills to earn that living. They were let down and demoralised.

These issues have been debated time and again in the Chamber, and now when I consider speaking in such a debate I have difficulty in finding a major labour-intensive company in my constituency. Most such companies are now mere memories in the form of derelict, half-demolished buildings. According to the Government, all was not lost. They have had schemes to retrain and revitalise the north-west. At least, that is how the story goes. High- sounding words such as competitiveness, confidence and cohesion were bandied about, but they meant little to people who were still out of work. My constituency has the second highest unemployment rate in the country, topped only by the constituency of Liverpool, Riverside, which, if my geography serves me right, is also in the north-west.

Workers jumped with joy, full of ecstasy, when they heard that his grace the Duke of Westminster was to assist in solving their problems. Here was a lad who knew what poverty meant. Fantastic ; all that we need now is a fairy godmother. We in the north-west ask ourselves which is the myth and which is the reality. Is there or has there been

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a resurgence of bringing prosperity to the region? Have the Government given additional resources and facilities to industry in the north-west in order to regenerate the area?

The one industry that always gives an indication and is a barometer on which to judge economic viability is the construction industry. A trade inquiry report published this month by the Building Employers Confederation warns of a deepening recession and shows a sharp fall in output. It says that the slowdown is affecting all regions, and that will send icy shivers down the spine of every construction worker and small building business in the north-west, because they know from experience that our region will be greatly affected by any downturn. The report says that the likely consequences of the recession are

"the first major decline in building output since 1982 the sharpest deterioration in new orders in a single trading quarter since 1980

falling tender prices and wafer thin margins

rapidly rising unemployment".

It estimates that 150,000 jobs will be lost and that training in the industry will inevitably suffer. The report also shows that manpower, whether skilled or unskilled, is readily available. Materials are in good supply. There are no undue worries about finding carpenters, bricklayers, plasterers, builders or other workers. In other words, the operatives, the skills and the materials are available, but the economic climate to enable all these human and material resources to be put to good use does not exist.

According to the Building Employers Confederation, the Government's commitment to maintaining the value of sterling and their reluctance to cut interest rates are leading to a bitter and deep recession. The building employers say that a cut of 1 or 2 per cent. in interest rates would be most unlikely to prevent a fall in building industry output this year. The prospect of the gloom ahead is not lessened by the CBI's suggestion that the demand for factories and warehouses will remain depressed throughout the year. And this comes from Tory Government friends--the very people who put money into the Tory coffers at election times.

Where is the revitalisation to meet the needs of the people in the north- west? When I refer to the needs of the people of the north-west, I sincerely mean their real needs. The north-west business leadership team tells us that it is committed to the long-term prosperity and well-being of the region. I do not for one moment doubt that group's good intentions, but long-term prosperity means little or nothing to a worker who has been issued with his or her redundancy notice. It is always the same story : light at the end of the tunnel, a cloud with a silver lining, jam tomorrow. Meanwhile, the cupboard remains bare for the majority of people in the north-west.

It is a sick society that has the necessary work force, skills and materials, yet is not allowed to build homes, hospitals, schools, roads and bridges to meet the needs of its people. The Government have repeatedly failed the north-west. The present recession can be placed firmly on the doorstep of No. 10 Downing street. The Prime Minister, in his former role as Chancellor of the Exchequer, was instrumental in creating the mess that we have today. At the weekend he was up in the north-west, clutching at straws, hoping to salvage seats. What a forlorn hope. For him, Lancashire is already lost. It is

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strange that we never see a Prime Minister or a Chancellor visiting factories that are about to close, despite the fact that they would be most welcome in such places.

The north-west has had more than its share of unemployment, more than its share of bad housing, more than its share of poor environment, more than its share of ill health and poverty. After 12 years of Conservative government, we have homeless people on the streets of Manchester and an escalation in violent crime. We have had more than our share of deprivation. The north-west is asking when it will get its share of the promised prosperity. I do not see that happening under the present Government. Only a change of Government can bring prosperity to the north- west.

9.18 pm

Mr. Graham Riddick (Colne Valley) : The speech by the hon. Member for Dunfermline, East (Mr. Brown) was somewhat instructive to Government Members. He took between 30 and 35 minutes to reach the part relating to the policies of the Labour party. He then took one, perhaps two, minutes to describe those policies. There were no costings or details, but we were given enough of the flavour of what the Labour party believes in to demonstrate that it is still stuck to the old dogmatic, interventionist policies of the past.

We have heard Opposition Members going on about the regions. A relatively encouraging headline in the Yorkshire Post recently suggested that Yorkshire industry is doing better in the current recession than it has done hitherto. The CBI's recent quarterly report shows that business confidence in Yorkshire is more buoyant than anywhere else in the nation. That is a positive approach. It suggests that industry in the north is now more soundly based than it has been in the past and that the region no longer relies on the old smoke-stack industries.

Of course I recognise that great difficulties face many firms in the north of England because of the present high interest rates. But we must realise that interest rates are high in order to beat inflation. The prospects for Britain are good. Inflation will come down, and come down rapidly, this year, and interest rates will follow. It is instructive to see how the stock market is behaving. The stock market tends to take a six-to-nine- months view of prospects, and at the moment it is booming. That is a positive reflection of future trends.

During the 1980s we had consistent economic growth for eight years. That growth was brought about because we had low inflation, low taxation, minimum Government intervention and minimum red tape and bureaucracy. I have no doubt that British business men and entrepreneurs are as innovative as any in the world and are now able and willing to invest and compete in the modern world, but clearly they need a consistent, stable economic climate. They also need free trade throughout the world. Therefore, I urge my right hon. and hon. Friends to ensure that there is a successful outcome to the GATT negotiations in Brussels.

There is no doubt that British industry is going through a difficult time, but British companies are in much better shape today to withstand the current difficulties and to prepare for the upturn. We must be careful not to talk ourselves into a state of doom and gloom. Today we have seen that the Opposition like to talk down Britain and British industry as much as possible.

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In recent days I have had some evidence that things are not too bad. The future holds some positive things in store. Last week I met some executives from Vauxhall Motors. One told me that Vauxhall factories are working flat out and have massively increased car exports to the EC. This morning I went to a British textile exhibition at Olympia and I was heartened by the surprisingly robust and confident nature of the people I met there. I heard of the exporting efforts being made by many textile firms. I met one tie manufacturer who had just appointed seven agents in Italy. Some good news has been reported recently in the Yorkshire Post. A headline says :

"Japanese create 400 textile jobs".

The Japanese firm Toray is investing £50 million in a new factory in Mansfield. We have recently had the news that the Wakefield Shirt group of companies, best known for its Double Two brand, is taking on people. That is in the textile industry, one of the industries we are told is down and out. There is good news. In my constituency I have seen a brand new textile factory built in recent years. No Government subsidy or regional support was required. Yet that factory, producing polypropylene fibres, is one of the most modern in Europe. There is good news in other parts of the country as well. The good people of Ribble Valley should be aware of the good news in the north-west. Investment in manufacturing has doubled during the 1980s. Companies like Glaxo, Pilkingtons, Shell Chemicals and General Motors have all made big investments in the north-west. The number of businesses has increased by over 20 per cent. Trafford Park in Manchester has continued to revive. Companies such as Kellogg and Proctor and Gamble, my old firm, are investing in the north-west. That is all good news.

I have no doubt that the electors in Ribble Valley will recognise that it has been the sound, consistent economic policies of the Conservative Government throughout the 1980s which have resulted in that investment going into the north-west. When they go to the polls on 7 March, they will send back a Conservative Member, most probably with an increased majority, or certainly a majority as big as that achieved in the general election. In the meantime, I am confident that we will pull out of the current difficulties and will see economic growth taking off once again. That will happen only under this Conservative Government.

9.26 pm

Mrs. Irene Adams (Paisley, North) : I listened with great interest to the Secretary of State telling us how the Conservative party had transformed industry. I do not know about transforming industry, but it has certainly transformed my constituency. It was once a highly industrialised constituency. When the Government came to power in 1979, the cotton mills in Paisley employed 10,000 highly skilled women--spinners, doffers and tenters. They travelled widely, taking not only the products but their skills all around the world. They taught other people those skills.

The first recession of the Government caused that industry to fail. The hon. Member for Colne Valley (Mr. Riddick) told us about seven jobs in Italy connected with the textile industry. Some of the 10,000 women who are now unemployed in my constituency and who "have Giro, can travel," would be interested in those seven jobs.

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It is not just the thread industry which has been affected. We had a large male population who were heavily involved in engineering. We built ships that sailed the world. We do not do that any more. What the Government, the friend of industry, have given us in their place are fast food chains. We now make hamburgers instead of ships. They have also given us security guards and contract cleaners at the princely wage of £1.20 an hour. That is what they are asking the skilled engineers and the skilled textile workers to do.

Mr. Ian McCartney (Makerfield) : In the last few days I came across a case in the north-west of a young disabled woman who was offered a job so long as she agreed to work the first six weeks without wages. At the end of the six weeks this young blind girl would be taken on at the princely sum of about £2 an hour for a 45-hour week, and she would have to help provide the special adaptionfor the equipment that she would use. That is reality. [Interruption.]

Mrs. Adams : Yes. Perhaps Conservative Members found that funny. I certainly did not.

One of the great difficulties is that, because we have lost these work forces through redundancies, we have missed a rung on the evolutionary ladder of converting old skills to fit new technologies. Because of the lack of continuity in industry, and the lack of Government foresight, the next generation has to start from scratch, learning new skills without a firm knowledge of the old.

What have the Government done? They have lost us more and more jobs. However, let us not run away with the idea that merely the cotton industry was affected, or industries which were failing. The latest victim in my constituency was Howdens at Renfrew. Howdens had been in production for 130 years, and was in the forefront of design and manufacture of energy, tunnelling and other precision products. Howdens was a name synonymous with advanced technology throughout the world. Its Renfrew plant was a centre of engineering excellence unique in Europe. The plant and the work force had been able to perform in markets for which there is sure growth-- manufacturing equipment and kit for the greening of power stations.

Howden's Renfrew plant had a bright and long-term future. It was in the process of negotiating contracts worth £20 million, but difficulties occurred when the United Nations trade embargo was put in place last August, following Iraq's invasion of Kuwait. Howdens was in the middle of building a huge power station in Iraq. Those difficulties should have been short term. If the Government had not been locked in the dogma of the past and if we had a Government willing to enter into partnership with industry, we would still have 500 jobs of engineering excellence in Renfrew, and all the subsidiary employment which backs up such jobs.

One of the first speeches that I heard when I came to the House was made by the Secretary of State for Defence. He said that he did not think that sanctions could work in the Gulf. He did not think that sanctions had ever been viable. I wish that he had told that to the Howdens work force last August, when they were prepared to sacrifice their future for those sanctions.

That is only part of the story for Howdens in Renfrew. Such was the uniqueness of the work force's skills and its technology, no other companies in the whole of Britain

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now carry out the work that was carried out there. Contracts are pending in Britain for tunnelling equipment that will have to be placed elsewhere because Howdens is not there to carry out the work. That is the direct result of Government policy, a Government bereft of ideas, which could not bridge the gap in an emergency ; a Government who failed to recognise short-term difficulty and did not know the difference between that and long-term investment in the future ; and a Government too dogmatic to recognise that interest rates were too high and that we needed a Budget for investment in the future, and the capability to enter into partnership with innovative industries, such as Howdens, in a bid to encourage the research and development that could bring long-term prosperity to the company. That could bring jobs to the skilled work force, who deserve our loyalty, and to Britain's long-term security as an industrial nation.

9.32 pm

Mrs. Elizabeth Peacock (Batley and Spen) : We have heard a lot about doom and gloom from most of the speakers in the debate tonight, but industry is not all gloom and despair, especially in West Yorkshire, where it is already planning for the future. Times are difficult. Yes, interest rates need to fall, but investment in manufacturing is still taking place and business confidence in Yorshire is more buoyant, as investment levels prove.

A £15 million project, with 100 new jobs, was recently announced in Leeds. Double Two Shirts in Wakefield is investing and providing 68 new jobs. Maitland Menswear in Leeds is investing £4.5 million, creating an extra 40 jobs and guaranteeing that about 300 jobs will continue. Spring Ram plc at Birstall is making multi-million pound investments at its site, and is about to settle terms for another new factory there which will eventually create 300 new jobs, we hope by the end of the year.

All that is not altogether gloom and despair. It is something which we welcome in Yorkshire as we are a great manufacturing county, and manufacturing will continue. That does not mean that we ought not to encourage the Government to bring down interest rates as soon as possible.

We have heard about the lack of investment in training. There is great investment in training throughout the country, particularly in Yorkshire. The Confederation of British Wool Textiles has a marvellous training programme. Recently it conducted an award ceremony. Apart from investing in the training of young people, it invests in the training of those members of the work force who are aged between 25 and 35. It now offers opportunties for training and qualifications to many people who, through no fault of their own, left school at an early age with very few qualifications. It is a tremendously important scheme. Supervisors can be promoted because they have been offered training.

There is great investment in the training of engineers.T. S. Harrisons, an engineering company in my constituency, has a tremendous training scheme for young people. It takes on apprentices every year and trains them in all the different aspects of its work. Its training machines and its trainees are as important to the company as its

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