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document that Labour published this week is almost devoid of concrete policies. Instead, Labour sets a target, and the document says :"Labour believes a reasonable target is to increase civil research and development from the present 1.8 per cent. of GDP to 2.5 per cent."
Table 2 of the document says that that would involve increasing spending on research and development by £5.8 billion. That is some target. As the hon. Member for Livingston (Mr. Cook) said recently, unhelpfully from Labour's point of view :
"Anyone can invent targets, but targets won't hit themselves. The challenge is what action the Government will take to meet those targets."
Unfortunately, the document does not spell out what action a Labour Government would take to meet the target. If Labour proposes to do so by increased Government spending on research and development, that will represent a massive breach of Beckett's law. If not, it must be relying entirely on the only specific proposal in the document, and that is Labour's discredited idea of tax credits for incremental research and development.
I am amazed that Labour Members are still plugging that idea. All the international studies of such tax incentives show how ineffective and wasteful they are. An Inland Revenue study carried out with the help of the OECD reached three conclusions. The first was that countries which operated the biggest tax incentives for research and development had the lowest level of industry-financed research and development. The second was :
"the best evidence available suggests that special fiscal incentives only increase industrial research and development by an amount that is roughly half of the revenue forgone by the government : the remainder goes to swell companies' cashflow and post-tax profits."
The third was that much of the consequence of such incentives was simply to enable accountants to reclassify expenditure that was going on anyway as research and development. The study concluded : "in some instances, evidence of abuse (amounting to criminal fraud) has led to the discontinuation of fiscal incentive measures." So if Labour is relying on tax credits to reach its extra £5.8 billion target, it must be willing to forgo, say, double that in tax revenues, while giving accountants and fraudsters a field day. Of course, what really makes companies invest in research and development is the spur of competition and the lure of profit. In the last six years, when profits increased substantially, industry raised its spending on research and development by about 50 per cent. in real terms.
On Monday of this week we published--or The Independent newspaper published on our behalf--a research and development scoreboard. That was widely welcomed, and I hope that it will give industry more of a stimulus and the financial world more of an understanding of the importance of research and development.
I have today drawn up another scoreboard. This one compares the performance of the Conservatives with that of the Socialists over our entire periods in office. We are proud of our record, even if Labour Members are ashamed of theirs, and if they insist on going back to the policies that they practised during the last Labour Government, it is legitimate for us to compare the performance of that Labour Government with our performance.
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I concede that Labour wins in some categories. I start with inflation, and I must admit that on that one they are high scorers. Prices rose more than twice as fast under Labour as they have risen under Conservative rule. Labour also comes out top in days lost through strikes. They averaged 14.6 million a year between 1974 and 1979, twice the average over our period in office, and in the last 12 months, the number of days lost has fallen to just 0.8 million. That makes Labour's grand total so far two. Travaillistes : deux points. I come to our achievements, and I begin with growth. Excluding North sea oil, the economy has grown by 1.9 per cent. a year under Conservative rule. It grew by 1.2 per cent. under Labour. In manufacturing productivity, throughout our term in office it has grown by 3.6 per cent. a year, three times as fast as under Labour. The number of new businesses trading, after all mergers and closures, has increased by 41,000 a year under us, twice the rate that they grew under Labour. The disparity in the case of self-employment is even greater. The ranks of the self-employed have risen by 126,000 every year since 1979. Under Labour they fell by 23,000 a year. Under the Government, the average increase in real take-home pay for a man on average earnings with two children has been 2.4 per cent. a year. Under the last Labour Government, it was just 0.1 per cent a year. That means that, since 1979, the standard of living of the average man has gone up 37 per cent. but under Labour it rose by less than 1 per cent. That is the price that ordinary people pay when all the growth of the economy is channelled into increased public spending. That is the policy that Labour pursued between 1974 and 1979, and that is what it threatens us with again.Let me recap on my scoreboard : Labour--two ; Conservative--5. Labour easily beat us on inflation and strikes, but we beat Labour on growth, manufacturing productivity, business start ups, self-employment, and standard of living.
The Government have delivered not just for one year but over a period of 12 years. We have delivered a stronger economy, a massive increase in the number of firms, and a substantially higher standard of living. That is a record to be proud of. It is based on sound policies that will ensure growth in the 1990s. Our record will deliver a fourth election victory to our party, and socialism will never begin to challenge it.
6.12 pm
Mr. Stanley Orme (Salford, East) : No one would believe from the Secretary of State's speech that the Government have been in office for 12 years--and are presiding over massive unemployment and a huge reduction in manufacturing. The Secretary of State has no policy to deal with those problems. He analyses what he assumes to be Labour's policy. We shall tell him what our policy is when we start to implement it under the next Labour Government.
The Secretary of State's speech was outrageous. Faced with the largest increase in unemployment, the decline in manufacturing industry, and the closures that are taking place, he has a duty to the country to say in straightforward language what the Government intend to do and to explain their policy. However, he did nothing of the sort. Rather, his speech contained only bluff and schoolboy politics.
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Mr. Robert B. Jones : Will the right hon. Gentleman give way?
Mr. Orme : No, I shall not. I have just started. I will give way later.
Many years ago, Salford was a large engineering city, but it has experienced an unbelievable decline in manufacturing. Only 10 days ago, a firm told me that it employed more than 100 people in my constituency. Its work force was highly skilled and the company had overseas orders that it wanted to develop. Its employees had agreed not to take a wage increase, unlike some directors of large companies. Well over 100 jobs are at stake in that firm. If it closes because of a cash flow problem, with the banks calling in their money--some £100,000--about 140 workers will be thrown on the dole and will never work in industry again, despite the first -class product manufactured by that company. What will that cost the nation? The events taking place within that firm are a mirror image of what is now taking place throughout our society. I wrote to the Chancellor about the issue. I saw the interview of the Chancellor on the David Frost programme, when he said that he would talk to the chairmen of the banks. The Barclays bank advertisement says that it is in favour of helping small businesses. I want to see some evidence of that. I want the banks to take action in favour of the firm to which I referred and many other firms in constituencies of hon. Members on both sides of the House. Conservative Members know the reality of the situation.
In north-west England there has been a 34.5 per cent. decline in manufacturing industry since 1979--the largest percentage fall experienced by any region in the United Kingdom. The number of male employees alone fell by 274,000. Where are we to get the manufacturing sector that will create the wealth to give our 60 million people the standard of living that they demand?
Mr. Alex Salmond (Banff and Buchan) : On the question of replacing manufacturing jobs, has the right hon. Gentleman heard about the remark of the former Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), today? She said that jobs in manufacturing can be replaced by jobs in gardening. What price does the right hon. Gentleman think the Chancellor of the Exchequer, the Secretary of State for Trade and Industry and the current Prime Minister would pay to keep the former Prime Minister quiet?
Mr. Orme : I am not surprised to hear what the previous Prime Minister said.
Mr. Ray Powell (Ogmore) : On a point of order, Mr. Deputy Speaker. I notice that the hon. Member for Brigg and Cleethorpes (Mr. Brown) is seeking assistance from the Minister's aide from the Box. I do not think that that is in order. If it is, I assume that we can all go to the Box for information on any matter that arises in the House.
Mr. Deputy Speaker : I know nothing about the Box to which the hon. Gentleman refers. It does not exist as far as the Chair is concerned.
Mr. Orme : When the Chancellor was asked, on the David Frost programme, where the recovery might come from, he referred to the building industry and other areas, but not to manufacturing.
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Many of my hon. Friends will be aware of what is happening in the north-west. As the recession worsens, companies are cutting jobs or even closing down. Job losses announced in the past few months include those at British Aerospace, which is to close its military aircraft plants at Preston and at Kingston, Surrey, with a loss of 5, 000 jobs. At the manufacturing facility at Lostock, Lancashire, 620 jobs are to go, and 370 jobs are being axed at Woodford, near Manchester. Cammell Laird cut 115 jobs on Merseyside. Reports predict that up to 1,000 production jobs will go at Ford's Halewood site on Merseyside over the next few months.Following the closure of the Bass brewery at Preston Brook, near Runcorn, Cheshire, 430 people are to be made redundant. Rolls-Royce motors is to cut its Crewe work force by 340. The Tootal textile group is closing its factory in Farnworth, Lancashire, with a loss of 148 jobs. At Manchester airport, 300 to 400 jobs are threatened at Dan Air. ICI is threatened with takeover by Hanson. I should have thought that the Secretary of State would be concerned that one of the major manufacturing units of the United Kingdom, or even of the world, could be emasculated and put out of action by the asset stripping of Hanson. The problem is that yet worse figures will follow the job losses that have been announced today.
It is no good the Barclays bank chairman saying, in the famous advertisment that is in the press today, that the major banks are in favour of assisting small businesses. Evidence shows that this is not so. This would not happen in Japan, Germany or the United States, but it happens in the United Kingdom because there is no concern for the manufacturing industry. I have spent a lifetime working in manufacturing industry and I know that it has always been seen as a poor relation, although it created the wealth that made Britain a leading country.
Mr. Nicholas Soames (Crawley) : The right hon. Gentleman makes a powerful point. Is he aware that that is compounded by the fact that the Japanese, American and German Governments support their major corporations far more vigorously than we do? Here, we spend so much time thinking about small businesses that we tend to forget the important interests of our major companies.
Mr. Orme : I take that point, but we should be concerned about all industry. We need small and medium-sized industries as well as large industries, and large industries have been diminished as well. People in the machine tool industry have told me that orders for the industry are down by 46 per cent. and that overall investment is down by 22 per cent. in the first quarter. That tells it all. The machine tool industry led the world. I have worked in it, and I know what it is like. It no longer leads the world because it has been overtaken by the Japanese, the French, the Americans, the Germans and many others. If ever there was a time when the industry needed support, it is now. The industry is made of medium and small firms, many of which are high-tech.
To illustrate the point made by the hon. Member for Crawley (Mr. Soames), I shall use the example of British Aerospace. It is the largest industrial manufacturing employer in the United Kingdom, employing about 130,000 people directly, and tens of hundreds of thousands
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indirectly. The Government have no policy on British Aerospace. On Tuesday 11 June, a survey on British Aerospace in the Financial Times said :"the industry is having to adjust to a slump in both its commercial and defence sectors."
I know that things are changing, not least in the defence world, and that there is recession in the commercial world. I have spoken to both workers and management, and they are crying out for a more positive Government policy to assist them, but the Secretary of State has turned away. He has said that this is a matter for market forces. If market forces were allowed to run riot, we would have no aircraft manufacturing industry left. We have seen television, car manufacturing and other industries go. The British aircraft building industry is next unless the Government are prepared to support it.
Mr. James Cran (Beverley) : The right hon. Gentleman is trying to convey the impression that British Aerospace, Britain's largest manufacturing company, is clapped out. If that is the case, why did British Aerospace have record profits last year, and why is it that this year it has its most valuable ever order book, at £11.8 billion?
Mr. Orme : I wish that the hon. Gentleman would listen to what I am saying. I did not say that the industry was clapped out. I said that it was one of our major high-tech industries.
British Aerospace recently announced large planned reductions in its work force, both in the military and civil divisions, some of which will result in redundancies in the north-west and in the south of England. These include reductions of 675 workers at Chadderton works, 375 at Woodford, 1,470 at Hatfield, 60 in Bristol, 2,200 at British Aerospace (Dynamics), the missile production division, 620 at the Lostock factory in Lancashire, 500 at Stevenage in Hertfordshire and 1,300 at Bristol. About 5,000 will be lost in the next three years, following cuts in both Preston and Kingston- upon-Thames. This is a major industry. I know that we need to take the peace dividend into account, but both the workers and the management want to co-operate with this or any Government to ensure that the industry has a basis from which it can survive and expand. Instead, it gets no support from the Government. If we sit back and watch the industry disintegrate, it will be a disaster for the country. If that happens, we shall not have the manufacturing capacity to challenge our main competitors. We shall then become a second-rate country.
Mr. Ken Eastham (Manchester, Blackley) : Does my right hon. Friend recall that, in a recent meeting, Mr. Roland Smith expressed concern about the future of British Aerospace? He told us that the nation must make up its mind whether it wants to continue to have an aircraft industry, or whether the business should go to Germany instead.
Mr. Orme : The airbus is about to come on stream. Important decisions must be made both in the commercial and the defence sectors. I recognise that they will be difficult decisions, and I am not trying to gloss over that fact. However, we should be looking at the problem as a nation. The Government should be involved both in measures to overcome it and in the necessary planning.
My hon. Friend the Member for Dunfermline, East (Mr. Brown) made constructive proposals. Whether I believed in them or not, I wish that the Secretary of State
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had at least made some proposals. We have nothing from him. We need a fresh approach. High interest rates, training and investment, the exchange rate and the lack of a national policy are all important factors. We are debating the future of the United Kingdom in the 1990s and beyond. We must resolve the problem and ensure that the nation prospers, with all the necessary growth and expenditure. If we do not do something about it, whatever party is in power, we shall not have the capacity to produce the standard of living that people demand. The Government's policy is unbelievable. I hope that the British people will listen to this important debate so that they know what the answers are.6.29 pm
Sir William Clark (Croydon, South) : I followed the speech by the right hon. Member for Salford, East (Mr. Orme) with great interest. He was reminded by my hon. Friend the Member for Beverley (Mr. Cran) that British Aerospace has a record order book. We do industry no good by trying to talk down a successful company.
All that one can say about the speech by the hon. Member for Dunfermline, East (Mr. Brown) is that it was a good knockabout speech. He spent most of the time in knockabout and it was only as a postscript that he mentioned one or two points such as more training, and more research and development. Not once would he answer the question of where the money would come from. We can all have targets and ideas, but, in the last resort, the question is where the cash will come from. As hon. Members know, the Labour party's top priority seems to be to increase pensions and child benefit. It is all very well for them to talk about targets, but we and the country are entitled to know where the cash will come from.
As we entered the 1990s, the supply side of the economy was good and in far better shape than it was in 1980. Today we compare with the best. I accept that there is a drop in investment. We start from a high level of investment. Investment will come from industry when it feels that there is a product that it can make--with new machinery or whatever--which is competitive.
We have been debating business and the help that we can give to the general economy. We should remember that inflation has come down from well over 10 per cent. to 6.4 per cent. and I am confident that when the figures come out tomorrow, we shall see that inflation has come down to under 6 per cent. Inflation will continue to come down, which will assist not only business, but everyone in the community. As my right hon. Friend the Secretary of State said, with inflation coming down, interest rates will follow. We have already seen the base rate come down from 15 to 11.5 per cent. and we all hope that it will continue to come down with inflation.
I agree with the right hon. Member for Salford, East that as the Chancellor of the Exchequer has reduced the base rate by 3.5 per cent., the reduction should be passed on to the local business man, whether big or small. The Chancellor has not reduced interest rates to increase the banks' profits. He has reduced interest rates following the reduction in inflation to help business and to help us become increasingly competitive. We must find a solution to the problem for the sake of the small business man and the large business man. I have raised the matter with the Governor of the Bank of England and I am waiting for his reply.
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The small business man also suffers from some of the charges that banks impose when a loan is being renegotiated or when an overdraft is increased. Business men are suffering from a cash flow problem. We must soon consider the problem of payment of debt, especially from large companies to small companies. We should consider whether it should be mandatory for interest to be paid by the person who owes the money after a stated period, whether 28 days, 40 days or whatever. Some large companies are late in paying.We must take the question of bank interest out of the political arena. My right hon. Friend would be well advised to get the British Bankers Association, which covers all the clearing banks and all the merchant banks, to exercise influence on the banks.
The hon. Member for Dunfermline, East said nothing about the good things in our economy and about our achievements. In the short term, there are temporary difficulties--nobody could deny that--but we must look at the economic long term. In the 1950s and even in the 1960s, we were the poor relation in Europe and we were bottom of every economic league. Now we are not--
Mr. Austin Mitchell : At least we paid our way in the world.
Sir William Clark : I must remind the hon. Member for Great Grimsby (Mr. Mitchell) that it was because of socialist policies that we were bottom of the league in Europe. One needs only to look around the world. The world is rejecting left-wing policies. Socialism ruined Africa, Russia, the Baltic and all the other iron curtain countries. Those countries are now in a desperate state, yet the Labour party advocates similar policies for us.
Mr. Den Dover (Chorley) : My right hon. Friend said that the hon. Member for Dunfermline, East (Mr. Brown) did not mention any good news. He mentioned one point which his right hon. Friend the Member for Salford, East (Mr. Orme) also mentioned. They pooh-poohed the fact that there has been an uplift in the amount of housing development started recently. Labour Members complain about a lack of manufacturing and a lack of investment. Does my right hon. Friend accept that investment in housing is investment? Does he also accept that housing requires a lot of manufacturing--the manufacture of machinery, of timber frames, of bricks, of pipes and of all the parts that go into a dwelling including carpeting and finishing?
Sir William Clark : My hon. Friend makes a valid point. There is no doubt that if the building industry improves, so will all the other industries associated with building.
We must look at the Government's record. There are well over 400, 000 more firms today than there were in 1979. As my right hon. Friend the Secretary of State said, the number of self-employed is over 3.25 million, up by 70 per cent. compared with 1979. That must be good. The small firms have created well over 1 million jobs and that is an achievement.
Hon. Members have talked about helping business. We need only look at the actions of successive Chancellors of the Exchequer. In 1979, corporation tax was 52 per cent. ; today for large companies it is only 42 per cent. In 1979, corporation tax for small companies was 42 per cent. ; today it is 25 per cent. That is a great help for small businesses. Small businesses invariably grow into big
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businesses and one must start small if one is going into high technology and innovation, especially in communications.Income tax has come down. The standard rate has fallen from 33 to 25 per cent. and the top rate from 83 to 40 per cent. The tax on investment income has come down from 98 to 40 per cent. The welcome increase in the threshold for VAT has also helped business men. However, I sound a note of caution. Some of the fines imposed for genuine mistakes, whether in VAT or in pay-as -you-earn, are draconian and that point should be examined. However, we all welcome the quarterly payment by small businesses of PAYE and national insurance contributions. The Government have also helped to cut form filling. Many thousands of different forms are no longer needed.
The Labour party will not tell us where the money is to come from. There are only three ways in which we can get the money : first, by increasing taxation ; secondly, by borrowing it ; and thirdly, by printing it. During the past three years, the Government have repaid the national debt to the tune of £26 billion. That is quite a good achievement and saves a servicing charge of about £2 billion to £3 billion a year, which is now available for extra spending in the public sector.
We know that, under a Labour Government, income tax would go up to at least 59 per cent. One of the other proposals that the Labour party has slipped in is that investments worth more than £3,000 would cost the investor an extra 9 per cent. on top of the normal tax. The Labour party also intends to reform the trade unions, so that we would be back in the bad old days when the trade union bosses ran the economy.
The Labour party would cut interest rates. I was delighted that my right hon. Friend the Secretary of State reminded the hon. Member for Dunfermline, East that, during the 1987-88 crash, when we now know, with hindsight, that interest rates were reduced too rapidly, the Labour party was asking for extra cuts. Such cuts would have compounded the problems for which it now criticises us. If we took the advice of the shadow Chancellor and the Labour party and cut interest rates by a substantial amount tomorrow, there might be a run on sterling, which would be catastrophic. If the Labour party ever became the Government and cut interest rates, the resulting collapse of sterling would be serious for this country.
It has been said that the Labour party intends to bring in a job tax. How would that help the economy or reduce unemployment? The Labour party says that it will generate £20 billion more in revenue, but the Leader of the Opposition seems confused about how that will happen. He has overlooked the fact that, in the next three years, the forecast for this Government's spending is about £38 billion. Is the £20 billion to be on top of the £38 billion? I was delighted that, on the "Today" programme on 13 May, the shadow Chancellor said that the £20 billion would not be an addition--presumably, it would be a substitute. I should not have thought that all those irresponsible, bogus promises from the Opposition could hoodwink the general public. The Labour party talks about a minimum wage, which in itself would create more and more unemployment.
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There are signs that the recession is coming to an end. I do not know whether hon. Members have read the words of Christopher Johnson, the chief economic adviser to Lloyd's. He reckons that the recovery has already started. David Kern, the chief economic adviser to the National Westminster bank, wrote in April that the recession was at its lowest point. If that were so, from then on, the recession must have been coming to an end. I agree with the hon. Member for Dunfermline, East that the recession was not caused by the Gulf war--everyone accepts that. But it has to be admitted that the Gulf war contributed towards it, particularly as it affected our tourist industry and consequently our balance of payments and our overseas deficit.The economy is soundly based--
Sir William Clark : The hon. Gentleman is good at intervening from a sedentary position and more or less, to use the jargon, barracking, but, as the right hon. Member for Salford, East said, this is an important debate and should not be treated lightly, as the hon. Member for Great Grimsby appears to be doing.
There has been a complete transformation of the economy since 1979. We have only to look at the number of shareholders and home owners, and the level of real wages. My right hon. Friend the Secretary of State mentioned the real wages of the average family--a married man, the sole earner, in a family with two children. In real terms, his earnings have risen by 37 per cent.
As so many party poltical points are being made, we are in danger of talking too much doom and gloom. I am absolutely convinced that the constant talk of doom and gloom, and repetition that this country is flat broke do us no good. My view is shared in many parts of the City and industry. Our economy is extremely sound and we should be shouting about our achievements, not running ourselves down
Ms. Dawn Primarolo (Bristol, South) : Will the right hon. Gentleman give way?
Sir William Clark : No, I am just finishing.
I think that my right hon. Friend the Chancellor is right to resist the siren calls for a rapid cut in interest rates. Inflation is coming down and I think that tomorrow's figures will be extremely encouraging. We should not take panic measures, but should stay on our present course. We have control of public expenditure and are getting inflation under control--a recipe for future prosperity. 6.45 pm
Mr. Alex Carlile (Montgomery) : I listened with great care to the right hon. Member for Croydon, South (Sir W. Clark) and I agree that it would be wrong to peddle doom and gloom, and create pessimism about the prospects of British industry. However, if the Right hon. Gentleman believes that his optimism, which is shared in some parts of the City, is filtering its way through to people working in factories around the country, and to those in commerce and industry outside the City of London, he is making a fundamental mistake. That mistake is also being made by many others in the Conservative party who believe that their policies are credible to the public at large. I shall open my argument with some evidence from a source that has already been mentioned : the machine tool
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industry. The evidence has been provided by the Machine Tools Technologies Association and puts the Government's policies into their proper context. The machine tool industry is at the centre of manufacturing industry, no part of which operates without its innovations. The machine tool industry is made up largely of small to medium-sized enterprises, the sort of businesses which are the blueprint of the philosophy of Conservative economic strategy--at least, as we used to hear it from the previous Prime Minister. The machine tool industry has been innovative and has provided vital overseas earnings. The economic growth in the 1980s, for which the Government claim sole credit, is very much based on the achievements of the machine tool industry. It is precisely companies such as those in that industry that are bearing the brunt of the Government's current policy. The recently issued three-month and 12-month sales and order figures for the industry show a desperate decline in orders for advanced technology made by that industry. The overall trend is disastrous. We have already heard that, according to the Central Statistical Office, orders for the first quarter of this year were down 46 per cent. on the first quarter of last year. There has been a decline in sales from £30.5 million a year ago to £23 million in March 1991--a fall in sales of more than 23 per cent. in less than a year.There was also a decline in investment in plant and machinery of 22 per cent. in the first quarter of 1991. What better measure of confidence or lack of confidence within the industry is there than the measure of its investment? When we hear that the investment in plant and machinery made by a vital industry such as the machine tool manufacturing industry has declined by nearly a quarter in the first quarter of this year, we have something to worry about.
Mr. Austin Mitchell : I just wanted to add to the hon. and learned Gentleman's statement, with which I absolutely agree. When a number of Labour Members met the association this lunchtime, its president said that if things continued at their present rate, in six to nine months there would not be a machine tool industry.
Mr. Carlile : The hon. Gentleman reinforces my point.
That industry's figures tell the story of what has happened recently under the present Government. One sees the symptoms reflected dramatically throughout the United Kingdom. Only 20 years ago, my own country of Wales was a major producer of coal, steel, and food. Two of those industries-- coal and steel--are virtually redundant, and agriculture daily faces the threat of a similar decline. Every day, some of my farming constituents go out of business.
Where, 20 years ago, men produced steel plate and fuel for heavy industry, in a nation famed for its design and innovative skills, today their children assemble typewriters and televisions designed on the other side of the world. The former Prime Minister, the right hon. Member for Finchley (Mrs. Thatcher), apparently believes that the future lies in gardening. While there is no doubt that the United Kingdom leads the world in gardening, it is not enough to build an economy on.
Wales welcomes the new industries that have come there--often from abroad-- but they are evidence of the failure of successive Government policies for indigenous manufacturing industry. We now have to buy the design,
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components, manufacturing techniques, and even the industrial practices from the other side of the world, to provide jobs for people in this country's industrial areas.The whole culture and ethical framework within which business operates has changed since 1979. To be fair, the Government have encouraged new business, but their efforts have not borne much fruit in terms of long-term employment or security. For every Body Shop, there are hundreds of bankruptcies. I was shocked to see for the first time last week, while travelling by Underground, an advertisement in a carriage for a firm of liquidators, inviting people in real trouble with their businesses to use that firm's skills. It is extraordinary that we should now find advertisements on the tube for liquidation experts. One of the best careers that right hon. and hon. Members can recommend to young people looking for lucrative employment
Mr. Austin Mitchell : Is the legal profession, as a barrister.
Mr. Carlile : --is liquidation, sadly. It is much more profitable than being a barrister.
Liquidations and bankruptcies are at shocking, record levels, and every one of them means bad debts for innocent and hard-working people. They often drag suppliers themselves into liquidation or bankruptcy. There are also huge losses to the Inland Revenue. When the Minister replies, perhaps he will tell the House how much money has been lost to the Inland Revenue and to Customs and Excise as a result of liquidations and bankruptcies, with tax remaining unpaid, since the present Government have been in office.
Many believe that an atmosphere of greed has led to increasing fraud, which has besmirched the reputation of business, from the highest to the lowest levels. The City of London used to be a byword for integrity, which was taken for granted. Sadly, that is no longer so. The phoenix syndrome of here today, gone tomorrow, businesses has spread. For many people who deal with companies, the term "Limited" should not be a sign of commercial credibility but a clear warning that they may not get paid.
More bills remain unpaid by companies today than ever before. Despite the blandishments of the right hon. Member for Croydon, South, who puts the case very clearly, the Government refuse to introduce statutory interest for late payment of bills. Many other countries in western Europe have such legislation, and it works. Perhaps it would embarrass the Government. It is the experience of those in the professions who undertake work for the Government--including my own, the legal profession--that the Government are a very slow payer of bills. They often pay late, and they almost always pay reluctantly. I invite the Government clearly to state that they will set an example in future, by paying their creditors quickly, and will create an atmosphere in which bills paid late carry interest, to encourage settlement on time.
We heard something of an argument between members of the Government and Labour Front Benchers as to who takes a hands-on and who takes a hands-off approach. Under the present Secretary of State and the other Ministers in the very dry Department that he runs, it has been customary to say that it is right to keep one's hands off business and to leave things to the market. However,
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the Department of Trade and Industry's attitude is even more distant than that. In truth, it has been a case of, "Look, no hands--and the devil take the hindmost."The Government seem to be avoiding dealing with the problems of industry while beating their breast and looking for a conscience in respect of what to do about Europe. One is tempted to take the view of this Government that, if one gives them enough Europe, they will hang themselves. While having that inner conflict, the Government have allowed business confidence to fall dismally and daily. Nowhere is that more evident than among small businesses.
If small businesses--the seeds from which big manufacturing plants grow--do not have the confidence to go to their bankers and to borrow, to be innovative and imaginative, there is no hope for our manufacturing industry. In my constituency and throughout rural Wales, many small businesses have been assisted by organisations such as the Development Board for Rural Wales. Personal taxes have declined, and the Government lay great store by that. However, the claim that the Government's fiscal policies have eased the burden of small businesses is laughable. Value added tax is up. Business rates are up through the roof. Interest rates are up. The tax on company cars, which is essential for any business in a rural area, is also up. That is all part of a package of increased costs to industry that small businesses are finding it extremely difficult to bear.
Instead of merely worrying about paying their taxes, as they used to do, many small businesses live in terror of the bank manager because of high interest rates. Today's press release and advertisement from the chairman of Barclays Bank is welcome, but we wait to see their content put into practice. The Government must also help. It is not enough for the Chancellor of the Exchequer to call in bank chairmen and give them a dressing down.
The Government have elevated non-intervention to a shibboleth, while ignoring evidence from France and elsewhere that central Government can give considerable assistance to industry without interfering in its management. The Government should serve as an agent, consultant and potentiator, in informing industry of new markets and opportunities, which they should cajole and entice industry to seize--but they do not. The Government appear to be determined not to assist industry even in respect of some exports, as we can see from their action in respect of the Export Credits Guarantee Department.
The future of British industry, small and large, is surely in Europe. We serve ourselves ill by cribbing about a single currency. Business and the City clearly want one. The public do not feel strongly, although some members of the Conservative party clearly do. What does it matter if a new unit of currency is devised? Why cannot it be called the pound, franc, or lira, according to the country in which it is spent? Why do the Government want to continue filling the coffers of currency dealers with commission that has no logical justification in what is supposed to be an economic community? Why is it that, if one sets off round the Community with £100 and simply changes it without spending it, one comes back to Britain at the end of the tour with about £70, £30 simply having gone to the money changers? That makes no sense at all. The Government strongly underestimated the
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confidence that the creation of an independent central bank would engender alongside the acceptance of a common currency for Europe. The Government must act. The explosion of pessimism in manufacturing industry was fuelled today by the prediction of a 70 per cent. increase in long-term unemployment within the next year or so. For the Government to proclaim success for their economic and employment policies, as they have done today, is surprising. It is time to recognise that good industrial policy starts in the schools, in the education and training of young people in the skills that are needed in manufacturing industry. It starts by creating an atmosphere in which careers teachers would not tell the brightest and best to go into accountancy, law, politics or merchant banking but one in which careers teachers would, as happens in France, tell such people to go into manufacturing industry where they will have a chance as an engineer, scientist or a manager to rise to the top in industry and in the nation.We need to commit ourselves to 1992 in a way which will ensure that our manufacturing industry is in the lead in Europe, not simply apologising, as the Government appear to do, for being in Europe. We cannot glean much confidence from the Labour party's attitude to Europe. I shall not read the Leader of the Opposition's 228-word sentence of yesterday, which was described as a "huge octopus squirting ink" by one language expert. An Oxford professor said : "It needs translating into English".
I hope that the hon. Member for Gateshead, East (Ms. Quin) will tell us in a few short words, with an occasional subject, verb and object, what all that means. I invite her to tell us what the Labour party's policy is on Europe. In the light of what the Leader of the Opposition said Britain, and particularly manufacturing industry, can have no real confidence that the Labour party has any policy on the EC upon which it is united. There are policies within the Labour party, but as far as I can see there are many more than two. British manufacturing industry has a great deal to worry about, because the Conservative and Labour parties are afraid of Europe. It is time that we stopped being afraid of Europe. It is time that we started to play a positive role in shaping what promises to be the greatest ever market known for manufacturing industry.
Several Hon. Members rose --
Madam Deputy Speaker (Miss Betty Boothroyd) : Order. I remind the House that, between now and 10 minutes to 9 o'clock, speeches should last no longer than 10 minutes.
7.3 pm
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