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general election. About 62 per cent. of our industrial work force are unskilled, compared with 38 per cent. in Germany, 21 per cent. in Italy and 20 per cent. in France. Those are just a few of the examples of how this country is being outstripped by our European competitors.Training has been an issue in this debate. Since the Conservative Government came to power, there has been a cut of £245 million in the resources devoted to industrial training.
Let us consider what has happened to trade since the so-called "economic miracle". Our trade deficit for 1990 was £12 billion, which is our worst ever balance of payments record. Our manufacturing deficit is now £10 billion. Conservative Members may well say nice things about manufacturing industry, but in the past 10 years the Tory Government have presided over a £10 billion reduction in the trade of our manufacturing industries. When the Labour Government left office, there was a balance of payments surplus of £2.7 billion. That is never mentioned in the House when the Labour party is criticised, but I put that fact on the record now.
In 1989, under this Conservative Government, investment was down by 8.7 per cent.--again, in the period of the so-called "economic miracle". Manufacturing investment fell by 20 per cent. in 1990 yet the Government have had the benefit of £98 billion-worth of North sea oil revenues since 1979. That is the money that the Government have had in their hands for the past 10 years and which they have squandered as the party that reduced taxes and increased unemployment.
In the past 13 consecutive months, unemployment has risen by 568, 000. That is an indictment of a Government who are in their death throes. There have, however, been 30 changes to the unemployment figures since the Government came to power as they have tried to fiddle the figures. There is no doubt that we are heading for an unemployment total of 3 million by 1991 or 1992, when I hope that this Conservative Government's period in office will end. Furthermore, in the second half of last year, 27,000 houses were repossessed by the building societies. That means that 27,000 people--both young and old--have lost their homes during the so-called "economic miracle". I turn now to the figures for Government assistance to industry in the north to show the House what the Government have done for the north. The figures show why there are not many Tory Members in the north-- [Interruption.] Well, there may be one or two, or three at the most, but the mind boggles. In 1979, under the Labour Administration, the north received £349 million-worth of Government assistance to industry. By 1989-90 that figure had decreased to £190 million--another indictment of the Government and their so-called "economic miracle". In 1979, the Labour Government gave £1,344 million in assistance to industry, but by 1989 the Conservative Government were giving only £505 million.
Business failures in the north-east soared by 109 per cent. between 1989 and 1990. In Britain as a whole, they rose by 77 per cent. Unemployment in the north has increased by 51 per cent. and is 10 per cent. higher than in any other region in Britain. In my constituency of Blyth Valley, the number of unemployed people has increased by 640--an increase of 25 per cent. in the past few months, 41 per cent. of whom have been out of work for six months or more ; 48 per cent. of whom are aged under 30 and 76 per cent. of whom are male.
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The recession in the north-east has begun to bite, especially in my constituency where two companies, which had shown great promise, have gone into receivership. The Burberry clothing factory has closed, with the loss of 340 jobs. Last week, another 240 or 250 job losses were announced at the Blyth power station. The town's larger companies have been laying off at least 5 per cent. of the men and women employed in their factories. Nothing like that has been seen in Blyth Valley since the closure of Bates colliery after the miners' strike, when we lost more than 1,000 jobs.Those figures are an indictment of the Government. As I have said, the No. 1 issue at the next election will be the economy--it will be the number one issue for the Labour party--and because of it we shall see the end of this Conservative Government once and for all. 7.59 pm
Mr. Phillip Oppenheim (Amber Valley) : We have heard much from Opposition Members about the Government's record. However, they did not mention that there are more jobs in Britain now than there were in 1979. They did not say that, during the 1980s, productivity in British manufacturing industry rose faster than in any other major industrial economy in the world. They did not say that manufacturing output is significantly higher than it was in 1979. Indeed, during the 1980s Britain's manufacturing output rose faster than that of any other major European economy.
I remind Opposition Members, because they attach a great deal of importance to manufacturing industry, that when the Labour party was last in power manufacturing output fell. So much for the supposed devastation of Britain's manufacturing industry under this Government.
Let us examine Labour's policies. We have heard a great deal about the minimum wage. Even the Fabian Society, an in-house Labour group, says that 880,000 jobs would be lost if a minimum wage was imposed. What do Opposition Members' hon. Friends say? The hon. Member for Birkenhead (Mr. Field), a Labour Member and, as we all know, a greatly respected one, has said that the employment consequences of a minimum wage would be nothing short of disastrous.
What about the Opposition's friends in the trade unions? Gavin Laird, a respected trade unionist in the Amalgamated Engineering Union recently said that a minimum wage was nonsense in the private sector.
"It has never worked in the past. There is no logic for it. It doesn't work in any other country and it certainly will not work in Great Britain."
I know what Opposition Members are thinking. They are thinking, "What about Germany?" I have some bad news for them. Germay does not have a statutory minimum wage. However, there is a country in Europe which has a statutory minimum wage. It is France. And France has some of the highest unemployment in the European Community. It is higher than ours.
A recent Organisation for Economic Co-operation and Development report pinpointed the statutory minimum wage in France as one of the major causes of high unemployment there. Only yesterday the French equivalent of the Confederation of British Industry, the Patronat, said that the statutory minimum wage should be abandoned in France precisely because it led to high unemployment. Few things show the fundamental dishonesty at the centre of Labour policies more than their
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policy of a statutory minimum wage. Labour Members pretend to the public that some sort of free ride is available, but unless pay rises match productivity, those pay rises will equal unemployment. But there are even more dangerous policies on industry on Labour's menu. First, it says that it would set up a British investment bank. How would it be funded? Would it be funded through pensions? In one of its policy documents, the Labour party says that pension funds will"be encouraged to take the status of their regional economy into account."
No Opposition spokesman has made it clear exactly what the role of the pension funds will be. What does that statement mean? Or would a Labour Government fund the National investment bank through taxation? If so, will it be a priority for funding?
The Labour party also proposes to establish British Technology Enterprise which apparently will buy equity in high-tech ventures. How will that be funded? Will it be funded by taxation? Labour also proposes tax credits for companies that increase their research and development. Apparently the cost of that would be almost £200 million. What priority will be accorded to that? Will it be accorded "top priority" or "absolute priority"? Have the Labour Front-Bench spokemen consulted the hon. Member for Derby, South (Mrs. Beckett)? She has said clearly on the record many times that the only priorities of a future Labour Government would be pensions and child benefit.
The Labour party is trying to be all things to all men. It pretends to the City that it is now a responsible party which will not indulge in an orgy of public spending. But to its friends in the public sector trade unions and high-spending areas, it promises to shower them with a cascade of spending.
Opposition Members should anyway consider whether research and development is really our problem in Britain. I know that it is fashionable to say that all we need to do is to increase our research and development, but the history of Britain is more that we have lost the ability to exploit the many inventions that we have made, rather than that we do not make inventions. We also have a history of putting huge state subsidies into uncommercial high-tech projects such as Concorde and Blue Streak. Certainly the precedents of Government funding of research and development in Britain are not happy.
Of course we must try to improve the way in which we exploit technology in Britain. That does not necessarily involve simply doing research and development. It can just as easily involve buying in patents and licences from other countries. After all, for many years the Japanese did well by buying in patents and technology from other countries and improving on them. If we want to get to grips with the problem of exploiting technology, above all we must, improve our education, as my hon. Friend the Member for Crawley (Mr. Soames) said in his superb speech. That is far more important than
Government-directed research and development subsidies.
Opposition Members pay lip service to the need to improve our education, but the record in areas where the Labour party runs the local education authority is poor. LEAs in all those areas have in common that they spend great sums of money--far more than they did in 1979 on a per pupil basis-- but have standards that are far below the national average and certainly far below the standard achieved by many of our competitors. Every time that we have attempted to improve education in Britain--by
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introducing the national curriculum and testing and through the devolution of power and authority to the schools-- we have been opposed tooth and nail by the Opposition.Underlying many of the Opposition's policies is a belief that Government intervention in the economy is the saviour of manufacturing industry. But their policies on interventionism are based to a large extent on a misreading of Japan. It is easy for politicians and business men to use the Ministry of International Trade and Industry--MITI--as an excuse for Japan's success, rather than admit that the company has not produced competitive products or taken the long-term marketing decisions necessary to beat the Japanese. The success of many of Japan's most successful industries such as manufacturing tractors, personal computers, photocopiers, motor-bikes and cars has had nothing to do with MITI. Indeed, many have refused MITI's meddling, including the car industry which in the 1950s refused MITI attempts to consolidate the industry and push it into developing a people's car along Volkswagen beetle lines. Even in industries such as computers and semiconductors, which have received help from MITI, that help has been a tiny proportion of the investment that the companies have made. Most sensible surveys of those industries show that MITI had little to do with the success of those industries.
Certainly, OECD figures show that Japanese state subsidies for research and development are way below those that prevail in both Europe and the United States. Subsidies for research and development are anyway too often snapped up by large companies for work which they would do anyway.
The real reasons for Japanese success have nothing to do with MITI and offer little comfort to Labour. Japan has had low public spending, high levels of saving, low taxation, pro-business attitudes and, above all, an excellent, rigorous, vocationally oriented education system. I sometimes wonder why Opposition Members do not look to countries such as India and Brazil, where highly interventionist industrial policies have been abject failures.
The problem with intervention is that too often it promotes inappropriate development, such as computers in Brazil, rockets in India and steel in Nigeria. Too often decisions made by politicians are based on political rather than commercial considerations. Too often the money goes to those with the most lobbying power, and resources are diverted from industries that could use the funds more efficiently.
We have had it all before, not just under Labour. The Macmillan Government forced a private steel company not only to invest in one big integrated plant in Wales, but to split the plant between a site in Wales and an unsuitable site in Scotland. The last time that we had a Labour industrial strategy, it gave us a British Airways which was rated below Aeroflot by its customers, a British Leyland which was an international joke and a British Steel that was the biggest loss maker in the world. How can we expect the hon. Member for Dunfermline, East (Mr. Brown), who has never manufactured anything except dodgy policies, to do any better ?
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I am sometimes amazed at the arrogance of Opposition Front-Bench spokesmen. None of them has even worked in industry, yet they believe that they can make better decisions than business men themselves. Opposition Members have the cheek to sneer at Hanson, yet it is a successful United Kingdom business which offers good employment to many people, including my constituents in a plant which certainly would not exist if it were not for the huge investment put in by Hanson.All the Opposition's policies would harm industry. Nothing they would do would help. They would clobber savers with an
investment-income surcharge, they would push up taxes and their minimum wage policy would costs hundreds of thousands of jobs. They would meddle with industry and encourage anti-business attitudes by equating enterprise with greed, as they habitually do. The Opposition would renationalise various industries when countries all over the world have been falling over themselves to denationalise. Above all, the Opposition would ensure that our education system did not improve.
The Labour party's policies demonstrate that no amount of flashy, sharp suits or tacky, red plastic roses can hide how little that party has changed its policies from those that proved so disastrous in the 1970s.
8.9 pm
Mr. Austin Mitchell (Great Grimsby) : I will not follow the hon. Member for Amber Valley (Mr. Oppenheim) in his grovelling sycophancy towards Japan. Obviously he is too thin to be a sumo wrestler and not quite smart enough to be a sophisticated apologist for the system. It is interesting that we have heard two arguments only from the Conservative Benches. The first is that things got better when the right hon. Member for Blaby (Mr. Lawson) was Chancellor. The second is that the country is too poor to afford a minimum wage. That has been the essence of the Conservative argument.
Labour Members have brought home the depth and extent of the depression, which is horrendous. This recession is damaging the industrial base on which everything in this country rests--the standard of living of an advanced society, jobs and growth. Everything that our economy needs rests on that industrial base, but it is being irreparably damaged by what is happening now. That damage will make it much more difficult for the country to expand and grow in the future. Every job lost and every factory closed means that imports will be sucked in by any expansion in the future. That expansion will be strangled because of a balance of payments constraint. That balance of payments is already horrendous. Deflation is a ruinous policy. I am afraid that the present recession is not an aberration. It is a logical consequence of Government policy and it will be extremely difficult to break out of it.
The Lawson revival was an aberration, not today's recession. That recovery was caused by a number of one-off factors. It was caused by an asset-price inflation, which the Government dare not let loose again. The oil was there to pay for the imports, but supplies are now dwindling. That revival was also caused by a 30 per cent. devaluation in real terms against the deutschmark. This from the Government who claim never to devalue. They won two elections following devaluation. In 1986, there was a 30 per cent. devaluation against the deutschmark. We cannot repeat that now. That revival was also aided by
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the financial liberalisation that boosted the City. Those were the one-off factors that produced the recovery. Those factors cannot be repeated and now we are locked into deflation.The tragedy is that what turns the key and nails the lid on deflation is membership of the exchange rate mechanism. We have bound ourselves to tie our exchange rate to that of west Germany. It will be kept within a 6 per cent. band. An essential of the system is to get our inflation down to Germany's abnormal low rate of inflation. However, we have entered the ERM at an overvalued rate, which is more than 20 per cent. higher in real terms than the exchange rate at the end of 1986. We warned about the danger of entering at an overvalued rate.
If every factory held wage increases or gave zero wage increases and if it cut the wage paid to its work force it could still not return to the competitive level vis-a-vis West Germany that existed at the end of 1986. Even then we were not particularly competitive. The Government have followed a ruinous policy that installs permanent deflation.
Where is the locomotive of growth? What will pull us out of the recession? The Minister made a pathetic speech. In answer to my intervention he said that once one got inflation down, interest rates could come down. However, the ERM precludes that because those interest rates support the exchange rate. If that is the central object of policy we are doomed to high interest rates. It means that we cannot reduce those rates by more than half a per cent.--and only occasionally. They are bound to remain high because the pound is overvalued and to keep it in its band in the ERM we must keep interest rates high.
Effectively, the country is no longer run by the Government. They cannot take decisions on interest rates. The country is now run by Robin Leigh- Pemberton--to name but three. The Governor of the Bank of England will decide when interest rate cuts can be made, but they cannot be substantial, and that is the trap. The country and industry are crying out for interest rate cuts, but the Government cannot make them. In that policy lies permanent deflation.
We shall be faced with a sustained diet of what France had to endure during the 1980s. Let us consider the damning OECD report on French competitiveness. That country has come through damaging inflation, but that has not made it any more competitive than Britain. We are now entering the same deflationary period, which will be hard, long and permanent. That way lies disaster for manufacturing. A Government who fight inflation with such techniques ruin manufacturing.
It is easy to bring down inflation, any fool can do it. All one has to do is to deflate the economy so massively that inflationary pressures end. The Government are pursuing that policy, but by doing so they are destroying our manufacturing base, our front line in international competition.
Manufacturing has not caused inflation. Manufacturing wages went up 14 per cent. only, in real terms, during the 1980s, but the wages in non- manufacturing went up by 42 per cent. The non-manufacturing sector has caused the inflationary pressures, but manufacturing has suffered the consequences of high interest rates and an overvalued exchange rate. The manufacturing industry has suffered the closures, but
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it is supposed to be our front line in the international market. It is supposed to face the trade sectors of other countries. We are fighting inflation by taking resources out of production and keeping them out permanently. If they are reintroduced inflation must resume because they are the cause of it. All the Government can do is under -run the economy and let unemployment rise. In that policy lies a future of remorselessly rising unemployment. It will go beyond 3 million because there is nothing to stop it. In that policy lies a future of more closures. It is forecast that between 40,000 and 50, 000 firms will close this year alone. We are already losing 4,000 manufacturing jobs a week.We shall have an increasing Government deficit. Government finances have already turned from a surplus of £14 billion to a deficit of about £8.5 billion. That is equivalent to a turnaround of £23 billion. The Government will have to increase taxes next year because corporation tax receipts will go down because profits will be in such a mess because firms are going bust. Expenditure on social security and unemployment will increase because unemployment is rising so rapidly. We shall be faced with a deficit that will rise continuously. There is no way out, because the Government are under-running the economy--that is their only policy.
Such deflationary economics are disastrous. The Government claim that industries and firms are closing because they are not price competitive. They argue that they could improve their price competitiveness by cutting labour costs. However, there is another way, which is to cut the exchange rate which is forcing that deflation upon us.
To make ourselves competitive in overseas trade we should reduce the exchange rate. It is too high and it must come down. The dollar came down to cope with the United States deficit--after 1985 the dollar fell by 50 per cent. That reduction in the exchange rate has been an enormous benefit to the United States balance of trade and its manufacturing sector. The pound must do the same. There is nothing else for it. That is what markets are about. To try to dam up the pound forces deflation on the country.
We should not cut demand, as the Government have done, but expand it and see that it is channelled by the price mechanism to production in this country. We should make it competitive for British industry to produce, to export and to make profits. We should increase the price of imports through the price mechanism to give British industry the advantage that it now lacks. We should give British industry that advantage and stimulate it. If that happened interest rates would come down. Unit costs would also come down because production would increase. The whole economy would pick up as a result and the costs of unemployment would fall. All the burdens facing British industry would fall and we would return to the path of growth. That is the only way out.
The Government will be driven to it sooner or later. It should be sooner because if they allow what is happening to go on, they will be doing irreparable and irreversible damage to the manufacturing base. There is no way that their present policies can improve competitiveness, revive industry and stimulate manufacturing on which we depend. The Government are following a phoenix policy. Phoenixes arise from ashes. The more ashes that are
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produced, the more phoenixes we shall get, and that is all that the Government can expect to come out of their present policies. It is essential to expand the economy, to allow industry to generate a profit and to expand as a result of investing that profit. That is the only way forward. The Government are sealing their own fate, but unfortunately they are sealing the fate of the country in a trap of orthodoxy.8.20 pm
Mr. James Cran (Beverley) : Having taken part in a number of like debates since coming to this place, I have concluded that they are becoming progressively drearier. That is happening because Opposition Members use these occasions simply to have a go at British industry and run down British companies and the economy. They also try to give the impression that British companies have the one aim of using downturns in the economy to winkle money out of the Government, which of course is not the case.
I admit that we are in a downturn. None of my hon. Friends has denied that. I, too, have seen CBI surveys. Indeed, I have participated in conducting a few of them in my time. I know, if Opposition Members do not, that British managers are adept at using such surveys to put pressure on the Government of the day, whatever their complexion, and that is happening now.
Whatever else those surveys show, beneath them lies the fact that British manufacturing and other companies are now immeasurably more resilient than at any time in the past 20 years. So I start from the premise that British businesses are among the best in Europe, and I am a bit tired of sitting here listening to a litany of defeatism from Opposition Members.
Mr. Chris Butler (Warrington, South) : This morning I received a letter from a north-west inward investment agency saying that, in 1990-91, it achieved the greatest number of inward investment jobs in the whole of its existence. That proves that overseas investors have more confidence in the future of our economy than have Opposition Members.
Mr. Cran : There is no doubt about that ; my hon. Friend makes an eloquent point.
I was saying that British business was among the best in Europe. Those with knowledge of the subject know that we have some of the best companies on the globe. To listen to Opposition Members, one would think that we had none. Of the top 500 companies in the European Community, 138 are British and only 92 are German. One would have thought, from the remarks of Labour Members, that the Germans would be ahead of us in that regard.
The wording of the Opposition motion is an utter disgrace. One would think that we were experiencing the collapse of manufacturing industry in Britain. I am a northern Member and am interested in manufacturing, although I agree with my hon. Friend the Member for Crawley (Mr. Soames) that the service sector is also important. I have an interest in manufacturing, and apart from this it is clear that all sectors of the economy are interested in having a strong manufacturing base. There is no difference between the two sides of the House on that, yet it is extraordinary that Opposition Members have not
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conceded what has happened over the years. For example, manufacturing output in the 1970s went down in absolute terms. Under Conservative rule, from 1982 to 1989, it increased in absolute terms. We have heard not a word of that from the Opposition. I was particularly disappointed that my near neighbour, the hon. Member for Great Grimsby (Mr. Mitchell), should have given an impression contrary to the facts.I have examined a number of company results in the United Kingdom to get to the true position. Consider, for example, the company to which the right hon. Member for Salford, East (Mr. Orme) referred, British Aerospace, Britain's biggest manufacturing company. In his annual statement, dated 25 February 1991, the c‡hairman of that company said :
"We are pleased to announce record results in this tenth anniversary year of British Aerospace as a public company." That meant pre-tax profits of £376 million, which was a record. If we are to believe the silly motion tabled by Opposition Members, there should have been a turndown in profits. Sales for that year were also a record, at £10.5 billion. Orders for this year stand at a record £11.8 billion--I attempted to explain that to the right hon. Member for Salford, East. In addition, British Aerospace has had a number of orders recently for aircraft, making that figure even greater. Again, that makes nonsense of the Opposition's silly motion.
It may be said that I have been lucky in choosing a company that suits my argument. I will therefore take another, Lucas Industries. Anybody with experience of British business and manufacturing knows that Lucas was an ailing giant when the lot on the Opposition Benches left office in 1979, and many people in the midlands thought that it would close down. The 1990 annual report and accounts for Lucas Industries show that group sales are at the highest level ever and that the same applies to the group operating profits, earnings per share and dividends per share. Perhaps more important, sales per employee are at the highest level ever.
Moreover, I did not know the figures, I would expect that there had been a downturn at Lucas in research and development expenditure. Instead, last year the company spent £99 million on research and development and with the addition of capital expenditure of £136 million. The combined figure is £325 million, 25 per cent. higher than in the previous year.
Those are two significant manufacturing companies at the sharp end of competition worldwide, and they are doing a great deal better than Opposition Members suggest.
While the business sector in Britain has occasionally faced difficulties, under Conservative rule it has managed to achieve levels of profitability never dreamt of when Labour Members had an opportunity to produce results. Business is also concerned about inflation, and it is therefore not accidental that the CBI has put at the top of its "Business Agenda for the 1990's" the question of the control of inflation. Yet the motion does not contain the word "inflation." That is because Labour Members do not understand that inflation kills the prospects of companies, because it erodes their international competitiveness.
We have not done as well as we might in controlling inflation. While I am the first to admit that, the facts show that, whereas our lowest rate of inflation was 2.9 per cent., the lowest inflation rate achieved by the last Labour Government was 7.4 per cent. Inflation is important
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because, if we could get it down to the German level, business would pay far less in interest--in fact, by about £8 billion a year. British business would also pay far less in corporation tax because with high inflation inflated profits are made.I am bullish about British business and the industrial sector, especially manufacturing. I echo the point made by my hon. Friend the Member for Warrington, South (Mr. Butler) : if the Opposition are correct in saying that the Government do not look after the interests of business, why does this country attract more foreign investment than any country in the European Community? There are more Japanese and American companies in this country than in any other simply because we look after industry.
When the Labour party had an opportunity to do so, it destroyed British business and undermined morale. That is no longer the case, and I expect much from British business in the next few years. 8.32 pm
Mrs. Irene Adams (Paisley, North) : I was elected to this House in November, just two days after the Prime Minister came to power. Throughout that election campaign people told me, "One thing is sure, Mrs. Adams. Things can't get much worse." At that time I probably agreed with them. How wrong we all were. Six or seven months later, a further 500,000 people are unemployed--people who thought that they had a future.
I listened to the Secretary of State telling us that the standard of living has increased. I wish that he would tell that to the 11 million people who are on the bread-line. The report by the National Children's Home last week said that many children in this country were going hungry. They were malnourished not because their parents were ignorant but because they did not have enough to eat. Their parents knew the right type of food that was required but they simply could not afford to buy it. That is the increase in the standard of living to which the Secretary of State referred.
Scotland has suffered particularly badly in this recession. It is the second round for Scotland, as it is for the rest of the country. When the Government came to power in 1979, my constituency was somewhat different. The town of Paisley was a single constituency. Recently, my hon. Friend the Member for Paisley, South (Mr. McMaster) asked the Scottish Office what was the net increase in manufacturing jobs in Paisley since 1979. The reply was that the net loss of manufacturing jobs was 14,500--in a town of 85,000 people. That probably means that not a single family in that town has not been hit by the loss of a manufacturing job. Those jobs had existed for over a century. They were jobs in cotton--most hon. Members probably had their buttons sewn on with cotton manufactured in Paisley by Coats and Clarkes. We now have two skeleton buildings standing in the middle of our town.
Coats and Clarkes was not the only company to go to the wall. At the end of last year, just as I came to the House, one of those centres of engineering excellence--Howden and Renfrew--disappeared, having been in existence for 120 years. Howden's work force were highly skilled in engineering. It was involved in research and development of renewable energy and was a world leader in that market. It was also involved in the manufacture of tunnelling equipment. I sat on the Committee that
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examined the Bill to introduce a link from Heathrow airport to central London. Only one company in Britain could manufacture the necessary tunnelling equipment to build that link--Howden and Renfrew. When the Bill's proceedings finished, Howden and Renfrew sold off all its plant and machinery to a company abroad, which will make the same tunnelling equipment for Heathrow. Howden's no longer exists. Conservative Members asked about skilled engineering. If they would care to come to my constituency tomorrow, I shall show them 400 highly skilled engineers who no longer have a job because Howden's no longer exists. They lost their jobs because of the Government's short-term policies and lack of foresight, and the fact that they are locked into a dogma of the past that would not permit them to enter into a partnership with that industry to help it over a hurdle. The company was asking not for nationalisation but for a partnership to help it when it was experiencing a short-term blip. It had millions of pounds, worth of orders on its books and simply needed a little assistance for a short time. The Government could not and would not give that assistance then, and nor would it now. If we pass a man with a broken leg in the street, do we refuse to send for an ambulance because that is intervention? That is the kind of intervention that was needed at Howden's to help it to pass that stage.The same happened in construction. Construction of private housing in Scotland has increased by 20 per cent. Unfortunately, construction in public sector housing has decreased by 78 per cent. The same people who have been put on the dole by high interest rates--a policy of this Government--are losing their houses. Because of those high interest rates, they cannot pay their mortgages. They then find that there are no public sector houses for them to move into.
The Government have continued with those policies and appear to have no intention of changing that path. They ask us continually about a standard minimum wage. Are they seriously telling us that they expect people to work for a pittance for ever? They seem to think that it is all right for people, such as those who work in hamburger restaurants or as security guards, to work for £1 an hour. The Government say that a standard minimum wage would create unemployment but 2.5 million people are already on the dole. When will the Government's policies, about which we so often hear, put people back to work? That has not happened so far, especially in my constituency. We are losing jobs at a record rate, to the extent that I asked the Secretary of State for Scotland to visit my constituency. There is now almost a haemorrhage. In one area, 40 per cent. of males are unemployed and there is no sign of improvement. By the day, we are losing solid, long-term jobs that have existed for centuries and there is nothing to replace them. There has been a net loss of 14,500 jobs. When will the Government finally realise that they are in the death throes and that there is no future for them? When will they move over and let someone else do the job?
8.39 pm
Mr. David Shaw (Dover) : The House should reject the Opposition's motion, which is ill conceived and shows no understanding of the needs of industry, and which fails to mention profits. It is an airy-fairy motion from academics, not from business practitioners. The Opposition have
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failed to acknowledge Government successes. The car industry, for example, has been turned round from the devastation that it suffered under Labour. The deficit in that industry was growing when Labour left office, but now it is moving towards a surplus in the trade in motor cars and accessories.The international competitiveness of our industry is growing as never before. We have been immensely successful in aerospace and pharmaceuticals. The Opposition constantly fail to acknowledge the impact of inflation on industry. Perhaps they do so because it hit 27 per cent. under Labour--a subject on which the Opposition engage in a conspiracy of silence. I invite Opposition academics to spend more time studying industry. I recommend that they look at the review by the National Westminster bank of February 1991, which carries an article entitled "How Inflation Undermines Industrial Success". It might as well have been entitled "How Labour's Policies Would Undermine Industrial Success". Labour needs a training seminar on how inflation costs industry so dearly.
Inflation causes higher costs for plant and machinery, and leads to higher working capital costs for financing industrial stocks and debtors. It reduces cash flows and damages industry, so why did the Opposition not mention it in their motion? Why do they ignore the effects of inflation on industry? Why do only the Government recognise how damaging inflation can be to industry? Perhaps it is because Labour's policy of higher public expenditure and a minimum wage would add to inflation. Labour has nothing but inflationary policies that would damage British industry.
The Opposition have missed an opportunity. Their motion could have complained about higher taxes on British business, but that would have drawn attention to the Labour Government's higher tax rates. Some may think it strange that I am drawing attention to taxes on business, but even under this Government, while tax rates have been reduced, our tax allowances are no longer as competitive as they used to be. Tax relief for depreciation must be reduced further. The Federal Reserve bank of New York published a research paper, No. 8193, which I commend to the House and to Ministers. It has an international study on the competitiveness of the United Kingdom tax allowances and other matters compared with the United States, Japan and Germany. It shows that this country is good on inflation because it is low and that internationally we have low real interest rates. However, it also shows that, on capital allowances, we have some way to go. I hope that the Minister and other Ministers in the Treasury will look at table 1 of that study. It shows that we need to reduce taxation further.
There is no comfort for businesses in the Labour party's policies. Not only would taxation be higher if Labour were in office, but a Labour Government would subsidise industry by attempting to pick winners. I wonder why the Labour party thinks that it can pick winners. Gamblers at the gambling table cannot do it, so what is so special about Opposition Front-Bench spokesmen? They have failed before and they would fail again if they were in office.
The Labour party's ideas on training would also fail. They want to train people for yesterday's jobs, but only
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business men know what the jobs of the future will be. No Labour politician will have any idea about that. The Government are introducing training and enterprise councils, which will be run by business men who are aware of what the jobs of the future will be. TECs will work and train people for the future.The Labour party has crazy ideas on research and development. Its policy harks back to Harold Wilson's white heat of technology--the biggest failure the country ever had. Harold Wilson's policies for industry, for selective employment tax and for higher national insurance were failures. The Labour party should be looking forward to the year 2000, rather than back at the 1960s, for its industrial policies.
I was an accountant when investment grants were given for research and development projects. Companies would arrange their accounts so that overheads were included in such projects. Management time and overtime were added to inflate the investment grant.
Mr. Whitney : The Opposition do not understand.
Mr. Shaw : No, they do not understand, because they do not have any experience to give them the understanding. Tax credits given in the way proposed by the hon. Member for Dunfermline, East (Mr. Brown) would cause problems. I wish that he were here to listen to the reality. He proposed tax credits, but he knows that they are wrong and will not work. Furthermore, he knows that the shadow Chancellor of the Exchequer would not allow him the money anyway.
Labour still has a policy of nationalisation. For example, it wants to renationalise British Telecom, the one company that has increased its efficiency massively, along with improving its services to industry. It is becoming more efficient each year under the Conservative Government and the policy of privatisation. Privatisation has improved efficiency.
I commend the Government's policies to the House. They are helping industry. We shall overcome any problems that have resulted from the recession. Our industry will come out of the recession strongr and more solid than every before. It will be a world-beating industry, which will not suffer from the negative attitude of the Labour party. The Labour party will never have the chance to run British industry because it will be run by business men, helped and assisted by a Conservative Government.
8.46 pm
Mr. David Clelland (Tyne Bridge) : The hon. Member for Dover (Mr. Shaw) should come to my constituency and explain to the 300 workers at Bridon Fibres, the hundreds of workers at De La Rue on the Team Valley trading estate and the hundreds in the royal ordnance factory in Birtley who have just lost their jobs, that their sacrifice on the altar of Tory economic policy is worth paying.
Unfortunately, the hon. Member for Beverley (Mr. Cran) is not in his place. He quoted, ad nauseam, the Confederation of British Industry, but one has to remember that he was once the chairman of the northern region of the CBI. We all know that the CBI is nothing but an apologist for the Tory Government. Increasingly, we
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have to look to the chambers of commerce and the industry associations to get the true picture of the state of British industry under a Tory Government.The northern region was once one of the cornerstones of manufacturing industry, but under this Government it has become a poor relation to Taiwan and South Korea as our manufacturing industries have been run down and closed while theirs have grown and thrived. The industries that have suffered are not, as too often we are told by the estate agents and second- hand care salesmen on the Government Benches, outdated smokestack industries that have outlived their time. All too often they have been industries at the forefront of technology--industries such as Marconi and Plessey. Too often they have been closed not because their products have become extinct but because of the economic policies of remote headquarters and the British Government. This has sometimes been caused by the Government's inaction and sometimes by the direct application of blinkered dogma.
An example of the former was the closure of the Caterpillar tractor factory in Birtley some years ago, when 1,500 workers were thrown out of work as a result of a decision taken in the United States, and one taken purely for the economic convenience of the parent company. That it was not the result of a lack of demand for the earth-moving vehicles that the plant produced is shown by the fact that the plant was bought by the Japanese company Komatsu, which immediately began to produce the same product and thankfully mopped up some of the unemployment caused by the closure. That achievement was down to the Labour-controlled metropolitan county council of Tyne and Wear and the Labour-controlled metropolitan borough of Gateshead. The Government's non-interventionist, hands-off approach did nothing to prevent the closure or to bring about the rescue.
Another example of the Government's contribution to the fate of manufacturing industry in the north is the disgraceful set of circumstances surrounding the close of North-East Shipbuilders on the River Wear. Hundreds of skilled workers were thrown out of work, many having given their lifetimes to the industry. An acknowledged highly technologically advanced and modern facility was closed as a direct result of and for no other reason than the Government's determination to pursue their dogmatic privatisation policies. That happened to such a degree that the wheeling and dealing that went on behind the scenes at the Department of Trade and Industry and among private interests resulted in the yard being forced to close even though other private interests were willing and able to take over the yard and to maintain its shipbuilding tradition on an unsubsidised basis. As my hon. Friend the Member for Hartlepool (Mr. Leadbitter) observed earlier, the workers were told that they could do anything in the yard except build ships. Anyone who saw the recent "Panorama" programme called "Scuttling British Shipbuilding" will acknowledge that the performance of the Department in this example was as near to corruption as makes no difference. The conspiracy acted out by Ministers in collusion with the deputy chairman of British Shipbuilders, behind the back of his chairman, was a disgraceful episode in our industrial history.
We heard from the right hon. Member for Croydon, South (Sir W. Clark) that living standards have improved over the past 12 years. That is not true of everyone. The gap between rich and poor has undoubtedly grown. Even
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