House of Commons Hansard Debates for 16 Oct 1991

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Just to be sure, we checked this afternoon that he was correctly reported. He said :

"The economy has been in trouble since the present Prime Minister was made Chancellor. We forecast the problems in September 1989 but the Government did not accept recession until the beginning of 1991. Confidence is totally destroyed in manufacturing there is no sign of an uplift."

Is that not the view of many manufacturers throughout the country? Faced with all the evidence, with rising unemployment, ever-rising bankruptcies and direct condemnation by industry itself, what are the Government still trying to tell us? The Secretary of State for Trade and Industry was interviewed on the "Today" programme last week by Mr. Brian Redhead--the man whom he accused a few months ago of voting the wrong way at the last general election, until Mr. Redhead pointed out that he had indeed voted the wrong way as he had voted Conservative. What did the Secretary of State say in that interview? Did he say that he appreciated all the problems of industry, that he shares the doubts about confidence coming back, or even that things may gradually improve? No. He said :

"The mood that I detect in businessmen"--

obviously based on his experience in the north-east--is that "confidence is flooding back".

Is it flooding back when investment is falling, redundancies are rising, and unemployment is increasing? Perhaps the Secretary of State will explain exactly what he means by confidence flooding back when he speaks later this afternoon.

The Chancellor, not to be outdone by the Trade Secretary, told us that there was a miracle when there was not, and that there was no recession when there was. He told us in the spring that he could hear faint stirrings that no one else, he admitted, could hear. In the autumn, he alone can see "green shoots of spring" that no one else can currently see. What does the Chancellor say when pressed? I have the cutting here. He says that the United Kingdom economy is "making dramatic progress".

Why should we believe the statements of Ministers who told us in 1988 and 1989 that they had created a miracle, who told us in 1989 that there would be no recession, who told us late in 1990 that the recession would be over by the beginning of 1991 and who told us this year that the recession would be over towards the middle of the year and then by the middle of the year? That never happened, as everyone knows. Now, even in the face of the Government's own

evidence--published in the Budget statement--we know that next year the balance of payments will worsen, imports will rise and investment will continue its decline. In the face of that, what do they tell us? The same vicious circle is about to be repeated--a circle that can only be broken by a proper policy for industry.

Nowhere is the gap between what Ministers say will happen and what happens wider than in the statements of the Prime Minister. Let us be clear about what the Prime Minister told us almost a year ago when he was Chancellor, giving the autumn statement in the House. Last November he told us that growth would be 0.5 per cent.--it is now declining by 3.7 per cent., so he was wrong by just over 4 per cent. He told us that manufacturing output would fall by 0.5 per cent.--it fell by 6 per cent., so he was wrong by more than 5 per cent. He told us last

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November that investment would fall by only 0.75 per cent., but it has fallen by nearly 12 per cent. according to estimates, so he was wrong by more than 11 per cent.

What is the Government's answer? As we saw in the Financial Times on Monday, it is not to admit to mistakes but to suggest privatising the Treasury forecasters. It is not the civil servants who work for the Government who should be moving out of Government and into the private sector--it is the Cabinet Ministers who made the policies that undermined the forecasts.

To be fair to the Prime Minister in his record on manufacturing, however, let us consider his record since he first arrived at the Treasury in 1987. He told us then that he had licked inflation--but then it doubled, and doubled again. In 1988, he told us that he would continue as a Treasury Minister with a policy of a balanced budget and said :

"Living today and paying tomorrow is not an attractive philosophy for Government, nor is it a Conservative philosophy. We are determined we will not do that. We will maintain a balanced budget." Is a £10 billion and rising public sector borrowing requirement a balanced budget? To crown it all, in April 1989 the Prime Minister made a speech to the country which I have here. What is its title? It is "The Manufacturing Renaissance"--under the Tories of course. He told us :

"The British economy is now resilient and dynamic and growing and so it will remain, and manufacturing will lead the way".

Since that day in April 1989 when the Prime Minister, then Chief Secretary, made that speech manufacturing investment has fallen 21 per cent., manufacturing output by 8 per cent., and manufacturing unemployment by 361,000. Is that a renaissance? We should be grateful that he is not promising a renaissance in the health service, in schools and in our public services.

The failures cannot be dismissed as one-off misjudgments, as aberrations or as the misfortunes of a single recession. We argue that the failures in manufacturing are the enduring and cumulative consequences of 12 years of short-termism when what Britain needed was a long-term strategy for investment in our future.

After twelve and a half years of this Government, manufacturing output has grown by 63 per cent. in our competitor country Japan, by 26 per cent. in Germany and by 32 per cent. in America, but in Britain it has grown by only 6 per cent.--10 times slower than in Japan.

The debate is not about whether we are fourth, fifth, sixth or seventh in the league for manufacturing growth. The fact is that we are 20th out of 21, with only Greece behind us. This is the Government who tell us that they think that manufacturing is important. Not only that--no other industrial country has seen such a lamentable performance in manufacturing investment, and in no other country has Government-funded research and development for the future expanded so poorly. Let us consider the figures for a minute.

Mr. Tony Marlow (Northampton, North) : I am intervening by popular demand : I have been asked to do so by some of the hon. Gentleman's colleagues on the Opposition Benches, who are bored stiff with what he has been saying so far. I am very grateful to the hon. Gentleman for giving way.

Whenever the hon. Gentleman speaks to one of his colleagues, there is a promise to spend more money on

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this, that or the other. Thus everyone in the country knows that if they suffered the misfortune of a Labour Government, it would lead to massive increases in taxation. How does the hon. Gentleman feel that that would increase investment in manufacturing industry?

Mr. Brown : That question is asked in every debate on this subject, whether it is asked by the hon. Gentleman or by someone else. We have set out our programme very clearly, and we have listed our priorities. We shall not spend what we cannot afford to spend, but we shall invest where we believe investment is essential for the future. We will take no lectures about prudence in public spending from a party that wasted £10 billion on the poll tax.

In 12 years, manufacturing investment--the key to our industrial prospects- -has risen by 52 per cent. in France, 48 per cent. in Germany and 54 per cent. in Europe as a whole. Since 1979, it has fallen in real terms in Britain--the only one of the main industrial countries in which it has done so.

Mr. Keith Mans (Wyre) : The hon. Gentleman has referred to budget deficits. Is he saying that he now believes that we should balance the budget ?

Mr. Brown : What I am pointing out is that it was the Conservative party which said that it would balance the budget. [Interruption.] Conservative Members are unduly sensitive today about some of the points that Labour is making about their management of the economy. That is the party which said not only that it would achieve a balanced budget--which must be the aim of Governments over a period of years--but that it would try to balance the budget every year. Now, of course, we have a budget deficit of £10 billion or more.

How do we improve our prospects so that we can achieve the wealth creation through which public services can be financed ? We must do so by means of a strategy for investment in our future, and particularly in manufacturing industry. Let us, however, examine the current position. Germany now exports three times as many manufactured goods as Britain ; under the present Government, production of electric motors, transformers, tractors, buses, lorries and vacuum cleaners has halved in this country. We now produce less steel than Brazil and even less than Taiwan. We import 3 million computers and 2 billion microchips a year, and 36 per cent. of all our manufactured goods are imported.

The truth is that our production is falling away, not only in the traditional industries, but in the high-technology industries on which our future depends. The tragedy is that, without a policy for industry, the current recession is merely an interval between the making of mistakes in one short-term consumer-led economic upturn and their repetition in another.

If another investment crisis exists in this country, along with the crisis that I have already described--the crisis relating to the Conservative Government's investment in industry--it is the crisis relating to industry's investment in the Conservatives. If Conservative Members are not worried about their party's investment in industry, should they not be worried about industry's lack of investment in their party? What has happened as a result of the policies for manufactuing industry that Conservative Members have pursued? Until 1985, GEC gave the Tories £50,000. What is the latest figure? Nil. Viyella gave £25,000, and now gives nothing. Vickers gave £30,000, and now gives

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nothing. Plessey gave £32,000, and now gives nothing. Pilkington gave £30,000, and it, too, now gives nothing. I could continue with the list : fewer and fewer British manufacturers are now prepared to support the finances of the Conservative party.

The only enthusiastic supporter of whom the Tory party can still boast--in Britain, at least--and the only one who can boast about the Tory party is Mr. Gerald Ratner, and we all know what he thinks of the products that he supports. The reason is clear. Quoted in The Spectator, one company director said :

"This is the age of shareholder power. We just can't hope to get big contributions past them especially since our shareholders seem to blame the Tories exclusively for the recession."

The problem has affected not only donations to the Conservative party but, I understand, its winter ball. Refusing to support the last one, Mr. Peter Edmondson, of Anglia Secure Homes, said : "After a decade of hard work and commitment to free market ideology I find in financial terms that I am back where I started." Perhaps, however, tickets for this year's winter ball are selling better, at least in Hong Kong, Athens and other such hotbeds of activity. Indeed, one Greek shipping magnate is contributing more than the whole of British manufacturing industry.

Mr. Robert G. Hughes (Harrow, West) : What the hon. Gentleman is saying is very interesting. Will he confirm, however, that the Transport and General Workers Union will be giving, and has always given, more to his party than has been given to ours by all the companies that he listed put together? Moreover, unlike those companies, the union controls the party to which it is contributing, and dictates its policies.

Mr. Brown : I can confirm that the Transport and General Workers Union gives money to the Labour party, but I cannot confirm whether it gives Labour more or less than what is given to the Tory party because the Tory party does not publish its accounts. To know how much it is receiving, we have to rely on The Sunday Times. The Transport and General Workers Union may give money to the Labour party ; what we want to know is who gives money to the Conservative party. Furthermore, when that or any other union sponsors individual Members of Parliament, it is not giving money to those Members of Parliament directly. That cannot be said in relation to the 800 directorships and consultancies held by Conservative Members.

The fact is that the Government have nothing to say to the management of a midlands light engineering company which is struggling in the export market and battling with high interest rates. They have nothing to tell a small business man faced with the twin problems of interest rates and bank charges. They will, however, be extremely interested in what a Greek ship owner with a special affinity with the right wing of politics has to say. As for the Hong Kong business man who offers to contribute, the Prime Minister will not, it appears, merely meet him halfway--he will meet him in Hong Kong.

I ask Conservative Members whether there could be any stronger indication of Conservative priorities than this. I understand that the Prime Minister was in Hong Kong a few weeks ago, and that he left a drinks reception organised on behalf of United Kingdom trade and industry to go and see Mr. Li Ka-Shing, a plastic flowers

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millionaire and contributor to Tory party funds. According to The Sunday Times, the Prime Minister left with an important carry-out : the promise of £100,000 in Hong Kong dollars. That must have been one of the most lavish Chinese takeaways in history. A Happy Eater indeed, and yet another invisible item in the nation's trading balance--and, I suspect, yet another disgracefully invisible item in the Tory party's traditionally mysterious accounting system.

If we were to ask the Prime Minister to list his engagements for 3 November, we should learn that he is to be in Oxfordshire. Will he be meeting small business men and manufacturers? Will he be talking to the unemployed, or to some of the youth trainees who cannot even obtain a place, and certainly cannot obtain any benefits? No--he will be at Blenheim, entertaining 40 of the Tory party's biggest contributors. Some of them may even be from this country. We can take it for granted that all these millionaires share the Prime Minister's vision of a classless society for Britain. The Conservative and Unionist party is no longer what it was. If its fund-raising is anything to go by, it has become the City and offshore party of this country--yet it is the party that tells us that it thinks and acts as though British manufacturing industry is important.

What has changed since the time, early in the 1980s, when the Conservative party discounted manufacturing industry and complained of Labour's obsession with it? What has changed since it talked about the importance of the service economy and even of a low-tech, no-tech economy? All that has changed are the statements--nothing else. The Conservative party tells us that manufacturing industry is important, but is there a new manufacturing investment programme, as Labour proposes and as industry supports, to kick- start investment in our economy? No. Is there a new regional investment incentive--a reform of regional aid to benefit manufacturing industry in all the regions of this country? No. The Conservative party has abolished many of the existing forms of aid that were available. Are there new incentives for research and development through the tax system, as we propose, and supported by industry? No. Are there tougher takeover rules to encourage long-term investment and to free business from stop-go short- termism, as Labour proposes? No.

The Conservative party wants weaker, not tougher, rules. Has it adopted our proposal for regional development agencies, which would be welcomed in every part of England? Would it create them in Scotland and Wales? No. Has the Conservative party even considered our proposal for a one-stop business service that would help many of the small businesses that are currently in difficulty, a policy that has been welcomed by business? No. Has it considered our new approach to training that would help manufacturing industry to expand? No, not at all. All that has changed is that, under pressure, the Conservative party now tells us that manufacturing is important. However, it pursues exactly the same policies that damaged manufacturing, even though we were told that those policies were not doing it damage.

If the Conservative party supported a policy for manufacturing industry, would it not have responded in 1984 and 1985 to the House of Lords report on

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manufacturing instead of disparaging it and wasting another six years, and would it not have supported its own official committees' recommendations--to take action on information technology in 1987, to take action on optel-electronics in 1988 and to take action on biotechnology in 1989? Would it not have responded when the Bank of England identified an investment gap for small business in 1990? No last gasp initiatives from this Government, no cheap scheme, simply for its public relations value, can disguise the fact that for twelve and a half years the Department of Trade and Industry, charged with responsibilities to industry, has been a do-nothing, care-nothing and listen-to-no-one Department.

Mr. Graham Riddick (Colne Valley) : The hon. Gentleman believes that the Government should have a far larger role in the way that manufacturing industry is run. Will he please tell me what experience either he or any of his colleagues in the shadow trade and industry team have of working within manufacturing industry?

Mr. Brown : The Labour party has been listening to industry and talking to industry. We have entered into a proper dialogue with industry. If the hon. Gentleman does not believe it, industry does.

Mr. Riddick : But has the hon. Gentleman ever worked in industry? Mr. Brown ; There is now a consensus about the measures that need to be taken. The people outside that consensus are the members of this Government.

Mr. Quentin Davies (Stamford and Spalding) : During the dialogue that the hon. Gentleman conducted with industry, did he ask industrialists or small business men what they thought of his industrial relations policies, or his minimum wage policies, or his tax policies? If he asked that question, does he have the courage to tell the House what replies he received?

Mr. Brown : The hon. Gentleman may be interested to know that the Institute of Personnel Management has just reported on a survey that it has conducted of its members. More than 50 per cent. of them want a minimum wage and believe that it is absolutely right. The Conservative party has remained absolutely silent as the chairmen and directors of privatised companies have awarded them-selves 50, 60, 70 and more than 100 per cent. pay rises and then complained about workers, struggling on £2, £2.20, £2.40 or £3 an hour, wanting a minimum wage-- something that happens elsewhere in Europe and America without job losses.

Apart from neglecting manufacturing industry, the Conservative party has neglected the whole of industry over the past 12 years. We have a new Conservative party document entitled "The Government's Industrial Strategy." For 12 years they told us that there was no need for an industrial strategy and that a regional policy was a phoney Government activity. Rapturous applause was given to the former Secretary of State for Trade and Industry when he asked what the DTI was actually for. Now the Conservative party tries to tell us that an industrial strategy is what it is pursuing in Government. Let us explore just what the Secretary of State means by an industrial policy. Does he mean that the market, unaided, cannot solve the training problems and that legislation will be essential? Does he believe in a market

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forces approach to training, or is he prepared to legislate? Does he mean a new commitment to regional policy, which he has cut, and cut again? Or does he still agree with his ministerial colleagues who believe that a regional policy has no real place in industrial policy as a whole? Does the Conservative party's industrial policy amount only to extolling the market's virtues or recognising the market's limitations? Is the partnership that it talks about a partnership between Government and industry to achieve specific training and technology objectives, long-term objectives and a policy for the regions, as we propose? Or is the truth not this : that, as the document makes clear, the partnership and the industry policy that the Conservative party talks about amounts to simply more privatisation--not to a recognition that markets can fail. It is a statement of conviction, in the teeth of all the evidence, that markets will always be right.

If the Conservative party really supported a policy for industry, this year alone it would be acting on the recommendations of the Government's committees regarding the action required on advance manufacturing for the 1990s, on the quality of technology transfer and on the lack of support for small business. It would have listened to and taken action on the House of Lords report that promoted the idea of capital allowances for manufacturing, tax credits for research and development, regional development agencies and proper policies for technology. Is the Confederation of British Industry not right to complain that these technology policies are public relations exercises rather than anything of substance? Is the House of Lords not right when it says that schemes come forward, when they do, simply for the sake of gaining political kudos?

The truth is that as we face the problems and challenges of the 1990s--when we need a policy for training, a policy for technology, a new approach to regional policy similar to that pursued by our competitors and an emphasis on long-term investment--a once great Department of State, whose job it is to support industry, has been hijacked by a faction that does not believe that industry needs the Department.

The Government say that they are the party of small business ; yet they stand by and do nothing as enterprising people are let down by an unenterprising Government. They say that they support home owners ; yet they have forced record numbers into mortgage arrears. It is the Government of a Prime Minister who tells us that his motto for the 1990s is the power to choose and the right to own. Let him tell that to the 70,000 victims of repossession in his first year of office because of mortgage arrears. Let him tell that to the 750,000 people who have been made redundant because of the Government's mistakes in the 10 months he has been Prime Minister. Let him tell it, too, to the 50,000 businesses likely to go bankrupt in the 15- month period he will have been in office.

If the Prime Minister believed in a classless society and in opportunity for all, would he stand by and do absolutely nothing as firm after firm, industry after industry, goes to the wall in a series of preventable disasters for British industry? If he really believed in opportunity for all, would he not repudiate the top rate tax cuts which have caused many of the problems that we now have? Would he not repudiate private medical care tax relief, the training cuts and the cuts in support for the regions and industry? If the Prime Minister believed in opportunity for all and a classless society, would he not have introduced a better

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deal for the unemployed, with an emergency work programme, legislation to improve training, action to bring the regions into play in our economy and, most of all, action to get people back to work?

British industry is no longer safe in the Government's hands. They have no new policies and no new vision. They have no new programme for six months, let alone for five years. Even six more months is too long for British industry and for the British people to wait--they need a new Government with a new mandate, and they need it now. 5.50 pm

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Lilley) : I beg to move, to leave out from"House" to the end of the Question and to add instead thereof : "congratulates Her Majesty's Government on its success in bringing down inflation to German levels and in creating almost three million jobs since 1983 ; recognises that the defeat of inflation is essential in maintaining international competitiveness, and in further job creation ; welcomes the dramatic transformation which has taken place in training in this country and the continuing succeses in export markets and in attracting inward investment ; recognises that sustained growth depends upon quality and innovation and welcomes the Government's policies to stimulate these ; and notes the revival in business confidence, which would be put at risk by the inflationary, job destroying and anti-industry policies of the Opposition, in particular their commitment to nationalisation, state intervention, punitive taxation, renewed union power and a national minimum wage.".

The House is familiar with the speech of the hon. Member for Dunfermline, East (Mr. Brown). Every time he plays us the same recorded message of denigration and despair. He gloats over gloom. He crows over closures. He revels in redundancies. But what makes him genuinely gloomy is any sign of good news. He is the sort of chap who is banned from his local wine bar during happy hour.

There is good news coming through. We did not hear a word of it from the hon. Gentleman, because what is good news for Britain is bad news for the Labour party. Contrast the picture that Labour paints of the British economy with the description given by the director general of the CBI :

"manufacturing output in Britain is running at levels which caused local economists to worry about overheating not three years ago ; British manufactured exports have been increasing faster than world trade--we export more per head than Japan ; in Britain import penetration remains below that in West Germany ; British investment in skills and innovation is at record levels and still rising ; our private sector inflation is under 4 per cent. and falling ; our manufacturers are rapidly closing the gap between productivity growth and pay rises and our industrial disputes are at their lowest level for half a century."

Mr. Gordon Brown rose --

Mr. Lilley : I shall give way later. The hon. Gentleman spoke for 36 minutes without telling us any Labour policies.

The Opposition have given the debate the title "Manufacturing Decline". Of course, that is a subject which they know a lot about. Manufacturing output fell under the last Labour Government. It has risen under this Government. Manufacturing output is now 25 per cent. higher than it was 10 years ago-- the same point in the business cycle.

Moreover, the wounds of which British industry still bears the scars were inflicted by socialism. It was

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manufacturers who suffered most from the excesses of trade union power, from inflation, nationalisation, high taxation, protection and state intervention. Those Labour policies are all behind us now. We rejected them and sowed the seeds of a manufacturing revival in his country.

I would not even mention the past if the Labour party did not intend to take us back to it. But it does. It is committed to policies that wrought havoc in the past and would undermine what everyone outside the Labour party recognises as the great achievements of the last decade.

Above all, poor industrial relations used to be the cancer of British manufacuring industry. We tend to forget just how appalling they were. In 1979 we lost 29.5 million working days through industrial disputes. Over the past 12 months we have lost only 0.7 million days--the lowest level for more than 50 years.

Yet the Labour party opposed each and every one of the trades union reforms which have brought about this improvement. Now it threatens to restore trades union powers and privileges. Of course, it sends the hon. Member for Sedgefield (Mr. Blair) to reassure us that Labour will not undo all our reforms. He is a nice chap ; went to a good public school ; speaks posh. But even he cannot conceal the fact that the trades unions are Labour's paymasters. They expect a return on their investment. And they have the votes to ensure they will get it. Labour claim some support among business men. I have yet to meet a business man who wants to unpick our laws on secondary action ; who wants to change our laws on picketing ; who wants compulsory union recognition.

Another undoubted Government success which a Labour Government would put at risk is the flow of inward investment. This Government have made Britain the most attractive country in Europe in which to invest in manufacturing. Last year we attracted more than half of all the Japanese and American investment coming into the European Community. Yet, by an overwhelming majority, the Trades Union Congress condemned Japanese investment as alien.

It would be a tragedy for this country, especially for our manufacturing sector, if inward investment were frightened off. Yet not one Opposition Front-Bench spokesman has dared to disown the TUC. I challenge them to do so now.

Mr. D. N. Campbell-Savours (Workington) rose

Mr. Lilley : I shall give way to the hon. Members opposite who are so indifferent to inward investment that they talk through what I am saying about it. Will either of the Labour Front-Bench spokesmen--the hon. Member for Dunfermline, East, the spokesman on trade and industry, or the hon. Member for Sedgefield, the spokesman on employment--disown that overwhelming majority vote of the TUC condemning inward investment? What about their colleagues from the regions that have benefited so strongly from inward investment?

Mr. Nigel Griffiths (Edinburgh, South) : On a point of order, Mr. Deputy Speaker. Is it in order for the hon. Member for Harrow, West (Mr. Hughes) to sign letters to his constituents and stuff envelopes, failing to listen to the drivel being spoken by the Secretary of State?

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Mr. Lilley : That was a defensive measure to try to help the Front- Bench spokesmen out of their embarrassment. They have to call in the Whips. How pathetic. The puppetmasters pull the strings. And there are more union strings on the Labour party than in the entire cast of "Thunderbirds"--but there is nobody, it seems, called Brains. The result is that a Labour Government and their trades union paymasters would frighten off foreign investment overnight. All that investment, all those factories and all those jobs would go to France, Germany or Spain, and they would export to us instead of our exporting to them.

Mr. Campbell-Savours rose --

Mr. Lilley : I happily give way to the hon. Gentleman.

Mr. Campbell-Savours : The Secretary of State says that investment is taking place. Will he respond to the proposition put by the shadow Secretary of State, my hon. Friend the Member for Dunfermline, East (Mr. Brown)--that investment has fallen? Has investment fallen?

Mr. Lilley : Investment this year is 30 per cent. higher than it was a decade ago--the same point in the economic cycle. As for inward investment--

Mr. Campbell-Savours : On a point of order, Mr. Deputy Speaker. You will have heard me ask the Secretary of State a specific question. Will he answer it? Has investment fallen--yes or no?

Mr. Deputy Speaker (Mr. Harold Walker) : As I suspected, that is not a point of order.

Mr. Lilley : Only this week a report from Nomura spelt out just how dramatic will be the full benefits of the current inward investments. It says :

"our new estimates suggest that by 1995 Japanese investment could add £4 billion to the trade balance, 2 per cent. to output, and over 400,000 new jobs".

That is what Labour Members put at risk by their shameful silence. I do not believe that British voters will share that willingness to put at risk the successful flow of inward investment by putting it in the hands of a xenophobic Labour movement.

Nothing was more destructive of industry than rampant inflation. It reached 27 per cent. under Labour. That almost wiped out profits. It made planning for investment impossible and it provoked the biggest industrial unrest Britain has seen.

By contrast, we have brought inflation down to 4.1 per cent. That is barely half the lowest level ever achieved under the Labour Government. It means that we are getting inflation down to German levels for the first time in a generation and it has enabled the Chancellor to reduce interest rates by nearly a third. That is why all the surveys show a strong recovery in business confidence. Business men recognise that we have now created the conditions for sustained and non-inflationary growth. Manufacturing output should again outstrip the rest of the economy, as it did in the second half of the 1980s.

Another unqualified success story which the Labour party's policies would put at risk is privatisation. Virtually every company that we have privatised has improved its output, turnover, profits, investment and industrial relations.

British Steel is a case in point. It was one of the commanding heights of the economy which was

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nationalised by the so-called moderate Labour Government in the 1960s. Nationalisation brought the steel industry to its knees. There was a genuine danger that we would end up with no viable steel industry in this country. Attempts to sustain it were costing the taxpayer ever more unbearable sums--totalling £14 billion between 1975 and 1985. In 1979-80 British Steel was costing the taxpayer £5 million a day.

Privatisation has transformed all that. British Steel has become one of the most successful steel industries in the world. Its efficiency increasingly rivals and, in many areas, surpasses even that of Japan.

I recently visited British Steel's works at Redcar, which has the largest blast furnace in Europe. It is more efficient than its Japanese counterparts. I saw the massive new beam mill being installed. It is a huge investment and the best in the world and is operating to twice as fine a tolerance as its best rival anywhere in the world.

We never hear a word of praise from the Opposition Benches for the achievements of our privatised companies. They threaten our utilities with renationalisation. At last year's party conference the hon. Member for Dunfermline, East won a cheap cheer from his socialist supporters by reaffirming Labour's commitments to renationalise water, the national grid, and British Telecom. Before this year's party conference I challenged him to withdraw those pledges. It would have been the first time he had ever given us some cheerful news, but he passed up the chance.

The Labour party remains committed to its priority programme of nationalisation which represents a £10 billion threat to the taxpayer, a threat to 6 million private shareholders and a threat to 50 million customers. Labour is the only party east or west of the old iron curtain which remains wedded to nationalisation. The Labour party has replaced Oxford as the home of lost causes.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich) : Will the Secretary of State tell us whether he considers the privatisation of British Rail Engineering Limited to be a success, when the railway industry is falling apart, when it has totally empty order books and when my constituency has the largest and fastest growing unemployment level in the north-west? Will he tell us whether he regards the privatisation of BREL as an example of the brilliance of privatisation?

Mr. Lilley : If the hon. Lady thinks that nationalised industries with empty order books can survive, she has a strange idea of economics.

Nationalisation of the utilities, which is what the Labour party proposes, would damage those utilities and undermine British manufacturing industry. When British Telecom was state owned 250,000 people, many of them with small businesses, had to wait two months or more to obtain a telephone line. Delays such as that damaged, destroyed or aborted countless small firms. Today nobody has to wait that long for a new line and if British Telecom is even a day late in repairing a telephone, it offers compensation. There would be small hope of that if it was still nationalised.

When the water industry was nationalised, investment was held back. Now that the industry is privatised it has embarked on a massive £28 billion investment programme. That creates immense opportunities for British suppliers.

We have seen how well our manufacturers can do in winning orders in such massive engineering projects. For

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example, on the channel tunnel, British firms have won 78 per cent. of the orders at this end of the tunnel, and 45 per cent. overall. French industry has picked up only 30 per cent. of the total orders.

Dame Elaine Kellett-Bowman (Lancaster) : My right hon. Friend will be pleased to know that not only large companies are thriving. An engineering firm in my constituency--R. E. Leach--which is small but growing steadily, secured an order in Cologne, the backyard of the German engineering industry, for work on a wind tunnel. Having got the order, it then trebled it. Would my right hon. Friend care to add his congratulations to that company?

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