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Mr. Lilley : I add my congratulations. I recently had the pleasure of visiting the constituency of my hon. Friend the Member for Lancaster (Dame E. Kellett-Bowman) and I was struck by the enterprise and initiative of the business men I met there and by their positive attitude. That contrasted massively with the attitude of Labour Members.
One key to our success in reviving British industry has been reducing tax rates, simplifying many taxes and abolishing others. We now have the lowest rate of corporation tax of any major industrial country. We have abolished six major taxes, including the surcharge on employers' national insurance contributions, investment income surcharge, capital duty, development land tax, composite rate tax and stamp duty.
Paradoxically, fewer, simpler, lower taxes generate more revenue as they restore incentives, boost profits and leave companies free to invest their own money. As a result, we have kept the total tax burden on business below that of our major continental competitors. The total of corporation and payroll taxes on business in this country amounts to 8.9 per cent. of national income. In Germany it is 10.5 per cent. and in France it is no less than 17 per cent. The Opposition are reluctant to talk about their tax policies in any detail. However, we do have some sources of information. Mr. David Winnick (Walsall, North) rose --
Mr. Lilley : Perhaps this is one of them.
Mr. Winnick : If it is all such a great success story, can the right hon. Gentleman tell us--I hope that he will refer to it in his speech--why there is such devastation in the west midlands, why 37 unemployed people are chasing every available job and why the west midlands is suffering devastation arising from the recession in the same way as it did 10 years ago, under the same Government? Is the Secretary of State at all concerned about what is happening in what should be Britain's industrial centrepiece? If the west midlands suffers as it did in the early 1980s, British industry suffers.
Mr. Lilley : If the hon. Gentleman seriously believes that that would be improved by a return to nationalisation, increased trade union power and higher taxation, he will believe anything. As I have said, we have some sources of information about the Labour party's tax policy. The first is its voting record. It has opposed virtually every tax reduction that we have introduced. Secondly, we have the frank acknowledgement by the shadow Chancellor that he
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would never cut taxes. His counterparts in former left-wing parties in Spain, Australia and New Zealand have set lower taxes as their objectives. The right hon. and learned Member for Monklands, East (Mr. Smith), happily for us, intends to go into the next election with the slogan, "Watch my lips--no more tax cuts." That is about the only Labour slogan that the electorate will believe. Those who read not just the right hon. and learned Gentleman's lips but his party's spending pledges know that he really means much higher taxes. The Labour party's £35 billion spending pledges, about which the hon. Member for Dunfermline, East refused to comment, as he refused to answer any questions, are equivalent to 15p on the basic rate of income tax. When my hon. Friend the Member for Battersea (Mr. Bowis) asked how a 9 per cent. tax on savings would help investment, he scored a bullseye. The hon. Member for Dunfermline, East wriggled and squirmed and said that there would be some offsetting incentives. It is fiscal madness to raise taxes and reduce them at the same time on the same thing.The Labour party often condemns short-termism, but, like the hon. Member for Dunfermline, East did again today, it invariably focuses on the short term. I am fully aware from my daily contacts with business men how painful the economy still is in many sectors. However, the return of confidence, in all the surveys, shows that business men increasingly take a positive long- term view. We should do likewise. It is clear from our record over the past decade and the outlook for this decade that the picture for manufacturing is very positive indeed.
After falling rapidly behind during the 1960s and 1970s Britain's manufacturing productivity grew faster in the 1980s than in any other major country, including Japan. With improved productivity came increased competitiveness. Our total exports have risen by over 60 per cent. since 1979. In the past two years alone, manufactured exports have increased by nearly a fifth. Since 1983 our share of world trade in manufactures has done better than that of France, Germany, Japan, the USA and Italy.
Make no mistake. Britain is succeeding in world markets. Whole industries that once seemed in terminal decline are undergoing a rebirth. Output of motor cars halved during the 1970s. Yet since the early 1980s output has been rising. The planned increase in capacity to produce motor cars exceeds that of all our European partners put together. Car imports this year have been up 82 per cent. on last year. Output of television sets has doubled since 1979, and we now export more television sets than we import.
Our policies have brought about this transformation. But we do not sit back complacently. We are developing the policies for the future, to build on success, to reinforce growth. By contrast, the Labour party looks back to the past, to policies which failed, to a recipe for decline. It is a party in decline, wedded to policies of decline, which it declines to change.
We have been developing new approaches to encouraging exports. Early in February we co-ordinated a comprehensive British presence at India's massive trade fair. I am proud to say that British firms outnumbered the rest of the world put together. The orders that we won exceeded all expectations.
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In April I led a team to Kuwait to ensure that Britain played as important a part in reconstructing that country as we did in liberating it. We have already won £0.5 billion worth of orders. And much more will follow.Business men were so pleased with the success of these efforts that they suggested that we develop them further. As a result, last month I led a high-powered British team to Venezuela to establish a task force of nine business men supported by officials which will stay in Caracas until December. We announced a series of ministerial follow-up visits over the months to come and seminars back in Britain to disseminate the information that is gained. The response of the Venezuelan Government and industry was enthusiastic, the commitment of British industry wholehearted, and we all believe that the success of the project is assured.
I also recently announced new schemes to encourage technology transfer from our universities to industry ; help for our universities to carry out technology audits to assess their strengths and scope for commercial exploitation ; and support for industrial units to manage and market their technology to meet commercial deadlines and industry's needs. Today I am announcing further support for the Centre for Exploitation of Science and Technology. Labour pretends that it has changed. I wish that I could believe that it really has abandoned socialism.
Mr. Peter Hain (Neath) : Will the Secretary of State give way?
Mr. Lilley : I will give way to the hon. Gentleman to see whether he has.
Mr. Hain : Are these entrepreneurial activities abroad the reason why Air India has just cancelled its £87 million deal with Rolls-Royce to build its engines?
Mr. Lilley : No. But I believe that my visit to Japan played a part in British Aerospace winning the biggest aircraft order that we have ever won in that market and one which I believe will presage further sales for our aerospace industry.
Labour pretends that it has changed, but I wish I could believe that it has abandoned socialism. If it had, that would be the most dramatic conversion since St. Paul on the road to Damascus. But it would be a whole lot less convincing. St. Paul saw the light. The Opposition saw the opinion polls. So they decided that Labour's unpopular policies must be hidden from sight.
Mr. Winnick : On a point of order, Mr. Deputy Speaker. I have referred to the plight of industry in the west midlands, where there are 37 people going for every job. My point of order to you, Sir, is this. In view of what is happening in my region and the number of jobs which have been lost already, does not the Secretary of State for Trade and Industry have some responsibility at least to refer to the matter and tell us what the Government intend to do? This is just empty political propaganda.
Mr. Deputy Speaker (Sir Paul Dean) : The hon. Gentleman knows that that is not a point of order for the Chair.
Mr. Lilley : The hon. Gentleman was probably upset by the contemptuous way in which the shadow spokesman treated manufacturing industry. He devoted most of his speech to knockabout and none of it to policy to remedy the defects that he saw.
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Mr. Gerald Howarth (Cannock and Burntwood) : Is my right hon. Friend aware that the real reason why the hon. Member for Walsall, North (Mr. Winnick) is so desperately upset is that there is a substantial private building programme in his constituency? Is my right hon. Friend also aware that he will soon open an extension to a factory in the area bordering on the hon. Gentleman's constituency? The Reward group has said that the most damaging thing that could happen to British industry would be a national minimum wage and that the region which would be worst hit would be the midlands, with its manufacturing base.
Mr. Lilley : My hon. Friend is right. The damage that would be done to the west midlands by that policy would be greater even than that which would be done to other regions. I saw the development to which my hon. Friend refers. It is doing much to contribute to the regeneration of that area.
The Labour party decided that its unpopular policies must be hidden from sight. So just for the sake of appearances it steals some of our clothes. But do not be deceived by appearances. The truth is that Labour has become a party of political transvestites. It wears Conservative outer garments but still clings to its socialist clothing underneath. It remains attached to nationalisation, high spending, high taxes, state intervention and trades union power. One topic to which the Labour Front Bench spokesmen devote much rhetoric, though little detail, is training. Training is very important they tell us ; qualifications are essential. So they are. How strange then that the Labour Front-Bench spokesmen are so singularly lacking in qualifications for the roles to which they aspire. It ill behoves those with neither experience nor qualifications in industry to lecture industry on training and qualifications, still less to tell business men infinitely more competent than themselves how to run their businesses.
I shall be asking my right hon. and learned Friend the Secretary of State for Employment to set up special training courses for the shadow industry team, to convert this assortment of lecturers, trades union officials, charity workers and psychiatrists into a decent set of industry spokesmen. The hon. Member for Dunfermline, East believes that his experience as a lecturer and broadcaster perfectly equips him to run British industry. In his conference speech he revealed his patent solution for all our industrial ills. It is the university lecturer turned broadcaster's approach to industrial regeneration. He wants to set up a new satellite television station
"to bring together universities, industry and broadcasters using satellite telecommunications to disseminate the newest ideas to industry as rapidly as the ideas themselves come forward." I cannot help feeling that this was a zany idea which came forward and got disseminated a bit too rapidly. It conjures up visions of a television station beaming the thoughts of Chairman Mao--sorry, Chairman Kinnock--to every factory, laced with exhortations from Commissar Brown. What reams that tells us about the hon. Member's understanding of British industry.
Recently the Labour Front-Bench team has been out on its cocktail offensive. Offensive, certainly. One unfortunate business man who had the misfortune to hear them certainly found it offensive. Asked how Labour would run industry he replied,
"Run industry? That shower couldn't run a bath."
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We cannot have a successful British economy without a vigorous manufacturing sector. But we cannot have a vigorous manufacturing sector if we return to Labour's trade union laws, to Labour's penal tax rates, to Labour's rampant inflation and to Labour's nationalisation.The way to success is to set managers free to manage, to return unions to their members, to slash red tape, to cut taxes, to restore incentives, and to release the enterprise of the British people. That is our strategy. It has succeeded in reversing decades of decline. It will reinforce success. It will regenerate Britain.
6.20 pm
Mr. Joseph Ashton (Bassetlaw) : My constituents will look in vain to the Secretary of State's reply to the opening speech of the debate for a single new concept which would lead to new jobs. I am sorry to say that his speech contained nothing but personal abuse of my hon. Friend the Member for Dunfermline, East (Mr. Brown).
During the past 12 years of Conservative power, my constituency has seen unemployment at least double and almost treble. I shall speak about the electricity industry and coal mining, because they create so many jobs in our part of the world.
In 1979, under the Labour Government, we had a system of grey areas, and an area such as mine got help towards machinery and buildings. The Tories took that away. Since then, there has been no regional aid, despite the massive pit closures in areas such as Nottinghamshire and despite the privatisation of the electricity industry, which will make matters even worse by increasing coal imports.
Three months before the last election, the then Secretary of State for Energy, the right hon. Member for Worcester (Mr. Walker), promised from the Dispatch Box to build a new power station, West Burton B. It was to create about 800 permanent jobs and 2,500 temporary building jobs, would cost £1 billion and would be a godsend to the area. There were some marginal seats in Nottinghamshire, which is why he made that announcement. Lo and behold, what happened after the election? Nothing. The promise was quickly forgotten. The industry was sold off, privatised, and there is no sign whatever of that new power station being built. It was just an election promise. Instead, the power stations were sold off at about a third of their worth. Now, the intention is to import massive quantities of coal from South Africa, Poland, Columbia--where it is dug by children--and any other part of the world where labour is cheap. That will be done to close down the pits in Nottinghamshire and South Yorkshire. Last week, we heard that the Rothschild report would recommend cutting the number of pits there to four. Again an election is coming up, so the Tories will say that they will not make any decisions or announcements, but they know very well that they will privatise the industry.
The two industries go together. The nationalised coal mining and energy industries were planned. We heard the Secretary of State scoff at nationalisation. Three power stations were built on the Trent in my constituency and were connected to the coal mines by a railway. The railway ran 365 days a year, picking up coal at the mines and dropping it off at the power stations, which ran 365 days a year. That was nationalised planning, and it worked.
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That planning is to be destroyed. Coal is to be imported on the Humber through Killingholme and such places and then taken to the power stations, probably by road. Heavy lorries will thunder through the environment, destroying the countryside, on roads which were not built to carry their weight and which have no proper street lighting or verges. Importing coal will destroy not only jobs, but the countryside. What will it achieve? It will make massive profits for the newly sold electricity industry. The consequences will be massive pit closures, because British mines will not be able to get their price down to that of imported coal, and further massive job losses, because the coal that was transported on the railways will no longer be taken from those pits.Every job lost in manufacturing industry loses four further jobs connected with it. The suppliers to the coal mines will suffer. Even the farmers who supply potatoes to the canteen will lose their contracts. There is no planning for that. There is no regional policy. The pits will be shut, coal will be imported, and nothing will be put in their place. Everything will be entirely down to naked market forces, about which the Government talk so much. Prices and profits alone will matter--if jobs are destroyed, so be it. They could not give a damn. That is the level of their concern.
About four years ago, the Common Market protested about our power stations causing acid rain which was landing on the forests of north Germany and elsewhere. Naturally, people were concerned about the environment. The then Prime Minister went across to Germany and said that we would do something about it. At the time she implied that the power stations would be modernised and improved, which can be done, to stop acid rain pouring on to Europe. That would have created many jobs.
If the power stations had been nationalised, that would have been done and the cash would have been spent--but not under private enterprise. There is no way that the new order, PowerGen and National Power, will spend their money on improving those power stations. It is much simpler and cheaper to import low-sulphur coal than to spend cash on creating local British jobs and modernising our industry. That will destroy our pits and save private enterprise from spending a penny on the power stations.
The regions of the country affected are Yorkshire and Nottinghamshire, as we saw from last week's leaked Rothschild report. Two of the 14 pits, Harworth and Welbeck, are in my constituency. In case the miners there think that they will be okay as their pits will stay open, I warn them now that, if those pits stay open, they will work seven days a week for their new private owners. They will work three shifts around the clock. The environment of the privatised coal mining industry will destroy whatever is left. It is not that good in a pit village anyway, with the slag heaps, the cracks in the walls, the nightshifts and the lorries working through, but at least there is a bit of peace on Saturdays and Sundays. There will be none of that under privatisation. Safety standards will go, because privatisation will do away with the Mines and Quarries Act 1954. The new owners will not spend as much on safety as the nationalised industry does.
Hundreds of thousands of miners will be made redundant and lose their right to concessionary coal. As my colleagues can verify, many pensioners who worked in
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the industry enjoy concessionary coal under an agreement with the miners' union. There is no guarantee whatever that, once the pits are privatised, that concessionary coal will continue to be given to pensioners and ex-employees. There is nothing in writing, no contract. It is not part of the pension. A new owner of a privatised industry could stop it straight away. Privatised industries do not guarantee to continue with the same pension schemes. I am not saying that the privatised industry would get rid of the pension scheme, but there is nothing to stop it, for example, dropping a 6 per cent. contribution to 2 per cent. There is no agreement. There is nothing in law. There is no protection of pensions or concessions in the mining industry, or any other, if they are sold.One of the most serious and diabolical situations that we have seen for a long time arises with additionality, under which the Common Market makes moneys available for regional policies. The Secretary of State is not even bothering to listen. He is talking to his colleagues, because he knows that we have raised the matter many times in the House, and he does not have an answer.
The European Economic Community made available millions of pounds for areas such as mine, which have suffered from massive pit closures, or those where the fishing industry has been run down. All over Europe, other countries have gratefully said, "Thank you for the RECHAR system, the additional cash, the regional money from the Common Market"--except Britain. But what have the Government said ? Apparently, if the coalfields receive any cash from the Common Market, the Government will stop other grants. We have led deputations to the Government on this issue and made protests, and the Coalfield Communities Campaign has asked the Government many times to take up the issue and to press the additionality case for RECHAR. If money is available from the Common Market through RECHAR--money that could be pumped into the regions--why do the Government say to local authorities that, if they take that cash, they will stop an equivalent amount in Government grant ? Therefore, the local authorities would not be a penny extra better off. Every other European country gets that extra cash--it is going begging --but the Government adamantly refuse to allow our regions to receive it.
Mr. Lilley : May I reassure the hon. Gentleman that he is labouring under a delusion ? If the Common Market will release the money, we will let it be spent on the RECHAR programmes. The fact that that money cannot be spent, because we have not got it, is proof that those programmes are additional. That should be enough proof for Commissioner Millan. We have endeavoured to persuade him that he should let us have the money. We want it and we are exactly on the same side as the hon. Gentleman and the people in the coalfields. We regret the stance that Commissioner Millan has adopted so far.
Mr. Ashton : That is extremely interesting, but I have a letter from the Coalfield Communities Campaign that refers to a resolution "tabled in the European Parliament urging the UK government to adhere to the rules of the European Community and implement additionality for RECHAR".
That was passed by a 3 : 1 majority.
The British Chambers of Commerce has added its voice to the controversy. Its president, Miles Middleton, has written to the Secretary of State in support of the
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additionality principle for RECHAR funds. Commissioner Bruce Millan has also made strong protests. The coalfields of Germany, Belgium, France and Spain have got the cash but we have not. Is the Secretary of State saying that the Government, not his Department, will ensure that RECHAR funds will be made available without an equivalent amount being deducted from the Department of the Environment or anywhere else?Mr. Lilley : We have made that clear in public and in private to Commissioner Millan. He has dug in his heels on certain technical issues, but we hope that he will show some flexibility. In his most recent letter, he said that he thought that he was close to agreement and that the sooner he can overcome his difficulties the sooner the money can be spent. We believe that half the RECHAR funds should come to this country. Those funds are earmarked for expenditure, and that expenditure can take place as soon as the money is released.
Mr. Ashton : I am grateful for that information. In that case, perhaps the right hon. Gentleman would not mind meeting a deputation from the Coalfield Communities Campaign to straighten things out. In July, the Parliamentary Under-Secretary of State for the Environment wrote to the Coalfield Communities Campaign :
"little purpose would be served by a meeting."
I take it that the right hon. Gentleman and his Ministers will now be prepared to meet representatives of the campaign so that we can clear up this important matter.
During Trade and Industry questions, mention was made of the reason that Toyota has decided to go to Derby. That company has chosen to go to Derby without any Government cash when so many coalfield areas with far higher unemployment are absolutely desperate for that type of work. Nissan went to the north-east and the coalfield areas of south and north Yorkshire would have given anything for the Toyota plant. The Minister claimed that the Toyota decision showed that the free market was working. However, if Japanese entrepreneurs and firms are allowed to choose where they want to establish in this country without being steered or bribed into the important areas, surely that does nothing to solve existing problems.
Toyota has gone to Derbyshire for one reason--to steal the skilled workers from British Rail Engineering Ltd., Rolls-Royce and the other car manufacturers in the area. Toyota has not established in any other area because mining skills are not transferable--they are not engineering skills. Despite massive unemployment, we face a massive skills shortage. Foreign industries therefore invest in the areas with a skilled work force.
Toyota will simply offer more money to Rolls-Royce engineers. It will recruit those engineers and those employed by BREL and that will cause skill shortages in those companies. Those engineers will be used to train Toyota's own people, as it will not import Japanese personnel to train the new employees. Toyota must get its skilled workers from somewhere, and that is why it has gone to Derby, an area with a skilled work force. It will poach the skilled workers who are desperately needed in other industries.
The Secretary of State for Employment (Mr. Michael Howard) : I invite the hon. Gentleman to disabuse himself of the misapprehensions under which he is, evidently sincerely, labouring. If he visits the Nissan plant in the
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north-east, he will find out how it has trained its workers to reach levels of skill of an extremely high order. This morning, Nissan was one of the 28 companies to qualify as "investors in people"--the highest accolade that we have in our training policies and programmes. I invite the hon. Gentleman to visit Nissan to see the steps it has taken to train British workers. I am sure that Toyota will do exactly the same in Derbyshire.Mr. Ashton : Initially Nissan took skilled workers--admittedly, they were unemployed--from the shipyards. One reason why Nissan chose the north- east was that surplus of skilled workers. It is easy to train workers after five years when a plant is running, but initially a company needs skilled people.
The Secretary of State for Employment is a lawyer, but I am an engineer. I served my apprenticeship ; I went into a drawing office and I am a design engineer. I am not seeking to be derogatory about the right hon. and learned Gentleman, but I know what I am talking about. It is impossible to think that one can acquire skills just like that.
People have argued that, when the defence contracts are dropped, the engineers in the defence industry will be able to do something else, but that is like saying that, because I speak English and I have a voice, I can immediately start speaking French. One has to be trained, and it takes years to acquire the necessary skills. One cannot suddenly switch skills, and any company developing a new high-technology plant knows that.
The next thing that the Japanese will go for are our defence plants. The House can rest assured that, 25 years from now, all British industry will be owned and run by the Japanese. They are smart enough and have the cash and the nous to put money into investment, but we are not training people to acquire the right skills.
People in my area may have been employed as jobbing welders at the pits. They come to me to ask whether they can train as ASVIII welders or insurance welders, who weld boiler drums--high-quality welding. Those people cannot get the training, because the factories that used to provide such high-skilled training have gone. When I take up such cases with the north Nottinghamshire training and enterprise council, I am told that it will send such people to train as waiters or something else. However, the guy with the basic skill who wants to improve it in my coal-mining area cannot do so, because there is nowhere for him to improve it. I could give chapter and verse on that, but I do not want to take up the time of the House.
I know that the Secretary of State for Employment is absolutely against the minimum wage. I made my maiden speech 23 years ago next week. Between 1972 and 1973, we spoke about a Labour Government bringing in equal pay for women. The then Tory Government cried out that that would throw thousands out of work at Woolworth, Marks and Spencer and the like. The Tories claimed that hundreds of thousands of women would be thrown on the dole if we brought in equal pay. But it did not cost one job.
When women got the extra money, they went out and spent it, and that created other jobs. When the Government give tax cuts to the well off, they spend that cash on a bigger mortgage, a BMW, a Mercedes or a microwave. They will spend it on anything that has not been made in Britain. If the minimum wage is awarded to those who work in C&A, McDonald's or Woolworth, those men and women, but especially the women, will go
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out to buy a new carpet, furniture or clothes. They will buy stuff that is made in Britain, which will get British industry back to work. Those who object to paying women shop assistants another 50p an hour will find that they soon need more shop assistants because the volume of customers with money to spend will start to grow, as it did when we introduced equal pay.6.40 pm
Sir Julian Ridsdale (Harwich) : I was interested in the little argument about the Toyota plant and Nissan plants because I have visited them both. I assure the hon. Member for Bassetlaw (Mr. Ashton) that the RB211 plant is as recognised and as advanced in technology as any plant that I have visited in Japan.
I remember going to Japan with the hon. Member for Bassetlaw and Joe Harper, who is no longer with us. He was an excellent Member of Parliament and, like the hon. Gentleman, an excellent Yorkshireman. Like the hon. Gentleman, Joe Harper objected angrily when the Japanese said that they were going to close down a coal mine. But were the Japanese wrong to close down an unproductive coal mine? In the 1970s they closed down inefficient industries because they knew that they were getting into the motor car industry. They moved from the motor car industry to the electronics industry and from the electronics industry to the technology industries. That pattern is happening in this country today, mainly with Japanese help. We must follow that pattern because we can no longer think in terms of United Kingdom industry alone. We must have bigger companies like the Japanese companies, which can compete on world terms.
That is the experience that I have gained from being chairman of the all- party group on engineering development, which has 120 members from both sides of the House and from the House of Lords. The group has visited factories around the country. Because of my experience in Japan, I knew that we had to copy Japan's industrial pattern if our manufacturing industry was to have a chance to compete in world markets, as it must and will do.
I am glad that we may now have reached the stage of getting away from the hustings and trying to reach a consensus by discussing some of the problems that face us. As the election may be in six months' time, the Government still have another Budget in front of them, and my all-party group will try to advise them on how to help our manufacturing industry.
I congratulate the Government on bringing down inflation to German levels and on the direction in which interest rates are moving. They are a key to investment, which is so badly needed in this time of world recession. We think that the recession is happening only in this country, but, alas, world trade has not expanded for the past two years. Anyone who goes to the continent--I speak of the continent and not of Europe, because we are part of Europe--or to Japan, or sees the problems in the developing world, will know what a terrific task faces any Government of this country. We must face up to that problem, which is why I hope that we shall get away from the hurly burly of electioneering and get down to discussing some of the problems facing this country.
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As chairman of the all-party group on engineering development, I have found it valuable that our group believes in specific action to ensure that engineering makes its full contribution to the balance of payments. One of the biggest concerns in the past few years in that regard has been transportation equipment, particularly our imports from Germany. I only wish that the Germans had invested in this country like the Japanese have when their exports to this country in 1987 reached a £10 billion surplus in one year, and a £10 billion surplus again in 1988. If that had happened, the world recession in trade may not have been nearly so bad because we could have kept the economy going. We must learn a lesson from that.Mr. Doug Hoyle (Warrington, North) : As the hon. Gentleman knows, like him I was one of the first to go to Japan and urge the Japanese to invest overseas. I said that they could not export their unemployment. Would not it be better if that advanced economy now took away all the restrictions on imports into Japan and really opened up a free market so that we and others could have a fair chance?
Sir Julian Ridsdale : The hon. Gentleman's comments are misguided. My experience of the Japanese market is that our exports to Japan have almost doubled in the past three years. With the priority campaign that now exists, it is up to us to test the market. I think that the hon. Gentleman's remarks are out of date, but I do not want to be too emphatic because I am trying to keep the argument on a low key and not to raise the temperature in this debate.
Thanks largely to Japanese investment in transportation equipment, particularly by Nissan, Toyota and Honda, when we pull out of the recession in the first half of next year--I am optimistic that we shall do so--we shall have the capacity not to suck in, as we did in the late 1980s, huge amounts of transportation equipment, especially from the continent.
I declare an interest in the Nissan plant, because I am an adviser to Sir Robert McAlpine. In 1983-84 I met Nissan with McAlpines, which then won the contract to build the Nissan plant in the north-east of England. How exciting it is to visit that plant today. As my right hon. and learned Friend the Secretary of State for Employment said, people must go and see the Nissan plant. I understand why the Opposition do not talk about that plant : it is an example of what should be done in British industry. Unfortunately--or fortunately--it has Japanese management, but, in answer to the point raised by the hon. Member for Bassetlaw on training, may I say how exciting it is to meet the 3,000 23-year-olds who work there and earn £15,000 a year. Perhaps the Archbishop of Canterbury will go there if he wishes to comment, as he did the other day, on crime in the north-east. It is an inspiration to see what is happening at that plant, which is exporting all the new Primeras to Germany. There is a waiting list for those cars and, although we are worried about the current rate of unemployment, 1,000 more people will be employed within the next month because of the demand for the Primera. A new model of another car is coming out which will help us to correct our imbalance with Germany. I am sure that nobody will welcome that more than the Germans, who do not want to be embarrassed by huge surpluses, because huge trading surpluses and huge deficits create unemployment.
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The same may be said of the Toyota plant in Derby, where skilled jobs will not be taken. The RB 211 plant is so mechanised that not so many people work there. As the Secretary of State for Employment said, I am sure that Toyota will, like Nissan, train staff. The hon. Member for Bassetlaw, as an engineer, knows the importance of training engineers. We must train more skilled people and take advantage of engineers and other skilled people, but they must not be poached. I am sure that my Japanese friends would not wish to do that because they do not want to get a bad name through their investment in this country. They want to help this country because in doing so they will encourage world trade and raise the standard of living throughout the world.It is exciting not merely to see the Japanese plants, but to see the British plants. At the IBM plant in Havant one can see computer-integrated manufacturing and computer-aided design and manufacture--we should ensure that the same processes apply throughout industry. We did not hear a word about that from the hon. Member for Dunfermline, East (Mr. Brown) who made a hustings speech--
Mr. Hoyle : We did not hear it from the Secretary of State.
Sir Julian Ridsdale : I am trying to lower the temperature of the debate because I want to help by introducing constructive ideas on manufacturing industry, not just to make a political argument. Gavin Laird, the general secretary of the Amalgamated Engineering Union, was right to say that the success of Japanese plants in this country was a result of company unions. Anyone who has been to Japan knows the importance of the company union. I know that some of our engineering industries wish that we could have the company union in some of our engineering plants because we would achieve better productivity which would allow us to sell more throughout the world. The skilled bloke on the shop floor must produce for £1 that which his competitor is producing for £2--
Mrs. Llin Golding (Newcastle-under-Lyme) : And women.
Sir Julian Ridsdale : Yes, certainly the ladies. I should hate to leave out the ladies because as one goes around industry one appreciates the value of ladies, particularly in relation to computers and machines in industry.
It is encouraging that achievements are being made, even now, in some of the British companies that I have visited, including EIS, Ricardos and the IBM factory in Havant to which I referred. However, some companies have been badly hit, particularly those in the machine tool industry. That is why we must press the Chancellor to encourage more extensive and effective investment in the most up-to-date processes in our manufacturing industry-- I have already referred to computer-aided design and computer-integrated manufacturing. The Italian machine tool industry has suffered a similar fall in the level of its orders--about 40 to 50 per cent.--as a result of an alarming fall in investment. The Italian senate has recently passed the "Righi Battalia" law which, if formally approved, will provide for about £700 million of investment in new technology over the next three years. Our machine tool industry is not asking for aid in excess of that received by our competitors ; all that it is asking for
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is the opportunity to compete on a level footing. Surely we must provide help through capital allowances in the next Budget. I am delighted that I can talk about the next Budget although I shall not be standing in the next election, which is one of the reasons why I am not making an electioneering speech tonight.In the next Budget we must also assist those sectors of the engineering industry that will have to bear substantial engineering costs in order to meet stricter environmental standards. Perhaps most important, we must encourage research and development. In Germany and Japan, that is being done from the profits of the big and successful engineering companies, but we lag behind, mainly because of the world recession. I congratulate the Government on what they are doing to encourage science parks around our universities. We must not be complacent about investment in research and development, but must take note of the huge amounts that Germany and Japan are investing in research and development.
There are other sectors in which help is needed, especially in the new markets in eastern Europe, Russia and China. We must give continual and expanding support to United Kingdom engineering companies to obtain overseas contracts and help to provide export guarantees for such work.
I hope that the Secretary of State and the Chancellor will bear these points in mind. In the marketplace, as in skiing, there is no security, only opportunity. In normal times, industry can get on well on its own, but in a recession it needs a helping hand.
Several Hon. Members rose --
Mr. Deputy Speaker : Order. I remind the House that the ten-minute limit on speeches operates from 7 o'clock, so the next hon. Member I call can speak until 7.10 pm if he needs to.
6.57 pm
Mr. Alex Carlile (Montgomery) : I am extremely grateful to you, Mr. Deputy Speaker, for calling me at this opportune moment in the debate--6.57 pm.
The debate stands as an indictment of the Government's wilful neglect and failure to sustain this country's manufacturing base. The case against the Government is based simply on an exposure of three aspects of their policies : first, their understanding, such as it is, of the recession ; secondly, their commitment, in so far as they have one, to training ; and thirdly, their attitude, if that is not too polite a word, to unemployment.
This recession--for we are still well in it--is one that has been made worse for manufacturers and the service industries alike by the Government's lengthy, desperate and, until recently, mostly unsuccessful attempt to get to grips with inflation. Surely the Government cannot be satisfied with the results. While inflation is down, which is welcome, it remains so under a threat of high interest rates. Industry knows that, the moment that inflation rises, interest rates will rise with it, yet those rates remain at historically high levels.
As a result of what has happened to manufacturing industry, particularly in the past two to three years, when the recession eventually ends it will be at the expense of a significant slice of our manufacturing base. The inevitable consequence is that, at the end of the recession, there will
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be greater import penetration, for we shall have lost even the facilities to manufacture many of the goods that we consume.Mr. Howard : As I understand the policy of the hon. and learned Gentleman's party, it is to hand over responsibility for these matters to another quarter altogether--to an independent European central bank. What recourse would the House have in respect of high interest rates if such an authority decided that high interest rates were necessary?
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