House of Commons Hansard Debates for 5 Dec 1991

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Germany and took over 40 per cent. of the amalgamated GPT. In April 1988, Coventry had 9,552 employees in GPT. By last month, that had dropped to 4,495. Last week, the biggest private employer in my constituency, GPT, announced another 320 redundancies. When will it name the people who will lose their jobs? Seven days before Christmas : 18 December is the date when the workers of GPT will find out which of them are going down the road for the last time.

It is estimated that any public telecom manufacturer needs 12 per cent. of the world market, with investment in new switching systems, to have an adequate return. Britain has 6 per cent. of the world market in its domestic market. Even with the benefits of the single market, I do not think that GEC, with Siemens, will survive the 1990s.

There is still an hour and seven minutes left of this debate. I am doing my best to represent my constituents in what may be my last speech as a member of the Labour party. Hon. Members may not know that my hon. Friend the Member for Liverpool, Broadgreen (Mr. Fields) was expelled from the Labour party two hours ago. I intend to follow him on Saturday. I am rushing as much as I can. I will finish this speech on behalf of my constituents as a Labour Member.

My constituents face the insecurity and uncertainty of unemployment. The other body blow we had was the closure by British Coal of the pit in Keresley a couple of weeks ago. Only 13 days after the announcement of the closure of the pit 1,300 men worked their last shift. I do not think that the pit has been closed. The buildings are still on the surface. I challenged the area director of British Coal about what was being done with the land. He said that it was not being sold. I know why. British Coal has sacked 1,300 NUM members, but it is talking about driving two roadways from Dawmill, the UDM pit, down into that coalfield, which has 40 million tonnes of coal, so that, if the Tories win the general election and pits are privatised, a privatised Dawmill can come back. That is the penalty of market forces in Keresley.

When I asked British Coal to meet the leaders of the councils and the Churches, I was told that it was not interested in such fringe groups, which were low in their priorities. It is the local authorities which have to pick up the pieces when pits close. It is the social services department which has to go to pick up the pieces in villages like Keresley, where over a quarter of the jobs are going overnight.

What shall I tell my constituents when the debate is over? Is recovery around the corner? Car production fell by 27 per cent. last year. Production for the home market has fallen by 39 per cent. That was the rock on which Coventry and the midlands were built. It is no good singing, like Monty Python,

"Always look on the bright side of life."

We should not hope, like Micawber, that things will turn up. Things have to be planned if workers are to get jobs. We are not getting that planning from the Tory Government. Workers who have been laid off or sacked cannot buy goods even if factories are producing them. People are going into debt ; 250,000 are now six months in debt on their mortgages, and thousands have already lost their jobs. I doubt whether exports will prove to be our salvation. Over half our exports go to the Common Market. Italy and France are still in recession. There is talk of a double dip in America, which is operating at only 77 per cent. of

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its capacity. Germany is beset by the colossal cost of unification. There is no salvation in the capitalist system. It is a failure. I confess to plagiarism ; those are not my words but the words of my right hon. Friend the Member for Islwyn (Mr. Kinnock). Unfortunately, they were said 17 years ago.

In the year since the Prime Minister got his new job, 67,500 men and 17,800 women in my area of the west midlands have lost theirs. Since the Prime Minister moved into his new house, 13,632 families in my area have lost their houses, having had them repossessed by banks and building societies. Therefore, I look forward to a majority Labour Government taking the economy by the scruff of the neck and bending it to the needs of our people --the working class people and their families.

I want a majority Labour Government to take millions of people--possibly more than 15 million--out of the ranks of poverty, if we define poverty as living on or below the margins of up to 40 per cent. above income support levels. I want a Labour Government to eradicate low pay, and I welcome my party's intransigence in the face of all the slanders from the Tories about the inadequacy of a national minimum wage--£130 a week even on half average earnings. Conservatives would not think twice about spending that on a meal for four in the Dining Room, but when it comes to curing homelessness, the Minister for Housing knows all about that. He defines the homeless as the people one steps over when one comes out of the opera at Covent Garden. One could not get one of the best seats in Covent Garden for £130, so why should folk not get that for a week's wages? I also want a Labour Government who redistribute wealth, because the top 10 per cent. of the people in this country now own more than half the wealth. To achieve that and to carry out the necessary building programmes for the construction of hospitals and schools, it is not enough to hope for economic recovery or to place our faith in the capitalist completion of the single market. We must plan the economy and that is why my party card still has clause IV(4) on it. [Laughter.] To the laughter of Conservatives, I remain an unreconstructed socialist, and I am not at all ashamed of that. 8.59 pm

Mr. James Paice (Cambridgeshire, South-East) : I know that the House is looking forward to the wind-up, so I shall not detain it very long. Understandably, while there is little in the speech of the hon. Member for Coventry, South-East (Mr. Nellist) with which I agree, I very much respect the principles behind what he said. It is a pity that I cannot say that about many other members of the Opposition, who have already abdicated most of their principles.

We are discussing the Opposition's motion on the Government's handling of the economy and their suggestions to improve it. The right hon. and learned Member for Monklands, East (Mr. Smith)--I am glad that he is now in the Chamber--ridiculed the fact that my right hon. Friend the Prime Minister referred to anecdotal evidence. I am glad that we have begun to take notice of anecdotal evidence, because if we had done so two or three years ago, it would have been--indeed, it was--abundantly clear anecdotally that inflation was getting out of control long before it appeared in the figures. It was equally clear anecdotally that businesses were beginning to

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get into difficulty long before that fact showed in the figures. I welcome the move towards a recognition of evidence other than Treasury statistics.

Many of my right hon. and hon. Friends have said much this afternoon about the Labour party's proposals, which are loosely described in the motion. The Opposition Front-Bench team have ad nauseam tried to persuade us that they can increase expenditure by varying amounts--we have heard all kinds of promises--with only a minimal increase in taxation. Several of my hon. Friends referred to the 9 per cent. surcharge on savings which is being proposed. I slipped out of the Chamber for some of the debate, but I did not catch anyone referring to the other area that the Opposition have made it clear that they expect to be a source of income--the change in the past few years to a property-owning and share-owning democracy. My right hon. Friend the Prime Minister coined the phrase "a cascade of wealth"--as the benefits of property ownership cascaded through the generations, everyone would benefit. However, the Labour party and the right hon. and learned Member for Monklands, East regard inheritance tax as a major source of increasing Government revenues, so the cascade becomes an opportunity for them to follow their basic creed of envy to spend.

This morning we heard on the "Today" programme what I can only believe was a slip of the tongue by the hon. Member for Derby, South (Mrs. Beckett). To its credit, the Labour party has as a matter of principle opposed privatisation whenever it has been discussed in the House and whatever industry was involved. It has a declared policy that it will wish to regain control of certain industries, but this morning the hon. Lady--my right hon. and learned Friend the Chief Secretary to the Treasury was also present at the interview--declared that Labour would go on spending privatisation proceeds from the deferred payments which would still be coming in if Labour came to power.

I do not believe that one can have it both ways. Labour cannot be against privatisation but happily go on spending the proceeds. However, that is the nature of the Labour party, as we have seen over and over again today. It is a party devoid of principles, which seems intent on chucking out the only members who have any principles, and we heard them amply described only a few minutes ago. This country has no truck with people who discard their principles, and it will have no truck with the Labour party.

9.3 pm

Mr. Peter Hain (Neath) : In the year since the present Prime Minister got his job, 26,900 men and 5,400 women in Wales have lost their jobs. In the year since he got his new home in Downing street, 8,842 people in Wales have had their homes repossessed. In the year since the right hon. Gentleman set himself up in business as leader of the Tory party, 1,760 businesses in Wales have failed. Ministers often say that Labour is talking Wales and Britain down. That is patronising drivel. Labour is not talking Wales down ; the Government are doing Wales down, and that is understood by everybody in Wales. The Government cannot see beyond the next consumer bribe or the next tax cut. They have elevated short-termism into a science, always striving to boost consumption and never resourcing investment. Consumption may have

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stalled in the past year, but since 1979 it has risen by 40 per cent. Interestingly, at the same time, production by British companies of British consumer goods has risen by only 7.8 per cent., barely one fifth of the consumption boost. As a result, consumer debt stands at a staggering £52 billion, five times what it was in 1979, and corporate debt is an even more staggering £27 billion, much of it financing the dividend payments to shareholders which have tripled since 1979 while investment has remained virtually stagnant. Between 1979 and 1990, the real priorities of the Tory Government are clear. Manufacturing investment in Wales rose in real terms by a pitiful 10.6 per cent., whereas the market value of United Kingdom and Irish equities increased in real terms by a massive 214 per cent.--20 times more. Surely that is eloquent testimony to the fact that market forces are not working, and that institutional shareholders and the capital markets are abjectly failing British industry. Why will not the Government boost the real economy and not just the candy-floss economy which it is so keen to promote? The issue is seen most clearly in pension funds, which have recently been exposed by the Maxwell scandal, one of a series of scandals in British industry. Short-termism is significant in this context. A handful of pension fund managers now control assets of £400 billion-- three quarters of the wealth generated across the United Kingdom each year. Those managers have helped to create and promote a climate in which high dividends have been the norm at the expense of long-term investment in British industry and at the expense of pensioners and employees, whose rights have been negated as pension funds have been looted by business tycoons.

The Government have deregulated the corporate finance structure. They have turned a blind eye to the abuse of pension funds in recent years. Their announcement that they will bring forward the 5 per cent. limit on self- investment is simply not good enough. It does not address the Maxwell problem, for example, or the problem of British Steel lifting £150 billion of the pension fund money due to its workers.

All those issues point to the fact that the Government are interested only in tomorrow and not in building for the future. That is why we need a Labour Government who have the economic policies to invest in the future, to invest in industry and to invest in the skills base which has collapsed over the past 12 years. People understand that only a Labour Government have the economic policies which will put Britain back into the first division in Europe, and which will lead to rising living standards and rising prosperity for our people.

9.8 pm

Mrs. Margaret Beckett (Derby, South) : This has been an interesting debate with some excellent contributions from both Opposition and Conservative Members. However, the comments on the present state of the economy by Conservative Members have been overwhelmingly characterised by the enormous gap between rhetoric and reality. The rhetoric is that there is sustained success ; the reality is very different.

The figures given by my hon. Friend the Member for Paisley, North (Mrs. Adams) bear repeating. Over the past

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year, 3,000 jobs have been lost every working day, 200 businesses have collapsed every working day and 300 families have had their homes repossessed every working day. We know that in every one of those groups, as the year continues, there is more to come. Manufacturing output is down more than 5 per cent. on the same period a year ago, manufacturing investment is already down 12 per cent., and the CBI predicts an overall fall of 20 per cent. over the year, retail sales are totally flat and gross domestic product is down 2.3 per cent. That is the reality that the Government have sought today to obscure with rhetoric. Faced with that, they weave, dodge and bluster. The other day, I was fascinated to note that the Chief Secretary apparently holds a special appointment as

blusterer-in-chief.

What is most important is that the Government spend their time and energy not on finding ways to combat the recession, but on trying to find ways to combat the impression that they are giving and reinforcing of a Government adrift in shark-filled waters--and they are. However, the sharks that matter most are neither addressed nor affected by the Government's strategy. The sharks that really matter are our competitors, especially our partner competitors in Europe--the ones that are snapping up the export orders that Britain should be winning, the ones that are gaining the markets that Britain is relinquishing, and the ones that, whatever their problems, are still growing and still drawing further and further away from us. During last week's Treasury questions the Government, with a fresh barrage of statistics about investment and exports, again sought to create the impression that there is no problem. On examination, almost all the new figures are based on highly-selective choices of data, not on the Government's whole record, or on bogus comparisons between incompatible figures. We can knock them down as fast as the Government can pull them up, but juggling the data to try to justify some line that Ministers will use anyway will not explain away that harsh reality.

It is less than a week--as my right hon. and learned Friend the Member for Monklands, East (Mr. Smith) reminded the House, or perhaps told Conservative Members--since the president of the Building Employers Confederation was reported as saying that he had been in the industry for 42 years and that these were the worst conditions that he had ever experienced. The conditions are shockingly depressed. How can Ministers square that with either their fountain of recalculated and re-presented figures or with the rhetoric with which they accompany them? Of late, the Chancellor has been insisting that--I quote what he said to Brian Walden-- what is happening now is "very much as I expected".

That was said in answer to a depressing litany from Mr. Walden, who said to the right hon. Gentleman that there might be

"a technical recovery, you admit that some of the figures look very bad there are serious debt problems you admit that the housing market is flat, you say you expect a contribution to growth from consumer spending, now Chancellor none of it sounds very upbeat does it".

That is a judgment from which the Chancellor noticeably did not dissent.

It seems that the Chancellor has perhaps been taking lessons from the Prime Minister in the art of precision. It was the Prime Minister, after all, who as a Minister in the

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Department of Social Security pledged that child benefit would continue to be paid as now--a pledge which was carried out to the ha'penny for a number of succeeding years. One could not say that his words were untrue, but it is certainly not what people thought he meant at the time. It is something to be borne in mind before getting too excited about his pledge, for example, not to privatise the national health service.

Similarly, it is certainly true that in his Budget speech in March the Chancellor said that he expected recovery to begin in the second half of the year. As my right hon. and learned Friend the Member for Monklands, East pointed out, later in the debate he said that it would be towards the middle of the year. The Chancellor now says that our present circumstances are very much what he expected, that he never expected anything else at this stage and that they are very much what he expected all along. He cannot stretch that to be compatible with the impression that his further comments no doubt deliberately created.

Whatever the Chancellor's precise words either at the beginning or end of the Budget debate, on 25 April--not long after--the Prime Minister said that

"the United Kingdom is coming out of its economic difficulties, while other countries are still facing deepening difficulties."--[ Official Report, 25 April 1991 ; Vol. 189, c. 1206.]

On 29 April, the Chancellor said in Washington that recovery is "around the corner". However, that is not the impression that he has been trying to create today. The Chancellor was no longer saying "in the second half" or "towards the second half" ; in April he was saying, "around the corner". The right hon. Gentleman is stretching things a little.

However, one must be charitable because that was said when there was still talk of an election in June 1991. Even when the June option had faded--no doubt with an eye on the autumn--on 19 July the Prime Minister was still saying :

"I am confident that, in the second half of this year, the economy will begin to take off". [Official Report, 19 July 1991 ; Vol. 195, c. 679.]

That sentence contains an active verb. I am sure that we have all noticed that take-off coming about.

By September, the pre-election hype was again well under way and, on the 16th, the Chancellor said :

"Britain is coming out of recession The statistics are highly encouraging and pointing very much in the right direction". What a contrast between those statements and the one made to Mr. Walden a mere two months later-- that the Chancellor never expected anything else but the position in which we now find ourselves. I am trying to believe the right hon. Gentleman. I do not think that he did expect anything else, but he did his best to make the electorate expect something else. With that record, not just on recession but on recovery, it is better to look to others for their judgment on where we stand and for the real signals that we should be considering.

The Government have been saying that with the technical recovery will come the end of all our problems. Some light was inadvertently cast on that today when the Chancellor, under pressure from my right hon. and learned Friend, conceded that, technically, the recovery was indeed here. "Technically", he said, "the recovery is now ended." We all recognise, however, that the problems have not ended. Others, of course, apply a rather more

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stringent judgment. The Chancellor quoted Professor McWilliams of the Confederation of British Industry saying that output was "slowly edging up". However, the right hon. Gentleman did not quote what Professor McWilliams stated in a letter to the Financial Times only last week about real recovery. He wrote that,

"the onset of recovery does not mean the recession has ended. If you are a diver, your head may still be below water even when you are rising towards the suface I prefer to define the recession as over when the economy has recovered to its previous level of output the recession will not end before the second half of 1992, even using the Chancellor's own forecasts as published in the Autumn Statement." Professor McWilliams identified the right hon. Gentleman's forecasts as more optimistic than those of other commentators. The Government still take no responsibility for Britain's real needs and conditions. They boast--many Conservative Members have done so in this debate--about bringing down inflation over the year from 10.6 per cent. to 3.7 per cent. Hands up whoever is taking the blame for putting it up. Are there no volunteers on the Conservative Benches? After all, it was the CBI that referred to the Government's "inflationary own goals" in the year that resulted in inflation at 10.6 per cent. It was the Governor of the Bank of England who referred to "administered price rises" as a result of political decisions. I note that the Government will take the credit when things improve, but none of the blame when they worsen. The Government took all the credit when unemployment was falling. Do any of them take any of the blame for its rise today? [ Hon. Members :-- "No."] That was a truly rhetorical question--one that expected no reply.

The Government have talked about worldwide recession, undoubtedly in an attempt to find someone to blame. However, I concede that the Chancellor was more accurate than usual today. He spoke of either "recession" or "falling growth" among our competitors. He sought to give the impression, without explicitly saying so, that somehow or other somewhere in the world sinister influences had brought about our recession.

It is only right to remind the Chancellor of what Peter Morgan of the Institute of Directors said earlier this year. He said : "this awful recession, which has caused so much grief, is a failure of government economic management."

Undoubtedly he is more than a socialist.

Let us look further at who is to blame for the recession. On the question of recovery, the London business school, which again is not hostile to the Government, has said :

"The economy will do little more in 1992 than make up for the output losses of 1991".

The Government have given up on ungrateful harsh reality, as they gave up on it in June and November when twice they chickened out of calling an election. It is increasingly evident that, having run away from an election twice, the Government are spending their time worrying about presentation rather than performance, script in lieu of substance. The Prime Minister tells The House Magazine that the Government have abolished the poll tax-- yet it is alive and well and at the heart of the council tax, for which the legislation had not even been published when he spoke.

The Prime Minister told us that the Government had "got inflation licked" in the autumn when he thought that perhaps they were about to have an election. Yet in the autumn statement the Chancellor murmured quietly that inflation

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"may rise slightly early next year".--[ Official Report, 6 November 1991 ; Vol. 198, c. 452.]

I understand that the Chancellor of the Duchy of Lancaster, the chairman of the Conservative party, told us on Sunday what the Government had achieved in negotiations on the social charter. The next day the Secretary of State for Employment was on the airwaves telling us how he was off to conduct the negotiations on the social charter, on the result of which the Chancellor of the Duchy of Lancaster had commented. I think it was McLuhan who said that the medium was the message. Under this Government, the massage is the message. The concentration is all on public relations.

There was a revealing announcement last week. It conveyed the Government's sense of priorities better than perhaps most of the things that we could say in the House. They announced that they were putting £2 million more into extra help to relieve national health service waiting lists. That is terrific ; we are all delighted. It could have been £4 million if the Government had not wasted at least as much--according to their figures- -on sending us all a copy of the patients charter.

When it comes to the crunch and the Government are asked what action they intend to take to promote economic recovery, the answer is always the same, as it was the same today--they will wait and see whether it happens. Any approach, on any time scale, to economic and monetary union requires us to be able to compete on equal terms with the Germans, the French and the Italians. What do the Government intend to do to bring that about? They will wait and see whether it happens.

When the Government are forced to say what they would do if they were re- elected, they tell us that they would do it all again. They want to cut income tax again. To fund those cuts, they want to cut the proportion of national income which goes on public

services--again. The Government tell us that they have got the inflation rate and interest rates down. They say, "If you want to know what we will do, just look at our record." Well, let us look. The Government cut income tax, yes, but they put up national insurance contributions and value added tax twice. This year they have got inflation down nicely in time for the election. That is very welcome, but is it unprecedented? Well, no, as a matter of fact it is not. In June 1983 inflation was 3.7 per cent. ; within two years of the election, in June 1985, it was 7 per cent. In June 1987, when there was an election, inflation was 4.2 per cent. ; within two years, in June 1989, it was 8.3 per cent. As we know, it continued to rise.

This year the Government have got interest rates down nicely in time for the election. Is that unprecedented? No, in June 1983 interest rates were at 9.5 per cent. ; within less than two years, in January 1985, they were at 14 per cent. By June 1987--and an election--the Government had reduced them to 9 per cent. again ; within another two years, in October 1989, they were at 15 per cent.

Mr. Ian Taylor (Esher) : Will the hon. Lady give way?

Mrs. Beckett : I do not have very much time. I shall give way to the hon. Gentleman if I have time later.

The Government make much of their record on interest rates and inflation, but under them we have had a roller-coaster ride between boom and bust. Whoopee, we

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are going round again. I do not believe that the country can afford a repetition of those policies or a third Tory recession. Economic debates have two consistent features--yet more dubious statistics and greater strength in their advocacy-- [Interruption.]

Madam Deputy Speaker : Order. One debate at a time.

Mrs. Beckett : In our motion we call on the Government to initiate targeted tax relief, to promote investment in manufacturing, to reverse the cuts that they are still making in training, to establish a new skills programme and to offer support for research and development. Those are exactly the policies being called for by the Engineering Employers Federation and the Confederation of British Industry, whose members I seem to recall the Chief Secretary describing as "a few out-of-step people with old-fashioned ideas" during the last Budget debate.

Those policies are also called for by the Machine Tool Technologies Association, in a document produced a week or so ago, which argued that

"there is a role for Government in closing this investment gap ... The correct balance and level of investment needed will come if policy provides : a stable economic environment ; more innovation and training ; greater availability of funds for investment ; and the appropriate incentives from the tax system."

All those are Labour party policy, for which we have consistently called.

Yet the Government Front Bench and Conservative Members consistently claim that the Labour party has no proposals. When commenting on the speech by my right hon. and learned Friend the Member for Monklands, East today the Chancellor said :

"If he had constructive ideas he kept them to himself. He has no policies, he never has and he never will have."

Later he said :

"There is nothing in the way of serious economic proposals." [Hon. Members :-- "There is nothing new."] Indeed that was not new. The Government say that in every debate on the economy. I find that fascinating.

All over the world there are Governments who do not know that such proposals are not part of the policies for running their economy, that they are outdated and do not work, as our Government claim. All over the world there are Governments who believe that while keeping inflation and interest rates as low as possible is necessary for economic prosperity, it is by no means sufficient. All over the world Governments are carrying out precisely the policies that we advocate and call on our Government to pursue for the sake of the country, yet the Chancellor accuses us of being

"locked in their isolationist world."

All over the world there are Governments, lacking the wise counsel of the British Conservative party, who do not know that they are getting it all wrong--grievously misled as they are by the fact that they have higher growth, higher investment, are more prosperous, and have better public transport, health, training, and education than we have. That has misled them to think that what they are doing is not an economic policy. I do not care what the Conservative party call it-- [Interruption.] The Chancellor is pathetic.

Nowhere else in the world are there parties or Governments who do not recognise that the policies that we have consistently advocated for years from these

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Benches are not part of a proper planning and direction for the economy. Only on the Conservative Benches are they so foolish, so "isolationist"--to use the Chancellor's word--and so locked in their own determination to listen to no one that they will not pay attention.

As the Chancellor has made crystal clear, while this wait-and-see Government are in power, our only hope of competing with those who follow, and are successful by following the policies that we advocate, is that they lower their standards to our levels. The British Government's idea of competing in Europe seems to be for Britain to crawl in at the bottom of the heap, when British people have the skills and the capacity to hold up their heads at the top. All that the British people lack is a Government with the understanding, determination and policy to help them reach that place. When the Government are finally forced by the date to stop running away from the electorate, they will get them.

9.30 pm

The Chief Secretary to the Treasury (Mr. David Mellor) : Mr. Speaker -- [Interruption.] I have not even started and Labour Members are laughing. I do not know what is to become of them. They might let me get a few sentences out first. I see laughing on the Opposition Front Bench the hon. Member for Brent, South (Mr. Boateng). I remember when he was a power in the land and chaired committees at the GLC. It seems that his only function these days is to come into the Chamber twice a day, for the opening and wind-up, and to laugh and make animal noises. It is a sad deterioration in what was once a rather good career.

Mr. John Smith : That is unfair to my hon. Friend.

Mr. Mellor : I am sorry that the right hon. and learned Gentleman thinks I have been unfair to his hon. Friend, who I am sure will grin and bear it. Indeed, knowing him, he will probably jeer and bear it. I have been puzzled by today's debate. I assumed, since the Labour party had initiated it, that Labour Members had something significant to say. So it was with some expectation that I attended to hear what new thoughts the right hon. and learned Member for Monklands, East (Mr. Smith) wished to convey. One can only say of his speech that it was environmentally friendly in that everything in it was recycled ; we had heard it all before.

We have had a lot of negative criticism of the Government--what my right hon. Friend the Member for Croydon, South (Sir W. Clark) rightly called talking down Britain-- [Interruption.] Labour Members may find, particularly when they see what the opinion poll in The Daily Telegraph says tomorrow, that the British people do not find comfortable the rubbishing of the efforts that millions of people throughout the country are making to come out of a recession that has afflicted many of the world's developed economies. Finding themselves increasingly in the position of having to talk down any good news for Britain and cheering at anything they can remotely distort into bad news is not an appealing platform for Labour Members and they must be seriously concerned about that fact.

We have had today only a sorry old rehash of the usual charges based on misconceptions about what has been happening. As usual, there has been from Labour Members an exclusive focus on manufacturing rather than

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on any other part of the economy. Not that I resent that. I am not disposed to being shy about our record in manufacturing-- [Interruption.] --but I wonder when they will start talking about the other 80 per cent. of the economy.

I am not ashamed of manufacturing when 22 per cent. of our national output for manufacturing is more than that in the United States or France, when our exports are at an all-time high, even during a recession, and when, for the third year running, we shall be increasing our share of world trade in manufacturing. I am not embarrassed by that record, notwithstanding the obvious difficulties that we know many businesses are facing here, just as they are in the United States, Canada, Sweden, Australia and in a number of other countries which are suffering equally from an economic downturn. I was interested to note how much reliance the hon. Member for Derby, South (Mrs. Beckett) placed on the CBI in the somewhat selective reading to which she treated us from the recent CBI report "Competing With the World's Best." For instance, she did not quote the following passage from that report :

"most of those responsible for running British industry believe there has been a marked improvement in performance during the 1980s which has been more than a temporary phenomenon. While there is no concealing the seriousness of the current recession, most manufacturers believe that their companies are in much better shape to weather the current downturn than was the case a decade ago." I wonder whether the hon. Lady has the same document, because the whole of it is worth reading. At the end of the document, the CBI said :

"To sum up the Group's conclusions to this point, the state of the Manufacturing Nation is better than is generally recognised. Many of Britain's manufacturers have shown that they can compete with the best in the world, there is a sound base on which to build". Mr. Jeff Rooker (Birmingham, Perry Barr) : Will the Minister give way?

Mr. Mellor : The hon. Gentleman, who has not been part of this debate but has just joined us, is obviously unaware of the fact that the hon. Lady constantly referred to the CBI. I am perfectly happy to share the CBI's opinions with the House. [Interruption.] The hon. Gentleman is becoming very excitable. Had he been here for a number of hours, any excitement would have died rather quickly.

Mr. Rooker : Will the Minister give way?

Mr. Mellor : No, I shall not give way if the hon. Gentleman cannot contain himself. The hon. Gentleman squawks, but I shall give way only to hon. Members who have taken a serious interest in the debate. On a generous estimate, that might even include the right hon. and learned Member for Monklands, East.

The Opposition's portrayal of the CBI as a damsel in distress waiting to be rescued from the Government by the Labour party is absolute nonsense. The CBI is about as anxious to have a Labour Government as we would all be to have our daughters go to an all-night party at the Kennedys.

The CBI's document says :

"It is quite clear in recent years that central government should not be in the business of picking winners, or of engaging in direct intervention in the strategic direction and management of companies. Experience has shown"- -

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the right hon. and learned Member for Monklands, East should focus particularly on this point--

"that Ministers and civil servants do not have the necessary skills and experience".

If anyone is in doubt about how the CBI feels about the Labour party, he or she should look at the interview given by John Banham to The Guardian on Wednesday, 30 October. He said :

"Labour means an explosion of public pay settlements without increases in productivity ; it means the minimum wage (causing up to a 300,000 increase in unemployment) and other social initiatives in line with the EC social action programme ; it means business diverting resources from investment to meet rising local government bills unprotected by a retail price index cap.

The other threat is devaluation, even though this is one which Labour has gone out of its way to stress is not real"

unlike the hon. Member for Great Grimsby (Mr. Mitchell), who was all for it in today's debate.

"We're very much opposed to devaluation but there are siren voices in the Labour party talking about that, he says.

All these add up to inflation, each percentage point increase in which he says costs business £5 billion a year."

That is what the CBI thinks of the prospect of a Labour Government. It is not impressed by the 283 quangos which Labour would invent, and does not want social audits, contract compliance, work force monitoring and other such stuff. Mr. Banham has no doubt noticed what Conservative Members have noticed about the right hon. and learned Member for Monklands, East--he says nothing about inflation. The hon. Member for Derby, South mentioned inflation only to make a trivial point about marginal changes of fractions of a percentage point between just under 4 per cent. and just over 4 per cent. When she was last a Minister, inflation averaged 15.5 per cent. and peaked at 28 per cent. Therefore, I do not find that very convincing.

No doubt, when Mr. Banham mentions public sector pay, he is also aware that there has never been a strike during the Government's lifetime that was not fully supported by the Labour party. He is aware of the Labour party's proposals for the minimum wage. The only thing that independent commentators disagree about over the minimum wage is how much unemployment it will cause. It is a case of, "You pays your money and you takes your choice." Nomura Securities starts low and says it will cost 145,000 jobs, James Capel says that it will cost 166,000, the CBI says that it will cost 200,000 to 300,000, UBS Phillips and Drew says that it will cost 400,000 for stage 1, up to 50 per cent., and 1.25 million for stage 2, up to 66 per cent. Even the Fabian Society says that it will cost almost 900,000 jobs. No wonder the CBI is not struck on the minimum wage. We only have to think what the national minimum wage would cost the national health service--at least half a billion pounds. The total cost to the public sector would be about one and a half billion pounds, without any increase in the productive capacity of the economy.

Mr. Banham is not impressed by the Labour party's proposals to remove the caps from local government expenditure.

Mrs. Beckett rose --

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