House of Commons Hansard Debates for 6 Feb 1992

Mr. Richard Tracey (Surbiton) : Does the hon. Gentleman realise that he is fast becoming the Ron Glum of British politics? I believe that he has never managed a company or been in a position in which he needed to motivate workers. The sort of talk that we hear from him, which is wholly contrary to what we hear from the CBI and others, will progressively talk down British industry. Is that what the Labour party is all about?

Mr. Brown : It is not I who am talking down British industry--it is British industry which wants a Government who will tell the truth about the British economy.

These are the facts. Exactly a year after the Chancellor predicted that we would have a recovery by the middle of 1991, eight months after the Prime Minister told us that a recovery would start in a few weeks, and months after the Chancellor detected the green shoots of spring, employment is still falling by more than 30,000 a month, manufacturing employment is still falling by nearly 20,000

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a month, sales are falling, industrial production is falling and, worst of all, the key to our future--investment- -is falling this month and next month and, if the hon. Gentleman listens to the CBI, he will learn that unless the Government take action, it is likely to fall during the year.

Mr. David Ashby (Leicestershire, North-West) : The hon. Gentleman obviously agrees that it is in manufacturing engineering that the greatest problems have arisen as a result of the recession. A company with which I am involved has lost a large part of its turnover in the past year, largely as a result of the fact that its manufacturing was done for American companies which, because of the recession in America, have taken the manufacturing back to America, thus depriving this country of it. Is it not because there is a world recession and, in particular, a recession in America, that we have the problems that we have now ? It is my experience that there has been a recovery in the past couple of months and, in the company with which I am involved, it is British-led. It is British workmanship which is leading us out of it.

Mr. Brown : The hon. Gentleman makes the point that the Prime Minister has been trying to make for a few days. [Interruption.] Let us deal with that point. He is saying that the problems in Britain arose not because of anything intrinsic to the British economy but because of a world recession. Why, if these problems are not intrinsic to Britain but part of a world recession, has Britain been bottom of the league of European Community countries for output, investment, employment and growth in 1991 ? Why, even in 1992, is the latest forecast that we shall be 12 out of 12 for employment in Europe ?

Mr. Phillip Oppenheim (Amber Valley) : As the hon. Gentleman is so dissatisfied with industrial performance in this country, will he cast his mind back to the balmy days when Labour was last in power, when British Airways was rated below Aeroflot by its customers, when British Leyland was the butt of international jokes and when British Steel was the world's largest loss maker ? Bearing in mind the fact that he has never manufactured anything except dodgy policies, how does he expect to do better ?

Mr. Brown : And when we had a surplus in manufacturing trade with the rest of the world. The hon. Gentleman, who repeats the same question every time, would do well to read the manifesto that he issued to the electors of Amber Valley, which said that the Conservative Government had put an end to fast-rising prices once and for all--just before inflation doubled.

Let us deal with the world recession. When Conservative Members claim--as the hon. Member for Leicestershire, North-West (Mr. Ashby) has just done-- that this is a world recession in which all countries are somehow suffering equally and try to tell us that it is not a British recession which is the fault of Ministers but a world recession which has nothing to do with them, let us be clear about the facts.

With the European Community as a whole growing by 1.4 per cent. in 1991 and expected to grow 2.1 per cent. in 1992, there is no falling output and therefore no recession in the EC as a whole last year or forecast for this year. With the countries of the Organisation for Economic Co-operation and Development as a whole growing by 1.2

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per cent. in 1991 and expected to grow 2.2 per cent. in 1992, there is not falling output and, therefore, no recession in the OECD countries as a whole last year or forecast for this year. When the G7 as a whole--

Mr. Patrick Nicholls (Teignbridge) : The hon. Gentleman has been complaining for the last few moments about a lack of investment. How on earth would British industry be helped by investment policy if his party got the opportunity to introduce its 9 per cent. tax on savings income? How would that help investment?

Mr. Brown : The policies that we advocate for manufacturing industry have been welcomed by the CBI, and are similar to the policies-- [Interruption.] Conservative Members are determined that I shall not be heard.

Madam Deputy Speaker (Miss Betty Boothroyd) : Order. The debate has been going on for only a few minutes. I suggest that hon. Members on both sides of the House sit back and listen.

Mr. Brown : I am grateful to you, Madam Deputy Speaker. I can tell the hon. Member for Teignbridge (Mr. Nicholls) that Budget submissions from the CBI, the Engineering Employers Federation, and many chambers of commerce and other industrial organisations, advocate a new investment incentive for British industry, to get the economy moving out of recession.

It is remarkable that the Chancellor of the Exchequer

Mr. Andrew Mitchell (Gedling) rose --

Mr. Brown : I shall not give way again.

It is remarkable that the Chancellor of the Exchequer will not rule out personal tax cuts or cuts in inheritance tax in the Budget, yet even before he began his Budget discussions, he specifically ruled out, in front of the National Economic Development Council, the one measure about which there is a consensus in industry--a new industrial investment incentive to get the economy moving again.

If Conservative Members would stop being completely embattled by their ideology, they might be able to learn from British industry.

Mr. James Hill (Southampton, Test) : Will the hon. Gentleman give way?

Mr. Brown : I shall give way to the hon. Gentleman, and that is the last time.

Mr. Hill : I have listened intently to what the hon. Gentleman has said about the OECD reports. I can give him a practical example, if he wishes. My daughter and her husband run a company just outside Bordeaux, in France. In the past few months, the recession there has been far worse than they have ever experienced before. One should take in some of those practical facts instead of listening only to statistics.

Mr. Brown : If the hon. Gentleman wants to make such points, perhaps he should go round the regions and listen to British industry. Perhaps he should read the report about machine tool orders--new orders are 47 per cent.

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down over a year. That is the result not of a world recession but of mistakes that have been made here in Britain.

Mr. Andrew Mitchell : Will the hon. Gentleman give way?

Mr. Brown : I shall not give way again.

Let us be absolutely clear : business investment last year did not fall in the EC as a whole in the G7 countries or in the OECD countries, but it fell in Britain. Employment did not fall in the EC, the G7 countries or in the OECD countries as a whole either, but it fell in Britain.

The Prime Minister tells us that Japan is in recession. Let me tell him, and Conservative Members, that, according to the latest report, in 1992 investment there is expected to rise by 2.4 per cent., employment by 1.3 per cent., and output by 2.4 per cent. That comes on top of a position in which, last year, business investment rose by 7 per cent., employment by 2 per cent., and output by 4.5 per cent. There is no recession in Japan, where the economy is growing, not declining, and unemployment is at 2.2 per cent., compared with 9 per cent. here.

Where is the world recession when the Prime Minister needs it? There is no world recession. Surely the only conclusion-- [Interruption.] Let us see what the IMF says. It says that the world economy grew by just 1 per cent. in 1991, but that it will grow by 2.8 per cent. this year. There is no fall in output in the world as a whole, and there is no recession. Where is the world recession? There is none. The only conclusion must be that the Prime Minister is condemned as--in his own words--economically illiterate.

Sir William Clark (Croydon, South) : The hon. Gentleman says that there is no world recession. Has he seen the statistics coming out of the United States? There is a recession there.

Secondly-- [Interruption.] Has the hon. Member for Clydesdale (Mr. Hood) finished? Secondly, if our economy

Mr. Brown : We had better examine the overall level of investment in the economy. At the beginning of 1990, manufacturing investment was £12 billion on a year-to-year basis. It is now £8 billion--that represents a 35 per cent. fall in manufacturing investment. If that is not evidence of a recession that needs correcting by Government action, I do not know what is.

This is a recession initiated in Britain by Ministers, and prolonged in Britain because of their mistakes. It is a recession which, thanks to the Government, still shows no sign of ending. What about the future? The CBI says that, unless action is taken, investment will continue to fall in 1992, and that, on the eve of the single market, investment will have fallen by 35 per cent. over two years. What does that mean in practice? It means that this year the Germans will invest about £3,000 for each manufacturing worker, and the Italians and the Americans about the same. The Dutch will invest more than £6,000. Yet no more than £1,800 will be invested in each British manufacturing worker. Britain has more to do, because it has done less over the past 13 years, yet Britain will invest 50 per cent. less than the Germans and the French, and less than half what the Japanese and some other countries invest. And the Prime Minister says that we have had a manufacturing renaissance in this country.

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The Chancellor's autumn statement, in November, said that output would grow by 2.5 per cent. Now the consensus is that it will grow by about half that rate in 1992. He said that investment would increase by 1.2 per cent. The consensus now--he has admitted it himself--is that those figures were over-optimistic, and that, according to the latest forecast, investment could fall. The autumn statement said that manufacturing production would rise by 2 per cent. The consensus now is that it will stagnate over the coming months.

Hon. Members will recall the night when a lady from Hampshire was told by Michael Fish, the weather forecaster, that there would be no hurricane. Michael Fish is remembered for one colossal failure of prediction, but the Chancellor's record is rather different. The right hon. Gentleman's record is remarkable for its consistency--he gets it wrong every time. The one thing that we can say about the Chancellor is that he is utterly reliable-- he will always let you down.

How can we trust the judgment of people who tell us that there will not be a recession, and then, when it is upon us, that there is no recession? How can we trust the judgment of men who tell us successively that the recession will have ended by spring 1991, June 1991, autumn 1991, December 1991 and January 1992, and who are even now telling us that it is all over, when the evidence is against them?

How can we trust the Government's judgment, when they are the very same people who in 1988 told us that they had created an economic miracle? They are the people who encouraged others to act as if they had no worries about borrowing, and who failed to warn about the risks--even, in some cases, to family homes--of debt, recession and high interest rates. Even as things got worse for millions of people, those men denied that there was a problem.

How can we trust the judgement of men who told us that their 1988 Budget, which gave £4 billion to the very rich, would increase output, growth, productivity, incentives, and even charitable giving? All of those have fallen as a result of Government mistakes in the past three years.

The Government are the people who have the audacity to put up billboards around Britain, in a campaign built round one central theme--that one cannot trust Labour. It is not the Labour party which has misled the country and cannot be trusted ; it is the Conservative Government who have forfeited any trust.

What is leading the recovery that we hear about from the Prime Minister? Is it housing-led, as the Chancellor promised? The Council of Mortgage Lenders has just said that there is no housing recovery. Is it retail-led, when companies such as John Lewis say that they are dealing with the worst conditions for 30 years? Is it

construction-led, as the Chancellor hinted that it would be, when the construction industry says that it will not recover until 1993? Is the recovery consumer-led, as the Chancellor promised at one stage, when in January, trade sales figures are stagnating and in some cases falling? Is it industry-led? Is it manufacturing-led? Is it investment-led? No. The truth is that if there is a recovery, it is not investment-led or industry- led ; it is a Conservative central office-led recovery.

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It is a recovery led by press releases, buoyed up by mistaken forecasts and advancing on the crest of a wave of pre -election hype. It is a recovery led not by car makers or aeroplane makers, but simply by phrase makers. The only companies talking it up are the Conservative advertising companies. This recovery leaves hundreds more companies going under, thousands more family homes repossessed and hundreds of thousands more unemployed. Is it an ICI-led recovery? Is it a GEC-led recovery? Is it a Wimpey-led recovery, or is it simply a Saatchi and Saatchi-led recovery?

It is a recovery dreamed up over a working breakfast and sketched by the Saatchi image makers. It is a recovery that begins and ends as advertising copy. It is a recovery that reaches as far as the nation's billboards, but not to its high streets, jobcentres or dole queues. It is a recovery led not by commercial activity, but simply by commercials. It is a recovery that has created a few jobs in a small section of Smith square in the press relations department, of Conservative central office, but none in any offices or factories throughout the country. After 13 years in government, the Conservatives are no longer asking how they can achieve better growth, better investment or better employment prospects. Their highest aspiration in government is simply better advertising in the run-up to the election.

What does Saatchi and Saatchi, whose good news machine proclaims that the economy is prospering, actually say about the real state of the economy to the people who matter to it most--the shareholders? Does Saatchi and Saatchi report to its shareholders that the Conservative Government are performing well, that Britain is best off with the Tories and that the recession is merely a blip?

Let me read the annual report of Saatchi and Saatchi. The chief executive says--

Mr. Ian Bruce (South Dorset) : Will the hon. Gentleman give way?

Mr. Brown : The hon. Gentleman would do well to listen-- [Interruption.] Conservative Members do not want to hear. Let me read the chief executive's report. He says :

"I do not expect trading to be any easier this year than last. The length of and the severity of the current recession are unresolved." That is Saatchi and Saatchi reporting to the people who matter to it--the shareholders. It says that there is recession, that it is severe and that its length is unresolved. That is bad news indeed, but presumably it is, in the Prime Minister's words, just another prophet of doom and just dismal Jimmy Saatchi at it again. Not even the messengers believe the message. What does the other Tory propaganda machine--the Daily Mail --tell us about the recession and recovery? Let us look at its headlines in the past few months, which include "Britain bounces back", and

"Small firms defy the prophets of doom".

What did the owners of the Daily Mail report when clear thinking was needed because their own directors' fees, dividends and salaries were at stake? Did they say, "Britain doing well, likely to do better, prospering and nothing to worry about"?

I quote from the report of Associated Newspapers plc :

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"Such limited signs of recovery in the United Kingdom economy as are visible remain patchy and do not give us any grounds for optimism The first months of the financial year have not indicated any recovery from recession."

The owners tell millions of their readers the good news from the Tory party while admitting in private, for all practical purposes of their own, that the news is bad.

What about the Daily Express ? In November, its headlines said : "At last we have lift off. Economy up."

Surely that encourages couples to bid up for their homes and encourages families to think that their debt problems are over. What does Lord Stevens tell his shareholders? He does not speak about signs of lift-off at the annual general meeting. He stated specifically :

"Contrary to the optimism of Government Ministers that the economy is turning, there are so far few tangible signs the advertising volumes are picking up."

The people who ask us to believe in the Tory record do not even believe it themselves.

What about The Sun ? It uses headlines such as, "It's looking good", "Britain on the way" and "We're OK in the UK". If then says : "It that's depression let's have more of it."

But what does News International plc report to its shareholders in its most recent annual report on 9 September? It said :

"Economic conditions as they affect the media are not expected to improve during the next year."

Its best assessment of our economic prospects to the people who matter to it is that there will be no recovery for a year--until next September. Yet News International is happy to put the interests of the Tory party before the interests of its readers.

Mr. Tim Bell is always ready to tell the good news on billboards, in full- page advertisements and in party political broadcasts. What did his company say about the real world of business at Christmas, only a month ago? It said that the company was having to make a last, desperate attempt to make any profits this year.

Here we have it. The entire Conservative propaganda machine--central office, Saatchi and Saatchi, the Daily Mail, the Daily Express and Tim Bell --the whole ministry of truth, when pressed, makes a sharp distinction between the message it puts to voters and the one that goes back to the directors and shareholders when serious commercial interests are at stake. There is one truth for the public, whom the Conservative propaganda machine is prepared to deceive, and another truth for the directors, the shareholders and the City audience on which it depends.

The public are being treated with contempt by people who know exactly what is wrong with the economy. They admit it to themselves every day and then proclaim a completely different story--a wholly different account--to the public in multi-million-pound Conservative advertising campaigns. Perhaps that deceit, that self-interest and that hypocrisy are nothing remarkable, but simply the prerogative of the Tory press throughout the ages. Saatchi and Saatchi say, "You can't trust Labour." All the evidence is that one cannot trust what Saatchi and Saatchi says about Labour, about the economy or about the Tory party.

Even within the Conservative party, I came across a document entitled "The Transformation of Britain", which was described as the new mass market magazine and as the party's flagship publication. It has an introduction

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by the right hon. Member for Bath (Mr. Patten), the Conservative party chairman. The third section entitled "The 1990s" looks at "the fruits of success in the lives of British people". It is not so much the record of the Tory transformation of Britain as an attempt at the transformation of the Tory record. There is only one edition so far, but in 100 glossy pages, the magazine manages only three advertisements. One is for a Tory joke book, one is from Selfridges and one is from Arthur Andersen which says :

"UK plc could be in better shape."

This is the Conservative party's own publication.

"It's time to get fit again. Getting fit is hard work Getting back in trim will not be easy for UK business. The exercise will be painful. Very often it means nothing less than a total

restructuring."

The Tory party's house magazine is now telling us that, after 13 years of this Government--

Mr. Ian Bruce : On a point of order, Madam Deputy Speaker. I have read the motion carefully. Could you help the House and the hon. Member for Dunfermline, East (Mr. Brown)? Will it be in order for us to discuss the Labour party's proposed policies, if it came to office? We have listened to the hon. Gentleman for 32 minutes, but we have yet to hear a single policy proposal from the Labour party.

Madam Deputy Speaker : The motion is wide. If the hon. Gentleman is called, I shall be pleased to hear what he has to say.

Mr. Brown : Conservative Members do not like what they are hearing about the fable.

Do Ministers themselves believe the good news? What does the Secretary of State for Trade and Industry say when pressed in cross-examination? In an interview in the magazine The Engineer which has just been drawn to my attention, does he share the confidence of the Saatchi and Saatchi advertisement? Does he repeat the pre-election talk of a transformation of Britain? What did he say in that interview a few months ago? What did he say when pressed on the problems of British industry? Did he talk about a blip or say that the recovery was just about to happen? He said :

"The problems are deep rooted and complex and only the most fundamental cultural, academic and educational changes are going to bring about reform. I think that message is getting over." It certainly is. When the messengers do not believe the message, when the Conservatives' party propaganda cannot sustain it and when Ministers cannot hold the line, can we trust the Government? Can there be any greater deception to the millions of victims of this recession--the small business men and women, the unemployed, shopkeepers and people in manufacturing? They need to be told the truth.

The Government are conjuring up a recovery that does not exist with a propaganda machine that does not even believe in it, and all for no other reason than that they are about to be called to account in a general election. A Government who treat the electorate with contempt will be treated with contempt by the British electorate.

The problem, however, is that we are talking about the difficulties not of the past three years, but of the past 13 years. In that time, we have consistently argued for the creation of a modern manufacturing strength, training, investment in skills, technology and training, and investment in the regions. What has happened under the

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Government? Let us look at what has happened in the past 13 years in terms of manufacturing growth. It has risen by 26 per cent. in Germany, 33 per cent. in America and 60 per cent. in Japan, but it has risen by only 4.9 per cent. in Britain.

What about investment in manufacturing?

Sir William Clark rose --

Mr. Brown : I gave way to the right hon. Gentleman a few minutes ago and I answered his question.

In the past twelve and a half years, investment in manufacturing has grown in real terms by 47 per cent. in Germany, by 52 per cent. in France, by 73 per cent. in Italy and by more than 100 per cent. in the Netherlands. However, it has fallen in Britain under this Government. We have the worst record for growth in manufacturing of all the OECD countries, with the exception of Greece. We have the worst record for manufacturing investment bar none. That is the Government's record at the end of 13 years in which they had the unparalleled advantage and the once-for-all windfall of North sea oil. However, we are now investing less and hardly producing any more in our manufacturing industry than we did in 1979.

This is a Government who boasted that they created an economic miracle. No wonder they are going to the country relying not on their achievements, but only on their advertising. The last thing they want to talk about is their record. They will not act on falling investment. They have refused to listen to the Confederation of British Industry and other organisations that have demanded a change in policy. While other countries are making proper preparations for 1992, the Government have done absolutely nothing to improve investment in the regions in particular.

We cannot trust the Government to take the necessary action and nowhere is that more true than in their attitude to our regions. Nowhere has the neglect of British industry and its future prospects been more obvious than in the Government's attitude to regional policy. That policy has been subject to modernisation in other countries, but it has been virtually abandoned in Britain. Nowhere is that more true than in the Government's attitude to RECHAR and our mining communities. The reason we have not reached an agreement in Europe is that the Ministers concerned are more anxious to wage ideological war with the Commission than to secure the funds that will create jobs, improve training and help small businesses grow in many of our rundown mining communities.

The document from the Department of the Environment says that the Government's case is no longer viable and that it represents an own goal. It states that the position must change. Jobs had been lost and help to small businesses had already been delayed when the Secretary of State for Trade and Industry told the House of Lords Select Committee :

"The problem is a metaphysical one. It is a metaphysical dispute about additionality".

Is it a metaphysical problem when Ministers put a miner of 47 on the dole with no prospect of ever working again and block the very measures that would help him?

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Peter Lilley) : Will the hon. Gentleman tell us whether he has ever asked his former right hon. Friend, Commissioner Millan, who was

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Secretary of State for Scotland, to operate the same rules as we do? Is Mr. Millan quite content to hand over that money to create those jobs or is the hon. Gentleman trying his best to dissuade him from doing so now?

Mr. Brown : The right hon. Gentleman knows full well that the rules on regional policy were changed in 1988.

Let me remind the right hon. Gentleman what his right hon. Friend the Secretary of State for the Environment said in his document. He said that the current arrangement is not transparent, that it is not additional, that it does not satisfy the objectives of grant recipients, and that it is not neutral. He actually admitted that the political criticism had not been met and that Britain was virtually isolated in the Community. That is what the Secretary of State for the Environment said from within the Government of which the Secretary of State for Trade and Industry is a member.

Mr. Lilley : The hon. Gentleman failed to read out the sentence that says that none of those comments refer to RECHAR.

Mr. Brown : The precise reading of that document is :

"This leaves the RECHAR programmes and other future ERDF receipts in jeopardy".

The right hon. Gentleman clearly does not talk to the Secretary of State for the Environment, and he does not even read the documents that come before him.

Is it a metaphysical problem when miners and their families who have travelled throughout Scotland and the north, and from Scotland to Yorkshire and further south and are faced not just with the prospect of unemployment, but of no further employment opportunities because the RECHAR money is being blocked? They are communities not of metaphysicians, but of miners and former miners laid low by closures and devastated by unemployment. Now, because of Government intransigence, they are deprived even of hope, at least until the Labour Government come to power.

How can we trust the Government to help mining communities or any of the hard-hit regions in Scotland, Wales and England, when they have cut regional assistance, axed regional development grants and will not back European regional measures? Our regional policy is now being presided over by a Minister who said in a pamphlet that he regards regional policy as one of the phoney activities of Government.

Nothing in the record of the Government is more damning than their failure to act on unemployment. Unemployment is now higher here than in all the Community countries except Ireland and Greece. It is still rising faster here than anywhere in Europe. That is on top of a doubling in unemployment since 1979.

What about employment action, which is a Government creation? There are only 263 people on employment action schemes in Scotland, which is an average of only three people in every constituency where employment action operates. Two years after the Government were first warned of the recession and 20 months after unemployment started to rise, employment action is offering places to 5,800 people in Britain. That is an average of nine people for constituencies which, in some cases, have more than 10,000 people unemployed. We now know that the Government have even raided the unemployment training budget in the past few days.

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