House of Commons Hansard Debates for 6 Feb 1992

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Member for Sparkbrook and says that the package would start straight away. He thus destroys Beckett's law, whereby Labour has only two pledges for immediate implementation. The right hon. Lady the Member for Derby, South (Mrs. Beckett) wisely remains silent. The final act came this morning, when the hon. Member for Dunfermline, East revealed that not a penny of the proposed tax cuts in the emergency package for industry would reach industry before October 1993. We are back to deferred blood transfusions. Labour's emergency package amounts to a few hundred million pounds down on employment measures, plus a temporary tax cut on account. It is simply not credible that the growth of the gross domestic product of this country, which is worth £600 billion, can be entirely dependent on Government spending of one thousandth of that amount, more or less.

In the absence of policies, what have the Opposition got in the way of people? If not measures, let us look at the men.

The hon. Member for Dunfermline, East aspires to be Secretary of State for Trade and Industry. There is no harm in that ; many people want the job, and most people do hold it from time to time. But I wonder how the hon. Member's job application would look. I suppose that it would read something like this : name, Brown, James Gordon ; age 40 ; business experience, none so far ; good degree in history ; student rector of Edinburgh university 1972-75 ; temporary lecturer 1976 ; only job in the private sector, TV producer ; believes this experience would fit him to run British industry, pick winners, select strategic investment, invest taxpayers' money, set up a state bank and take over water, electricity and eventually the other utilities.

Mr. Dewar rose --

Mr. Lilley : After today, I do not think that he would get an interview.

Mr. Dewar : I just want to suggest to the Secretary of State that the trouble with this bit of character assassination is that the hon. Members to whom he is talking have just heard my hon. Friend the Member for Dunfermline, East's speech, and they have heard his.

Mr. Lilley : They have heard from the hon. Member for Dunfermline, East not a word of policy, not a positive proposal for British industry, no recognition of the importance of innovation, sneering at free trade, despising competition. They have heard his right hon. Friend the leader of the Opposition saying that we are going back to the National Enterprise Board, to intervention, to policies which failed in the 1960s and were a dismal disaster in the 1970s. It is clear that Labour's policies would make recession worse and delay recovery. They would hit industry at every level. Their minimum wage would destroy job opportunities for the most vulnerable. Their national insurance increases would hit vital middle management. Their top-rate increase would cripple enterprise and those who create new jobs and businesses.

Our policies have laid the conditions for sustained viable recovery. That depends above all on confidence at

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home and a stable world trading environment abroad. Only a Conservative Government can secure that at home and pursue that abroad.

I urge my right hon. and hon. Friends to reject the Opposition's destructive motion.

6.13 pm

Mr. Alex Carlile (Montgomery) : During the speeches of the hon. Member for Dunfermline, East (Mr. Brown) and of the Secretary of State, my mind, I am afraid, drifted away from time to time to thinking about the difference between Dennis the Menace's dog Gnasher and Lord Snooty and his pals. It strikes me that there is only one difference between those two caricatures : Gnasher uses maximum energy to minimum effect ; Lord Snooty uses minimum energy to minimum effect. What we have heard in the last one and half hours or so has sounded very much like that.

We come to the House to listen to the hon. Member for Dunfermline, East with keen anticipation, for he is a very fine debater. Indeed, had he joined my profession, the law, I am sure that he would have made an enormous success of it, whether in Scotland or in England and Wales. However, in his speech today he did not do much more than set the great conundrum of our time, as he would have it : is there or is there not a recession? It was as if the future of British industry and the British economy depended upon the answer to that conundrum. I thought that he would come up towards the end of his speech, like a great panjandrum, with the answer to the great conundrum. He talked about the Conservative messenger who did not believe the message. Yet he sounded a bit like the Labour messenger who had forgotten to carry the message with him.

We heard from the hon. Gentleman a litany of entirely merited criticism of the Government's policies without any positive indication of what a Labour Government would do which I think that this House and the country are entitled to hear in a major debate, in Opposition time, the debate being of Labour's choosing, on our economy and industry.

I am not sure if it matters a jot whether we label what is happening a recession. Whatever it is, it is happening ; whatever it is, we know the symptoms ; and whatever it is, we, as members of political parties in the House, owe the country the duty of telling it what we regard as beiing the cure, without the snarling and snapping that is giving the House a bad name.

Something else occurred to me during the speech of the hon. Member for Dunfermline, East. He appeared to claim that there are those in industry and business who want a Labour Government, because they believe that a Labour Government could manage the economy, make the economy stronger and provide the base for manufacturing industry to grow. Yet he did not tell us who those people in industry are. He did not tell us which industrial organisations or chambers of trade--it is certainly not the Confederation of British Industry--want a Labour Government. He did not begin to address the important credibility gap, not just at home but abroad, by saying what would justify industry and business in supporting a Labour Government.

Internal confidence needs external confidence. The Labour party has failed quite wretchedly to find any

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external support in the financial institutions or economists of the world to encourage internal confidence if we had a Labour Government.

Labour is right in saying that the French have done better. The Government are wrong to say that we are merely victims of a world recession. The French evidence mentioned by the Leader of the Opposition was good enough to show that. The German economy is still growing at a rate of 3.2 per cent. That is a remarkable success story, particularly when one considers the problems that Germany has had with unification. It is not in recession, at least to anything like the extent of the United Kingdom. It has managed to enjoy positive economic growth, while our GDP fell by 2.5 per cent. during 1991. The Treasury took a long time to recognise that Britain had suffered the biggest one-year drop since the great depression of the 1930s. The autumn statement projection of 2.25 per cent. growth for 1992 has been utterly discredited, and plainly was influenced by the prospect of a November election that never happened. It is likely that the fourth quarter figures due later this month will show that the economy was flat.

The cumulative cost in terms of lost output has hit £100 billion--an average of £5,000 for every British family. The Government claim to be able to call on external confidence, but they fail to do anything to fuel the internal confidence that would justify a more optimistic view of the British economy for the future.

Mr. Barry Field (Isle of Wight) : The hon. and learned Gentleman makes much of forecasts that he claims were arranged in line with the timing of a possible general election. I remind him of the words of the Liberal Democrat pocket guide to Conservative party policy, published in 1991, which stated, to its credit :

"The Conservatives in 1979 recognised the need for change after three decades of stultifying corporatism."

If that was not a forecast of better economic prospects, what was? What would be the effect on the rural economy and on national inflation of the 50p increase in petrol prices that the Social Democrat leader advocated earlier this week?

Mr. Carlile : The hon. Gentleman is a little off the point, and he is very selective in his reading. His first quotation related directly to trade union law reforms that he knows perfectly well were supported by my party. His second point was also selective. If he will read all our policy, he will find clearly stated our determination to ensure that rural areas are protected against the petrol price rises that the Conservatives, Labour, and my own party recognise are otherwise inevitable in due course to protect the environment. The Tory party has not said that it would ensure that rural areas do not suffer disproportionately as a result. The hon. Gentleman has made an entirely peripheral intervention. I will return to the subject of the debate.

Part of the Government's failure can be seen every week in our constituency surgeries, at which small business people complain about the way in which their firms failed. Often, that happened not because they were poor managers but because they were unable to collect debts owed by other businesses that went broke. This serious problem led to the record 47,000 business failures that occurred in 1991.

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Although prominence has been given to south- east England being especially badly affected by recent economic trends, Dun and Bradstreet surveys show that, in terms of percentage increases in insolvencies, Scotland and Wales were hardest hit, with increases of 77 per cent. and 74 per cent. respectively. It is not a south-east phenomenon, but has hit us all--including the rural areas where business expansion plays such an important role.

The Government's forecasts have already been caricatured by the hon. Member for Dunfermline, East, and they were bizarre. Every season in 1991 the Government presented another inaccurate forecast. In the spring, we were promised that the recession would be "short-lived and shallow", and that growth would begin again towards the middle of the year. In the summer, we were told that Britain was coming out of the recession. In the autumn, we were informed that "the green shoots of economic spring are appearing once again." In the winter, the Government were driven to the desperation of calling upon alchemy--

"what Disraeli once called the alchemy of time."

The problems of manufacturing industry will be solved not by alchemy but by sound economic policies. That means managing the economy--not the use of alchemic tubes to produce some mythical solution.

Industry has identified its own problems very clearly. The best economic predictions have come from the Confederation of British Industry, and particularly from its chief economist, Andrew Sentance. The CBI's latest quarterly industrial trends survey shows that confidence is virtually non- existent, and that new orders are expected to continue falling. Export orders declined significantly for a sixth successive quarter. Output showed a negative balance of 29 per cent., and, after a slight improvement in October, 34 per cent. of business men were less optimistic about their companies' prospects.

I ask on behalf of my party, and of small business people in particular : why do the Government not take the steps that could be taken in an enterprise economy, without nationalisation and corporatism, to revive our service and manufacturing industries? I urge the Secretary of State to say why, when business person after business person tells him, "Of course, we must have a single European currency," he continues to insist on the opt- out that is so unrealistic and damaging to British industry? Is there one senior figure in British industry and commerce who really believes that we are not bound to have a single currency in the end? Why not accept that, and play a leading role in creating it in as beneficial an environment as possible?

Why does not the Secretary of State accept the example of the German economy? Even allowing for different national characteristics, which are not unimportant, their experience is something that we could usefully follow. German interest rates have been taken out of the hands of politicians. They still exercise some influence, but they do not make the decisions. The independence of the German central bank, which is not immune to political influence, provides a guarantee of confidence in the German economy.

Why did the Government choose, when the time was right, to ignore the good sense of going into the narrow bands of the exchange rate mechanism?

Why will the Government not agree to reforming corporation tax, to guarantee its neutrality against

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inflation, and to index it to provide more certain benefits to business than capital allowances--which would ensure that business inflationary gains would not be taxed?

Why have the Government been so half-hearted about infrastructure projects? An obvious example is the channel tunnel. If one goes to Calais, one will see a few miles away the motorways to the channel tunnel that have already been constructed, and the train grand vitesse that is waiting to whisk travellers all over France--once they have managed to struggle to the tunnel. Why are the British Government not prepared to follow the example set by the Franch and to make it clear that the whole of Britain should benefit from the channel tunnel?

Why is it that areas where industry is growing, such as the rural areas in my constituency, not only remain deprived of road infrastructure but are subjected to the destruction of the rail infrastructure by a British Railways Board intent on setting itself up for privatisation rather than providing the services that the public need?

Why will the Government not refocus training and enterprise councils when it is clear that, although they are doing a good job in a limited area, TECs could achieve so much more if they could refocus on retraining people who are already in work rather than concentrating virtually all their resources on training those who are out of work? Both jobs need to be done. The TECs are failing to carry out the necessary retraining because they have not the resources to do so.

Why do not the Government help the small businesses that face liquidation and bankruptcy by legislating for late payment of debt to be subject to statutory interest after 30 days?

Why will they not reduce the administrative burdens on small firms by indexing employees' national insurance contributions and income tax, coupled with employee end-of-year self-assessment of tax? Why have they not provided a seedcorn capital investment programme to fund the administration costs of new projects? Such projects could be supported by regional private venture capital funds.

We did not hear the Labour party mention any of those possible measures ; nor did we hear the Government tell us what they would do to drag business out of the recession that has affected it so badly. I find no difficulty in telling the House that those measures can be taken, and that the people are entitled to be told what those measures are.

Ours remains a great trading nation, it remains a manufacturing nation, and it remains one of the great financial and legal centres of the world. All those sectors of our economy, however, have suffered under recent Government policy.

Mr. John Lee (Pendle) : All this is very fine, but may I ask a question about infrastructure? What would the hon. and learned Gentleman say to the many Liberals throughout the country who--as he knows full well- -opposed the expansion of the M65, especially in north-east Lancashire?

Mr. Carlile : The hon. Gentleman knows that I have a connection with that area. On occasion, I have made the railway journey from London to Burnley. It is fine until Preston ; it then becomes picturesque--I think that that is the most complimentary description that can be applied.

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Our policy is to put as many passengers and as much freight as possible on to a decent railway system, as opposed to a system that is constantly being dismantled by British Rail.

We will not revive the British economy by means of state intervention ; nor will we revive it by nationalising either our own industries or those in other countries on which we spend money ; nor will we revive it by taking our hands off and not intervening in any way. There are many precedents for a well-run but not over-managed enterprise economy--an economy stimulated by fiscal measures in particular, which would generate confidence within business, and external confidence in the United Kingdom.

I have offered the House just a few of those measures. There are many more, and it is a pity that we have not heard about any of them this evening from other parties.

6.33 pm

Mr. Kenneth Warren (Hastings and Rye) : I declare an interest : I was in industry for 20 years, and I have been in Parliament for 20 years. As I listened to the remarkable, fiery speech of the hon. Member for Dunfermline, East (Mr. Brown), an amazing thought came to me. I was reminded of a phrase that is often heard in industry : he passed through at supersonic speed, generating much heat but no light.

I presume that the hon. Gentleman has now gone out to take a shower and cool off. I am sorry that he has left us, because I feel that he should be here to learn what it is like to be in industry, and what it is like to know how to deal, when fighting in foreign markets, with the effect that his speech will have on our exporters. I am sorry that Mr. Morita was not present to listen to the hon. Gentleman, for I hope to be with my right hon. Friend the Secretary of State listening to Mr. Morita. I think that Mr. Morita would be extremely worried, given his possible plans for investment in this country, not to have heard Labour's plans for the taxation of industry and its encouragement if it ever achieves power. I hope that we shall hear the answer from the Opposition Member who winds up the debate.

Mr. Alan Williams (Swansea, West) : Will the hon. Gentleman give way?

Mr. Warren : Well, seeing it's you.

Mr. Williams : As the hon. Gentleman will know, I was in charge of inward investment under a Labour Government. I negotiated with Mr. Morita in Japan, and met him in this country. He knows that we are very supportive, and, indeed, that we initiated much of the Japanese investment that has taken place.

Mr. Warren : I am not so sure how successful the right hon. Gentleman really was. I know that he meant well, but I remember that he started the Inmos programme and completely failed to invest the amount that was necessary. He made it possible for the company to set up its headquarters in the United States. That seemed to have been forgotten when the Leader of the Opposition intervened earlier. Let us consider how industry will have received the speech of the hon. Member for Dunfermline, East. I have some questions to pose on the basis of my industrial knowledge, which I hope may help hon. Members on both sides of the House. There is no doubt that, over the past few yeaers, the country has achieved a remarkable

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reduction in inflation and a remarkable improvement in the level of exports. As an ex-trade union official, I also welcome the improvement in industrial relations across the country.

We have a great basis for the revival of British industry, but that revival will require a combined effort--the kind of team work that has not been affected in government for 20 or 30 years. We may not have understood as well as we should that, when we face great competitors like Mr. Morita and his colleagues--and our competitors in West Germany--we should examine the way in which they compete with us. Those countries show a unique dedication, in industry and financial services and in their Governments, to trying to act as a team. I should like to see much more of that here. I should like to take industry out of the cauldron of dissension in which it is so often placed when it is debated in the House.

The hon. and learned Member for Montgomery (Mr. Carlile) mentioned the problem of small businesses, and the difference between what they need and what is done to them by the financial services organisations. I am sure that every hon. Member has repeatedly been approached by the small business men who come to tell us that the banks are threatening to put them out of business. We know that, in fact, the banks are trying to recoup their top management errors--failed ventures in the second and third worlds.

When it is suggested to a local bank manager that it may be better to try to keep a little business going than to lose even more money by making it bankrupt, it seems that such matters can no longer be decided at local branch level. All the local knowledge of bank managers is no longer used. Only today, I heard of a major bank that apparently requires a second manager to vet all loans--a manager who has no knowledge of the small businesses to whom such loans might be made.

The banks in particular need to look at their investment policies. They need to see themselves as essential collaborators with industry. I hope that the Government, as the country's largest single customer, will examine the way in which it can play a part in reviving British industry and its opportunities. The fundamental problem is that we are not competing in world markets as well as we could be. In terms of the manufacturing share that we have captured, we are better off per capita than those who export from the United States or Japan. Ahead of us, however, lies not only the problem of the unity of those countries in endeavouring to hold on to the markets and deny them to us, but the way in which the Japanese themselves are surging forward.

Before I say more about that, let me deal with the return on investment in this country, and the need for the Government to address the problems-- which are long-standing and have spread over many periods of office--to establish whether, as the Budget draws near, some solution might be found.

Between 1976 and 1990--I say this to please the right hon. Member for Swansea, West (Mr. Williams)--the return on investment in manufacturing industry has been 8 per cent. In West Germany, it has been 15 per cent. and in Japan 22 per cent. With the return on investment being so small, it is no surprise that people do not want to invest in manufacturing industry. If one has some money to save, it seems sensible to place it where it will gain the best return. So we end up with the problems with which we are familiar. Over the same period, in the United Kingdom, £2,000 per man was invested in industry. In West

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Germany, it was nearly £3,000 per man, and in Japan it was over £5, 000. It is a better bet. The team spirit across the economy encourages people to invest in industry in those countries and helps them to hold on to world markets.

We must not despair, as we so often do, about the ability of British industry to rise when it is given the opportunity. The Japanese have invested in Britain and brought the team spirit here. One has only to look at the performance of Mr. Morita's Sony and the Nissan company in Sunderland to see that British workers, given the opportunity, out-perform the parent companies in Japan. It is splendid to know that Japanese televisions from south Wales and motor cars from the north-east are being exported back to Japan. If we can get our act together, we can beat them all. That is not just rhetoric. We know from experience in our constituencies and our opportunities to visit factories that there is the willingness, determination and ability to conquer.

That is a base--I am again referring to the Budget--from which more should be done. From my industrial experience, I believe that we are doing all that from too narrow an educational base. In West Germany and Japan, twice as many young people complete studies up to A-level. If one is to do a good job in engineering, one needs to be equipped not just with the tools of the trade but with the intellectual breadth of learning that can enable one to use those tools most effectively. I should like to see the Government look at ways of raising the quality of education and keeping more people in our education system up to A-level.

I should like to remind the Government, whom I loyally support, that there is a need to look at research establishments, whether they are Government sponsored or in private industry. We are funding far too few alpha-rated research projects. Only about 30 per cent. or 40 per cent. of the projects put forward are receiving funding. Those projects are the seedcorn for five, 10 or 15 years' time. In domestic electronics, it is a couple of years before patents are out in the marketplace, and in the pharmaceutical industry it can be 10 to 15 years. Greater attention needs to be paid to sowing the seedcorn to ensure that it grows.

In the forthcoming Budget, we could also look at training. British industry is achieving great things, but technicians and craftsmen attend, on average, one course in 14 years of employment. Think what we could do if we had the same level of training as West Germany or France. Overall, employees in industry attend one course in 33 years or one course in a 45- year period in industry. That is not good enough. However, the Government alone should not be responsible for that. The captains of industry should look to the way in which they are running the training courses for their employees. They should not sit back and wait for Government action. If we are to meet the problems that we will face in the future, we need more investment in training.

The Japanese and the Germans--our major competitors--are waging a patent war against us, and major problems will arise. We turn in about 24,000 patents a year. The Germans turn in 31,000--a substantial increase on our figure--but the Japanese turned in 10 times that amount--309,000--in 1988, the last year for which figures are available. The Government should look to their agencies to try to produce data more up to date than those

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over three years old. It is immensely difficult to do corporate planning, let alone produce political manifestos, if one has to rely on statistics that are so out of date.

Mr. Stuart Randall (Kingston upon Hull, West) : The hon. Gentleman is highly regarded on industry policy, and we always listen to him with care and interest. He talked about a poor return on investment--I think that he used the 8 per cent. figure. How does he advocate breaking in to the chicken-and-egg problem of getting investment going but not being able to do it when the return is so low? Does he support the Government's almost totally hands-off industrial policy, or does he feel that some greater level of intervention is necessary in order to achieve a better return and thereby higher rates of investment in industry?

Mr. Warren : With great respect, not because I am a Conservative, but because of my experience in industry, I would stick to our policy rather than that of the Opposition.

I have talked about planting the seedcorn and about training. The initiatives must come particularly from industry to make it more worth while to invest. The problems of industry will not be solved simply by throwing money at them. Throwing taxpayers' money at those problems is simply a waste of workers' wages. We must raise the quality of those working in industry so that they can be more competitive. That will attract investment. We must get away from the candy-floss opportunity for investment and show that it is far better to put money into production lines.

The Government should look seriously at the fact that they are the largest single customer in the country. The Government buy £4 billion-worth of goods and services each year in information technology. Half that is taken up by the defence industry. The Government buy 20 per cent. of all British output. That is not a form of interventionism. The Government are buying what they need. Surprisingly, government is the most labour-intensive business in the country, and it certainly needs more information technology. The Government must look at the way in which such purchasing power affects the corporate strategy of British companies. People queue up to sell to Boeing and to Marks and Spencer. I should like to see them queuing up to sell to the Government, because they are a good customer. If we can get better buyers in government, we will get better value for money and lower taxation. That is the intervention of common sense.

Having listened to the stirring of muddy waters from the Opposition Front Bench, I must convey a feeling that I know runs throughout industry. Industrialists and workers do not have confidence in the Labour party, and I trust that it will not succeed in the vote tonight or in the election to come.

6.48 pm

Mrs. Audrey Wise (Preston) : There is a place in my constituency called Strand road. Preston is an attractive town, but I cannot pretend that Strand road is an attractive place. However, it is an important place. It has been the heart of industry in my constituency. It has two large factories--British Aerospace, which is in the process

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of closing, and GEC, where the workers are worried about their prospects and the lack of orders for trains. If one goes around Preston, one will find closed factories, factories with greatly reduced work forces and factories with worried workers.

After 13 years, the Tory Government still keep talking about long-term solutions. I have a five-year-old grandson so I know exactly what five-year -olds are like. A five-year-old from 13 years ago is now an 18-year-old wondering about the prospects for the future. To that 18-year-old, those 13 years have offered ample opportunity for many a long-term solution, but all he or she faces is a long-term mess.

Manufacturing employment in the north-west has fallen by 37 per cent. since 1979 ; 322,000 jobs have been lost. Even according to the rather fraudulent means by which employment figures are now calculated, unemployment in the north-west is more than 152,000 higher. The Secretary of State says, "Be optimistic." I rather favour optimism, but if one is in a snow storm, optimism cannot keep one warm. I favour positive thinking, but, as a gardener, I know that it will not protect geraniums from the frost. Optimism is very nice and is very useful, but it does not guard against the harshest facts of climate or economic climate.

The Government's amendment does not mention unemployment, but it complains about the social charter and the national minimum wage. Presumably the Government think that workers must try to maintain their jobs by being willing to accept any wages and conditions. I do not think that that is what workers in my constituency want. They want useful, secure jobs that pay good wages and offer good conditions. A Government worth their salt should be prepared to say, "Yes, it is partly our responsibility to create the conditions in which that will happen."

Tory Members in my area seem to think that it is my fault that jobs at British Aerospace are under threat and that I am responsible for the Government's defence procurement policy. That is remarkable. I have a straightforward view on defence. It is essential to defend the country, which will cost money, but we should ensure that it costs as little as possible and that the primary purpose of defence expenditure is saving and creating jobs in our country. I also think that that makes defence sense. From an industrial, economic and defence point of view, British Aerospace workers rightly object strongly to the build up of non-UK arms industries.

Mr. Roger King : What is the hon. Lady talking about?

Mrs. Wise : I am talking about the fact that British Aerospace's management has told me that they are hindered by the Government's procurement policy, which consists of going into the marketplace as if they are buying butter and seeing what is cheapest, regardless of its effect on the company's capacity to plan ahead.

Mr. King : I was guilty of saying, "What is the hon. Lady talking about?", because I understand that Labour's policy is to slash defence expenditure and not to encourage overseas arms sales, to which British Aerospace is resolutely committed. It confidently expects to conclude a substantial arms deals in the Persian Gulf area shortly. Would an incoming Labour Government tear that up?

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Mrs. Wise : I have tried to explain in words of one syllable that, despite the Government's policy of high arms expenditure, defence jobs have melted away like snow in summer. I have also tried to explain that I favour a rational policy of forward planning and of ensuring that defence expenditure keeps our workers in employment. I am sorry if the hon. Gentleman cannot follow that.

Mr. Lee : Will the hon. Lady give way?

Mrs. Wise : I have just given way to the hon. Member for Birmingham, Northfield (Mr. King). That is quite enough.

I do not share the enthusiasm of the hon. Member for Northfield for arms exports. I do not want workers in my constituency to depend on other people's wars and suffering for their jobs. That is not the way in which they would prefer to earn their living, given an opportunity for useful and peaceful production. A Labour Government will lead us towards useful and peaceful production. I shall do my share to encourage that.

An Opposition Front-Bench spokesman visited Preston today and spoke about the defence diversification agency, which I believe will be of much value to British Aerospace workers in my area. That constructive policy will build for the future and will not depend on other people's wars or on giving dictators and repressive regimes the means to keep their people down.

The contract for maintenance work on tornado aircraft has just been awarded to RAF St. Athan. I believe that taxpayers' money should be used most effectively. The skilled workers who built the Tornado, who know it through and through, are in my constituency. Seven hundred jobs are at stake. I do not understand the logic of investing £40 million to maintain the Tornado at St. Athan. The Royal Air Force personnel will inevitably be less efficient, because the trained workers are in Preston.

We fear that, because it may prove extremely difficult to find enough Royal Air Force staff at St. Athan, some of the workers from Preston will take the civilian jobs that may become available there and end up doing the same work but away from their families. That is not a logical way to go about things. The Ministry of Defence must invest in maintenance by using civilian workers who are already familiar with the aircraft they maintain.

Next door to the British Aerospace factory which is closing is GEC, which needs orders for trains. It is years since British Rail ordered any high- speed trains. I should like to give some international comparisons. InterCity uses class 91 (IC225) first generation trains. Class 93 (IC250), if produced, would be the second generation. Although InterCity has become the only profitable railway system in the world, it has been required to cut over £90 million from its 1991-92 budget to help ease the overall British Rail financial crisis. That is cloud cuckoo land.

While British Rail is compelled to slash its investment programme, the Swedes are now on their second successful generation of the X train, and Japan is on its third generation of the bullet. The French are on the third generation of the TGV and are exporting it in mass to Spain and America. The French Government have decided that the TGV Atlantique is of economic benefit to a depressed region and have provided additional investment finance.

Why has British Rail had to slash its investment? Because there is no coherent transport policy in this

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country. I am pleased that Labour is committed to a coherent transport policy which will consider at one and the same time transport needs and the industrial development brought about by supplying those transport needs, including export shop windows. That would also save employment and improve the environment.

All we have from the Government are quarrels among their Front Benchers about how to privatise British Rail, not about how to get investment or to keep trains running. They are quarrelling about the exact forms of the companies under privatisation, no doubt because they want whatever form of privatisation will give the best return to their friends. My constituents in GEC need Labour's transport policy. With that, there would be orders for trains. With orders for trains, the work force at GEC would have secure jobs.

Lest anyone thinks that that is just my gloss on matters, Labour's programme for transport says that there will be

"a substantial and sustained increase in investment in new transport infrastructure."

The position is the same with buses. We have seen the killing of a coherent public transport bus system. I get complaints from some people that too many buses run past their doors because they are on lucrative routes. I get complaints from others that there are no buses. If people live two miles outside a town, and have toddlers or are elderly, they might as well live on the moon.

Labour stands for the development of public transport, which needs buses. Good public transport needs new buses. Deregulation opened the way for a good secondhand market in buses, but it did nothing for Leyland Bus. Vigorous trade in clapped-out vehicles is no good for safety or for the environment, and it is deplorable for Leyland Bus in the Lancashire area. Labour will go a long way towards curing our transport ills.

Although I have concentrated on manufacturing, I must remind the House--I may be the only hon. Member to do so--that all that has a knock-on effect on retailing. It takes longer to get through, but it has got through now. In Preston, Lewis's has a fortnight's stay of execution. It is a perfectly good shop. Why did it go bust? The answer is that people cannot afford to buy. Employment in retail trade also depends on a healthy economy.

In not mentioning unemployment in their amendment, the Tories are guilty of a give-away. They have talked about high tax. That shows nerve, coming from the party which increased VAT from 8 to 17.5 per cent., with adverse affects on retailing and everyone apart from the best off. Not too many pensioners pay income tax, but all pensioners pay VAT. VAT is well known as a highly regressive tax.

When the Prime Minister tables an amendment which complains about high taxation, he should take the message to heart. We stand for fair taxation. Fair taxation would help to bring about a healthy economy, because ordinary people would have more money to spend in the shops. If we have a sensible policy on investment in manufacturing, people will be able to spend their money on goods made in Britain, thus keeping jobs. In that way, the British economy would cease to be a leaky bucket and would have recycling and increased creation of wealth. I look forward to that day.

Several hon. Members rose --

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