House of Commons Hansard Debates for 6 Jul 1992

Mr. John Whittingdale (Colchester, South and Maldon) : It is with great pleasure that, in this my maiden speech, I follow my right hon. Friend the Member for Shropshire, North (Mr. Biffen), whose views I have long held in great regard. It is also a pleasure to follow my hon. Friends the Members for Halesowen and Stourbridge (Mr. Hawksley) and for Milton Keynes, South-West (Mr. Legg) and the hon. Member for Feltham and Heston (Mr. Keen), all of whom made excellent maiden speeches and made my task considerably more difficult.

As this is the first time that I have spoken in the Chamber it is only right that my first act should be to pay

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tribute to my predecessor, Lord Wakeham. For 17 years John Wakeham represented, first, the constituency of Maldon and Rochford, and then my constituency of Colchester, South and Maldon. He did so with enormous distinction in a way that won him friends throughout the area. I have lost count of the number of people who have come up to me in the past year and told me that I have a hard act to follow. But I have never doubted that they were absolutely right.

In this place, John Wakeham was perhaps better known for his role in Government. He is one of that dwindling band who joined the Government in May 1979 and has remained a member of it ever since. In that time, he has held an enormous variety of positions, but he will be best remembered for his time as Chief Whip when he set a standard against which all his successors are likely to be judged. He once described himself as the Minister for stopping the Government doing silly things. It is a cause of great pleasure to my constituents and all Government supporters that he is still in the Cabinet and still fulfilling that role.

In 1984 John Wakeham suffered severe injuries in the bombing of the Grand hotel at Brighton, which also caused the death of his first wife. I am sure that no one in the House who witnessed it will forget the moment when a few months later he walked back into the Chamber unaided. I remember listening to that event on the radio, and in particular the reception that he was given by hon. Members. It was a tribute to his remarkable courage--a courage that he has displayed every day since that terrible event.

I should also like to mention some of my other predecessors. Before 1983, the Colchester part of my constituency was ably represented by Sir Antony Buck and, before him, by Lord Alport, to both of whom my hon. Friend the Member for Colchester, North (Mr. Jenkin) paid deserved tribute. Previous Members of Parliament for Maldon include Brian Harrison, who now lives in Australia but is still a regular visitor to the district. It was also once represented by Tom Driberg, who will be remembered as one of the more colourful Members of Parliament. Earlier still the constituency was represented by Mr. Quintin Dick, who is said to have spent more than any other hon. Member on bribery at parliamentary elections. I shall not follow his example, even if we do receive increased allowances for our office expenses.

My constituency stretches from the southern part of Colchester to take in the whole of the Maldon district. It is an area rich in history. Colchester was the first Roman capital of England and is Britain's oldest recorded town. At the end of the Dengie peninsula, at Bradwell, is the chapel of St. Peter-on-the-Wall--one of the first Christian churches in England. It is just a short distance from Bradwell power station--the first Magnox nuclear power station to be built in Britain.

Maldon itself was made a royal borough in 1171, and almost 200 years earlier was the subject of repeated assaults by invading Danes. The battle of Maldon in 991, in which the great Saxon leader Bryhtnoth was slain, inspired a famous Anglo-Saxon poem. Last year, the battle was re-enacted as part of the millennium celebrations. The House will be glad to learn that my constituents now regard the Danes in a much friendlier light.

The recession has hit my constituents hard. The Colchester Lathe Company has announced its intention to cease production, light industrial companies throughout

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Essex have shed labour, and retailers, small business men, and the construction industry continue to suffer from lack of demand. Confidence among Essex business men remains low. I am frequently asked what are the Government doing to bring about an upturn. I have always replied that it is not in the Government's power to conjure up recovery. Only business can create lasting jobs, and it is the Government's duty to create the right climate in which enterprise can flourish.

Having spent almost three years as special adviser to three of my right hon. Friend's predecessors as President of the Board of Trade, I read with interest his proposals to reorganise the Department of Trade and Industry. I welcome in particular his efforts to improve communications between that Department and industry and to reduce further the regulatory burdens on business.

However, the key to recovery lies more with my right hon. Friend the Chancellor of the Exchequer. As I said, it is primarily for the Government to create the economic conditions in which recovery can take place. In the words of my right hon. Friend's amendment, that can best be done by controlling public spending, reducing taxation, relieving business of burdens, and, above all, getting inflation down. I congratulate my right hon. Friend the Chancellor on his success in achieving that aim, and agree that nothing must be done to jeopardise the progress made so far. I hope, however, that my right hon. Friend the Chancellor will take the earliest possible opportunity to reduce interest rates again. With inflation falling, the real level of interest rates is actually rising, which is adding to the difficulties facing my constituents.

I hope also that when interest rates fall again, that will be reflected in the rates charged by banks to small business men. I am concerned that too often they tell me that, despite the nine reductions in interest rates, the interest on their loans has not fallen accordingly--or that they have had to pay more in other charges.

The other essential requirement for recovery is continued control of public expenditure. In that, I agree absolutely with my hon. Friend the Member for Milton Keynes, South-West. It is understandable at a time of recession that the public sector borrowing requirement will increase. Although it is higher than I would like, I am reassured that it is less than the average under the last Government, and that it is this Government's intention to restore it to balance in the medium term. That will not be easy. It will require my right hon. Friend the Chief Secretary to the Treasury, like Ulysses, to lash himself to the mast and to fill his colleagues' ears with wax so that they do not succumb to the siren voices in favour of higher public spending.

If my right hon. Friend does that, and if the proportion of our gross domestic product taken by public expenditure can once again be reduced, allowing industry and the public to keep still more of the wealth that they create, then I am confident that, as the recovery gathers pace, the future for commerce and industry in my constituency and throughout the country will be bright.

6.34 pm

Mr. Richard Caborn (Sheffield, Central) : I congratulate the hon. Member for Colchester, South and Maldon (Mr. Whittingdale) on his impressive and sincere maiden speech. We all concur with the hon. Gentleman's remarks

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about his predecessor, and remember the moving occasion on which he first returned to the House after the horrific incident to which the hon. Gentleman referred. I have no doubt that we will hear a lot more about the hon. Gentleman's constituency. However, he need not concern himself about the Chief Secretary to the Treasury having to lash himself to the mast--many others will be doing that in the not-too- distant future. Nevertheless, I welcome the hon. Member for Colchester, South and Maldon to the House, and no doubt he will contribute to many debates in years to come.

It was interesting to hear the President of the Board of Trade admit that Britain is suffering the worst recession since the second world war. Unfortunately, he did not produce many solutions for tackling it. The right hon. Gentleman said that the House ought to consider the recession itself, the practical options available to the Government, and the world context. The depth of the recession has been highlighted by right hon. and hon. Members in all parts of the House. The seriousness of the situation emphasises the lack of Government foresight. Many of the people who watch this debate or who read it in Hansard will feel concern about the lack of Government initiatives.

I can offer the right hon. Gentleman practical options not only in terms of action taken centrally by his Department but regionally. If only the Government were prepared to give effect to subsidiarity in its true sense. We have heard from Government Members about monetary control but little about the real economy. There are many in the country who seriously want to tackle that aspect. In my own area, they include industrialists, academic institutions, local authorities, trade unions, and local communities. After surviving the recession of the early 1980s, which destroyed much of our manufacturing base, industry in my region became leaner and fitter, but in the current recession those enterprises risk going to the wall. That is true of many of the country's other industrial areas.

I hope that the President of the Board of Trade will in the first instance consider public expenditure. Expenditure by the Department of Trade and Industry, Ministry of Defence, and Department of Transport in the south- east of England is £546 per head of population, whereas it is only £248 in the north. At a time when resources are scarce, there ought to be more equity in the way that they are distributed.

Many parts of the United Kingdom attempting to grapple with the serious problems that confront them receive little support from central Government. Last Friday's announcement about the streamlining of the DTI is itself welcome, but in terms of overcoming regional problems it will offer few, if any, advantages. Although people may argue in the macro sense about interest rates--and the right hon. Member for Shropshire, North (Mr. Biffen) made a compelling argument, which I hope is taken on board--the exchange rate mechanism and the City's short-termism should also be considered.

The Government could do much to assist the entrepreneurial spirit in the regions, and to create a climate in which that spirit can operate, without necessarily creating a climate of intervention, or adopting a hands-on approach. The DTI should give serious consideration to the partnerships that are developing in the regions, thus enabling them to operate more effectively and to initiate their plans for local economies. The Government and, in

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particular, the DTI are obstructing and stifling the development of ideas in regions. It was, I believe, the Audit Commission that described the DTI's actions as a programme overload in a strategic vacuum.

I trust that I have spoken briefly, although Front-Bench Members are looking daggers at me. Let me conclude by expressing the hope that, as the Secretary of State travels around the country, he will take seriously, in an entirely non-partisan way, the ideas that are currently being expressed. People are genuinely trying to work in partnership, and to ensure that the industrial base--the real economy--gets back into first gear. I hope that, when considering further reforms of his Department, the right hon. Gentleman will take that on board. His record and his writings lean in such a direction, and I hope that he has the guts and the determination to make certain that his wishes are carried out by the Department.

6.41 pm

Mr. Doug Henderson (Newcastle upon Tyne, North) : I assure my hon. Friend the Member for Sheffield, Central (Mr. Caborn) that, at this point in the calendar of the parliamentary Labour party, Front-Bench Members do not look daggers at anyone.

The motion has given rise to a good debate in the short time available. We have heard some eloquent maiden speeches from the hon. Members for Milton Keynes, South-West (Mr. Legg) and for Colchester, South and Maldon (Mr. Whittingdale), and a "return maiden speech" from the hon. Member for Halesowen and Stourbridge (Mr. Hawksley). We also heard an excellent speech from my hon. Friend the Member for Feltham and Heston (Mr. Keen), who was generous in his praise of his predecessors in both parties, and showed great understanding of the problems that face industry and those who work in it. Middlesbrough's loss is Feltham's gain, and long may it remain so. We also heard interesting speeches from the right hon. Member for Shropshire, North (Mr. Biffen), the hon. Member for Southwark and Bermondsey (Mr. Hughes) and my hon. Friends the Members for Coventry, North -West (Mr. Robinson), for Preston (Mrs. Wise) and for Sheffield, Central. In a speech of the highest quality, my hon. Friend the Member for Dunfermline, East (Mr. Brown) outlined the case for an industrial policy. In the speech that followed it, the right hon. Member for Henley (Mr. Heseltine) admitted that the present recession was the deepest that the country had experienced since the war. I do not know whether that was a boast or a complaint, but it was significant that the right hon. Gentleman should make comparisons with Malaysia and Poland rather than comparing Britain with the great nations of Germany and the United States, as he might have done in the past. People in this country know that unemployment has now reached 2.6 million and has been rising for 24 consecutive months-- a tragedy that has caused deprivation and hardship in all walks of life and all regions of the country. In my own region, north-east England, 153,000 people are now out of work ; most alarming of all, 35 per cent. of all manufacturing jobs have been lost between 1979 and 1992. Output is now below the 1988 level, and

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--if this morning's forecast by Ernst and Young is correct--the 2.6 per cent. fall in output in 1991 will be followed in 1992 by a further fall of 0.6 per cent.

Manufacturing output has fallen for seven consecutive quarters. Business failures were up by 32 per cent. in the first six months of this year, and mortgage repossessions were at an all-time high. Hon. Members on both sides of the House will know of the pain and hardship that that has caused families throughout the country, because of the increasing number of people who have come to their surgeries to complain.

Most critical of all at this time of deep recession is our serious trade deficit. Is not that the most telling statistic of all? More successful industrial economies with stronger manufacturing bases show, at the very least, a major improvement in their balance of trade at a time of recession, and many run a trade surplus as the demand for imports falls ; yet, after two years of deep recession, the British economy now has a projected deficit of £10 billion for 1992.

I take issue with the right hon. Member for Henley on two points. First, he said--if I understood him correctly--that the world recession has been a major contribution to Britain's difficulty in achieving recovery by means of an export drive. The right hon. Gentleman has missed the point. As Britain was in recession first, we should still have been able to increase our exports more than we did before other countries, in Europe and elsewhere, went into recession. The right hon. Gentleman would do well to face up to the fact that our real problem is our lack of supply-side competitiveness : that is what has prevented us from improving our balance of trade.

Secondly, I believe that the right hon. Gentleman was both wrong and complacent in saying what he did about world trade in manufactured exports. Britain's position improved under a Labour Government : its share rose from 7.4 per cent. in 1974 to 7.9 per cent. in 1979, and subsequently fell to 6.4 per cent. in 1990 under a Conservative Government. That is a telling statistic.

Does not our trade deficit tell us, very sharply, that our industrial base is so weak that we cannot even meet our domestic demand for many industrial products? Does it not tell us that there has been no supply-side miracle-- that we still have all the problems of under-investment, lack of training, lack of export assistance and inadequate infrastructure? Most damaging of all, does it not tell us that any upturn in the economy--and we all want an upturn--is likely to be halted quickly when a further surge in imports of industrial products that we can no longer produce leads to more

balance-of-payments problems, and they in turn lead to a further policy of deflation in an effort to control inflationary pressures in the economy and to hold the currency?

In the past, the right hon. Gentleman has acknowledged the formidable nature of the task faced by British industry. I want to be fair to him : he has been recognised by hon. Members on both sides of the House as a man with the courage to face up to the nation's problems. He has shown courage in Cabinet--not to be dismissed lightly just because it was a little over- focused on the question of helicopters. He has shown courage in the wilderness, displaying enormous fortitude in the dark ages of 1985-86 and carrying his message to countless dimly lit church halls and civic centres. He was then in competition with Jeffrey Archer in the great battle of the chicken-leg suppers. The right hon. Gentleman's publisher has told me, with some

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chagrin, that, although the right hon. Gentleman may have edged ahead in the battle of the chicken legs, he could not match the about-to-be-ennobled Jeffrey Archer in the battle of the autographed paperbacks.

The right hon. Gentleman showed courage in his comeback. When he realised that he needed a new legend, he cried from the same dimly lit church halls, "You Margaret, me thinker." Where is that thinking now? Where is the thinking that was contained in the book that the right hon. Genlteman published in those dark, dark ages? Where are the strategies, the policies and the measures to help industry? Where is the firm action to rebuild our industrial base? Where is the right hon. Gentleman's British solution now? Surely he does not claim that the shuffle of desks announced on Friday addresses the issues that he identified previously.

Industrialists--people who work in industry and have experienced the damage done to their businesses and jobs--want to know when the President of the Board of Trade will preside. When will he preside over tax allowances to help companies to invest in new equipment? When will he preside over the establishment of an English development agency, to which he was previously committed? When will he preside over the establishment, or rather re- establishment, of a body like the National Economic Development Office, which could provide a real forum for partnership discussions--where industry and the world of science and technology could sit down independently to discuss Britain's problems with Government, and to tackle the problems of competitiveness, market share and export potential? Does the Secretary of State support the need for a body such as the National Economic Development Office, or is he caught up in the same revenge or the same spite as the Treasury which, rather than deal with the problems that have been thrown up by the NEDO reports, has sought to shoot the messenger?

Many people have lost their businesses and jobs as a result of the recession. Both those who have lost their jobs and those who still struggle to provide the nation's wealth know that further damage to industry could still be caused by present policies. They know that lack of investment has often left their businesses and jobs uncompetitive ; they know that there has been no supply-side miracle in the economy ; they know that industrialists abroad get real support from their Governments to help them undertake research and development, invest in new equipment, and make sure that the work force is highly skilled.

Our industry could have the same support, but that will demand honesty by the Government about the difficulties that industry faces. It will demand determination by the Secretary of State to build a partnership with industry to meet the challenges of the 1990s and genuinely to modernise the supply side of our economy. It will demand policies to avoid another plunge into further recession. It will demand that the Secretary of State does not timidly serve his parole in Cabinet in permanent hock to the post- Thatcherites in the Treasury. These are reasonable and realistic demands. The House should support them.

6.51 pm

The Minister for Industry (Mr. Tim Sainsbury) : This has been an important debate, for three reasons. First, it has given the House an opportunity to hear some fine maiden speeches. Secondly, it has provided a constant reminder to us of the importance of controlling inflation. The control

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of inflation is the key to sustainable economic recovery and to international competitiveness. Thirdly, it has provided us with some indication of the ideas--or perhaps I should say lack of them--of the Labour party on industry.

I pay tribute to the excellent maiden speakers. My hon. Friend the Member for Halesowen and Stourbridge (Mr. Hawksley) will perhaps forgive me if I include him among them. We welcome him back to the House. I particularly appreciated his tribute to his predecessor. The hon. Member for Feltham and Heston (Mr. Keen) also paid a nice tribute to his predecessor in the witty first part of his speech. My hon. Friend the Member for Milton Keynes, South-West (Mr. Legg) deserves to be congratulated on the skilful way in which he overcame the handicap that he identified of being a new Member for a new seat in a new town. He, too, paid a generous tribute, not just to half his predecessor but to the whole of his predecessor. He made some interesting comments on the economy which I am sure all those who did not hear his speech will want to read.

My hon. Friend the Member for Colchester, South and Maldon (Mr. Whittingdale) paid a particularly moving tribute to his predecessor, whom we are delighted to know is now helping us from another place. He added a miniature, albeit interesting, history lesson, although I am not sure what conclusions we should draw from it.

The House always expects, and always gets, a thoughtful and interesting contribution from my right hon. Friend the Member for Shropshire, North (Mr. Biffen). He will appreciate it, I know, if I say that I do not always agree with him, even on the subject of interest rates, but he knows all too well that my right hon. Friend the Chancellor of the Exchequer keeps interest rates always under review. There are, however, many implications in making changes in interest rates, particularly for inflation. If I followed the view of my right hon. Friend the Member for Shropshire, North on the exchange rate mechanism, I fear that there would be implications not only for inflation but for inflationary expectations.

We are well aware that lower interest rates could help industry, but I am sure that we all agree that consistently low inflation is more important. Among other things, it is the key to improved productivity. During the 1980s, substantial progress was made on productivity. It grew faster in Britain than in any other major industrial country, after decades when our record has been quite the contrary.

We tend to think of inflation most in the context of the general level of prices and the disastrous effect that high inflation can have on our international competitiveness and exports. That is certainly important, but it is by no means the only reason why keeping inflation down is vital for industrial success. Investment decisions are always difficult. I know that from my own experience in industry. They require not just an analysis of facts and figures but judgment.

Judgments are made more difficult and the outcome of investment decisions more unpredictable the higher the rate of inflation and the greater the difficulty of forecasting the costs--particularly the cost of investments, of which there are many, that take several years to complete before products are ready to be sold in the marketplace. The larger the scale of the investment, the longer the time scales involved, the more difficult the judgment becomes, if we have high inflation. Therefore, we have to make sure that we control inflation. That is the only way to avoid

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deterring investment and to ensure that good investment decisions are made. High rates of inflation erode the purchasing power of wage packets. That in itself can lead to industrial unrest, as we were all too frequently reminded during the period in office--now, happily, a fairly distant memory--of the Labour party.

There has been general recognition throughout the debate of the severity of the recession. Conservative Members recognise that it is an international phenomenon and that there are no quick fixes. The hon. Member for Southwark and Bermondsey (Mr. Hughes) recognised that there are no quick fixes, but I am not sure that he carries his party with him. I suspect that some members of his party have always been addicted to quick fixes.

The hon. Member for Dunfermline, East (Mr. Brown) called, as he often does, for a regional policy. He never says what a regional policy is meant to be, nor does he recognise what our regional policy is now doing to help the various areas. The hon. Member for Sheffield, Central (Mr. Caborn) also referred to that point. The current assisted areas map-- [Interruption.]

Madam Deputy Speaker (Dame Janet Fookes) : Order. There is an undercurrent of conversation on both sides of the House. It makes it difficult for me to hear the Minister, and that I wish to do.

Mr. Sainsbury : Thank you, Madam Deputy Speaker.

I was about to say that the current assisted areas map--the map that identifies the areas which receive regional assistance--was drawn in 1984 and covers some 35 per cent. of the working population : 15 per cent. in development areas and a further 20 per cent. in intermediate areas. I hope that even the hon. Member for Dunfermline, East agrees that in the intervening seven and a half years British industry has gone through major changes. As one would expect, the effect of those changes on employment opportunities has not been uniform throughout all the regions. After such an interval, therefore, it must be appropriate to review the assisted areas map to ensure that it remains effectively focused on the areas of greatest need. As the House will know, we have issued a consultation paper which confirms that measures relating to unemployment will continue to be the major component in the review, although other factors will also be considered. Our intention is to reach conclusions on the review later this year. I shall make the results known to the House at the appropriate time. Our assisted areas map, like those of other European Community countries, is subject to clearance by the European Commission. A new map should therefore be in place in early 1993. The Government are conscious that assisted area status is important to many local and regional bodies that are concerned with economic regeneration. We have decided, therefore, as part of the review, to consult as fully and widely as possible. We have invited local and regional bodies that wish to do so to make representations before the end of September. I assure the House that we take such consultation very seriously and that we shall listen carefully to any points that are put to us. The Government remain committed to an effective, properly targeted regional industrial policy.

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The third benefit of this important debate was the reminder that it gave of the views of the Labour party. We heard outdated ideas, with which we are familiar, and antiquated policies. My right hon. Friend the President of the Board of Trade eloquently and powerfully reminded the House of them. He said that, even among Labour Members, some doubt is creeping in about those outdated ideas and antiquated policies. Some of those doubts were expressed. I suspect that the hon. Member for Dunfermline, East may think that we heard too much. Again, we heard nothing about the alternatives. It is no wonder that the hon. Member for Dunfermline, East did not remind us of the extraordinarily toxic--perhaps lethal--cocktail of policies that the Labour party proposed for British industry in the election : higher taxes to deter entrepreneurs and investors and to frighten away inward investors, and the abolition of the reforms of the trade union laws that have been of such benefit to industrial relations and investment.

As always, we heard from Labour Members about red tape, regulation, quangos and committees too numerous to mention. However, worst of all, although it is not often mentioned now, we heard about the minimum wage. Everybody knows that that would have destroyed jobs and increased unemployment.

I cannot say that we cannot wait to hear what changes might emerge from the moving of chairs in the Labour party, but, happily, I can say that the electorate has ensured that we do not have to worry about those ideas and that industry does not have to worry when it recovers from the recession. I therefore urge the House to reject the motion and accept the amendment.

Question put, That the original words stand part of the Question :--

The House divided : Ayes 262, Noes 301.

Division No. 50] [7.02 pm

AYES

Abbott, Ms Diane

Adams, Mrs Irene

Ainger, Nicholas

Ainsworth, Robert (Cov'try NE)

Allen, Graham

Anderson, Donald (Swansea E)

Anderson, Ms Janet (Ros'dale)

Armstrong, Hilary

Ashdown, Rt Hon Paddy

Ashton, Joe

Austin-Walker, John

Banks, Tony (Newham NW)

Barron, Kevin

Battle, John

Bayley, Hugh

Beckett, Margaret

Beith, Rt Hon A. J.

Benn, Rt Hon Tony

Bennett, Andrew F.

Benton, Joe

Bermingham, Gerald

Berry, Roger

Betts, Clive

Blunkett, David

Boateng, Paul

Boyce, Jimmy

Boyes, Roland

Bradley, Keith

Bray, Dr Jeremy

Brown, Gordon (Dunfermline E)

Brown, N. (N'c'tle upon Tyne E)

Burden, Richard

Byers, Stephen

Caborn, Richard

Callaghan, Jim

Campbell, Mrs Anne (C'bridge)

Campbell, Menzies (Fife NE)

Campbell, Ronald (Blyth V)

Campbell-Savours, D. N.

Cann, Jamie

Chisholm, Malcolm

Clapham, Michael

Clark, Dr David (South Shields)

Clarke, Eric (Midlothian)

Clarke, Tom (Monklands W)

Clelland, David

Clwyd, Mrs Ann

Coffey, Ms Ann

Cohen, Harry

Connarty, Michael

Cook, Frank (Stockton N)

Cook, Robin (Livingston)

Corbett, Robin

Corbyn, Jeremy

Cousins, Jim

Cox, Tom

Cryer, Bob

Cummings, John

Cunliffe, Lawrence

Cunningham, Jim (Covy SE)

Dalyell, Tam

Darling, Alistair

Davidson, Ian

Davies, Bryan (Oldham C'tral)

Davies, Rt Hon Denzil (Llanelli)

Davies, Ron (Caerphilly)

Davis, Terry (B'ham, H'dge H'l)

Denham, John

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