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I got the impression that the right hon. Gentleman was more interested in convincing his hon. Friends of the merits of what he was saying than anything else. He was certainly anxious to get the support of the Euro-sceptics on the Benches behind him for whatever motion is finally put before us.I do not think the Foreign Secretary convinced many of his hon. Friends. He might have convinced the hon. Members for Cirencester and Tewkesbury (Mr. Clifton-Brown) and for Stamford and Spalding (Mr. Davies), who both supported the right hon. Gentleman's position. But the Foreign Secretary was a long way from satisfying other of his hon. Friends, including the hon. Members for Southend, East (Sir T. Taylor), who spoke in interventions, for Colchester, North (Mr. Jenkin) and for Aylesbury (Mr. Lidington), who did not appear to take quite the same Euro-sceptic line as some of his hon. Friends. As we listened to contributions to the debate by Conservative Members, we heard two different views emerge. On the one hand, the Government view of the social chapter was that it was dreadful, that it had to be resisted and that the only way to resist it was via the opt-out of the Maastricht treaty. On the other hand, we heard the strong view that the opt-out was a waste of time because the social measures could be enforced via existing treaties and treaty obligations.
Mr. Jenkin : I must correct the hon. Lady. I do not think any of my hon. Friends have said that the opt-out is a waste of time. We are simply seeking to demonstrate that the Government claim that the Maastricht treaty will avoid intrusive legislation, the mandate on which they conducted the Maastricht negotiations-- [Interruption.] I stand corrected if I recall the position incorrectly. Our worry is that the lessons of the Single European Act have not been learned and that the Maastricht treaty could make matters worse.
Ms Quin : I am far from convinced. I listened with interest to the hon. Gentleman's speech tonight, having listened to him on a previous occasion, when we were debating amendment No. 27. He then said little in favour of the social opt-out and much about how inevitable the social measures would be, whether or not we had an opt-out. That message came across clearly from several of his hon. Friends, so I cannot regard his most recent comments as persuasive.
Euro-sceptics on the Government Benches say that the opt-out will not have much effect. Meanwhile, supporters of the Government line say that the opt- out is necessary, and they congratulate the Government on having achieved it. But the hon. Member for Harrow, East (Mr. Dykes) was the exception. While he has supported the Government strongly in their European policies, he conceded that there is already a commitment to the social dimension under existing treaties, perhaps making the opt-out less effective than the Government claim. [Interruption.] I gather from the demeanour of the hon. Member for Colchester, North that his hon. Friend was agreeing with some of his comments. Even so, the hon. Member for Harrow, East dealt with the matter from an entirely different perspective, and he is troubled by the fact that the Government's social opt-out is putting Britain at a distance from its European social partners in an important area of policy. That is also worrying the former
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Prime Minister, the right hon. Member for Old Bexley and Sidcup (Sir E. Heath), who has spoken in favour of the social chapter and has cast doubts on the Government achieving the opt-out.The Foreign Secretary tried to make a strong case against the social chapter. That case was not convincing, not just to many of his hon. Friends but to all who spoke from the Opposition Benches. The right hon. Gentleman again claimed that the social chapter would be a huge burden on business, yet he produced little evidence to support that claim.
His hon. Friend the Member for Mid-Staffordshire (Mr. Fabricant) tried to make a helpful intervention by referring to Nissan, even though he must have overlooked the views of that company's managing director, given recently to the Select Committee on Employment, when he said clearly that the social chapter was in no way a problem for Nissan and that the company, operating in Sunderland, already complied with the various requirements of the social chapter and the social charter and saw no difficulty in Britain being a fully paid-up member of the social chapter. That view must be made loud and clear. Government supporters referred at length to the question of inward investment and agreed with comments reported to have been made by Jacques Delors about the United Kingdom being a paradise for inward investors if it did not have the various attributes of the social charter and the social chapter. On that issue, I do not agree with Jacques Delors, and recent evidence shows that inward investors would not be deterred by the United Kingdom's being part of the social chapter. I refer hon. Members to an interesting recent publication from the Organisation for Economic Co- operation and Development, "Financial Market Trends".
Mr. Duncan-Smith : The hon. Lady said that inward investors would not be deterred if we were to participate in the social chapter. That is not the key question, which is whether they would be encouraged by this country being exempted from the social chapter.
Ms Quin : My own contacts with Nissan have provided me with no evidence to suppose that that is so. The publication that has recently been produced by the OECD studies trends of direct inward investment in different European Community countries in the past two or three years. It contains the following sentence, which seems a surprising one, given the claim of Conservative Members during today's debate and on earlier occasions :
"On the recipients side, France was the notable exception to the general slowdown registered among OECD Member countries. Inflows to France grew faster than outflows, and for the first time foreign direct investment in France is larger than French investment abroad".
In 1992, our Government were constantly criticising the French Government for their attachment to European social issues and their commitment to the European social chapter. The facts as outlined by the OECD seem to prove the exact opposite of what Conservative Members have been trying to prove in the debate. That point must be made loud and clear.
The Foreign Secretary was wrong when he talked about the costs of employee protection. He seemed to fail to see any advantages in employee protection. He claimed that it destroys jobs, but that does not fit in with what happened
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in Britain in the 1980s, when unemployment rose dramatically precisely when the Government were weakening various aspects of employee protection. The fact that we have lower levels of employee protection does not seem to stop us having the fastest rising unemployment in Europe at present.9 pm
Mr. Jenkin : If the hon. Lady looks at the employment rates she will draw a different conclusion.
Ms Quin : No, I do not think that I shall. I have looked at the figures and it is clear that over the past couple of years unemployment in the United Kingdom has risen faster than it has in any other European country. Another hon. Member referred to the welcome drop in unemployment today, but that does not alter the figures for the past two years, however much Conservative Members might wish that it did.
Dr. Liam Fox (Woodspring) : As the hon. Lady specifically mentioned France, will she say why Hoover decided to relocate in Scotland, not France? I believe that it is the first of many companies that will do so if we stay out of the social chapter and France remains party to it.
Ms Quin : I do not know whether the hon. Gentleman was present for the Foreign Secretary's speech, but the Foreign Secretary rightly said that the movement of jobs was a two-way process. He acknowledged that it was not a simple trend that could be explained by a simple reason. Certainly, although there was not nearly as much publicity about it, there was a transfer of jobs by Nestle from this country to Dijon shortly after the transfer of Hoover jobs from Dijon to Cambuslang. We must take account of all the factors, not isolate and oversimplify a complex matter.
Many of us feel that one of the main aspects that help a company to decide where to invest is the availability of skilled labour. We must also bear that factor in mind when considering inward investment flows. I am keen for inward investment to continue and I hope that we shall have the right conditions for inward investment in future. If one listens to Nissan and looks at the records of other Japanese countries that have invested in this country, one sees that they all have better social protection than is envisaged in the social charter. That reason blows an enormous hole in the arguments advanced by the Government.
Some hon. Members have today rightly referred to the untenable position of British multinational companies which will operate in the single European market and will be affected by the other 11 countries' social policies. That will make it difficult for this country to stand aside. I cannot believe that it will be feasible for British firms that employ people in a great many other European countries to operate an entirely different system in the United Kingdom from that which they operate in the other 11 countries. I am glad that the Foreign Secretary said that a social dimension was important in Europe. However, I am sorry that he went on to say that it was important only in a general way, and that it was not important to back it up with specific commitments and regulations. I felt that perhaps the Foreign Secretary has been dealing with foreign affairs for too long, as he seemed to be out of touch with some of the working conditions in Britain today.
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I was glad that that point was made not only by my hon. Friends, but by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) when he spoke about conditions in the security industry. That is something that I can back up from my own experience in my constituency, where not long ago, for example, a job for a security guard was advertised at £1.85 an hour for a 70-hour week--working a great many hours in a difficult and dangerous job.That kind of statistic shows that there is, unfortunately, exploitation in Britain today. I believe that that exploitation is particularly strong in areas where unemployment is so high that people will go to almost any lengths, quite understandably, to get jobs. But the fact that unemployment is high is no excuse for appallingly low levels of social protection. That is something which we must also bear in mind.
The problem of poverty in Britain, which is very serious and increased during the 1980s, should ma subsidising employers who pay poverty wages. In the example quoted by the hon. Member for Inverness, Nairn and Lochaber, it was clear that the only way that people in the security industry can survive is by claiming family credit and income support in various ways. It is not right that good employers should be undercut by bad employers who benefit from these unfair subsidies.
It is a great shame that there was no recognition in the Foreign Secretary's speech or, indeed, in the speeches of other Conservative Members of the fact that high levels of social protection can help companies. I was reminded of that when I read this week a helpful booklet, which I think is produced by the Business in the Community organisation, entitled "Corporate Culture and Caring". In a few interesting case studies it shows that it is sensible for firms to have good maternity benefits and good child care provisions of various kinds to get trained workers back to work, because that costs employers far less than getting rid of people and then being forced to take them on again later. This, too, is an aspect that should be taken very much into account.
It is not good enough for the Foreign Secretary to talk only about unemployment or for the hon. Member for Stamford and Spalding to say that unemployment is the only problem that we face in Britain today. We have to see the twin evils of unemployment on the one hand and very poor wages and working conditions on the other, and if we do not tackle both of them the country will not be in a very happy or healthy position in the future.
I urge Conservative Members to read the recent report from the National Association of Citizens Advice Bureaux, which depicts very graphically some of the poor working conditions in Britain today. One of the aspects that the Foreign Secretary mentioned was unfair dismissal. He said that he was worried that under the social chapter such issues might be looked at on the European level. I should be delighted if the European Community looked at this area of policy, because it is clear that in no other European country do part-time workers have to work for five years for the same employer before they get any rights whatsoever with regard to unfair dismissal. That seems to me to be a distortion in the European market that is completely unacceptable.
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The Government, as we know, have played a deeply negative role in employment and social affairs matters in the European Community. They have blocked many of the social directives which Labour Members believe are important and would have been welcome additions to the body of European legislation. I refer to such measures as the directive to give employment protection to part-time and temporary workers- -a growing part of the British labour force. There is also the directive to give a parental leave entitlement during a child's first three years of life. Many other directives have been similarly treated.I suppose that, as time has gone on, the Government have become increasingly embarrassed by their isolation in Council meetings of Employment and Labour Ministers, because they have continually had to veto sensible proposals advanced by the other 11 countries. Perhaps because of that, the Government saw the Maastricht social opt-out as a way of ending their embarrassment and isolation. Henceforward, they would not be consulted about or involved in that sort of decision making.
The Government are incorrect, however, to think that they can spare themselves that sort of embarrassment. As my hon. Friends have pointed out, whatever happens, we cannot hope to enjoy some sort of neat isolation on social issues from the rest of the Community. That is just not possible. As the hon. Member for Inverness, Nairn and Lochaber said, it will cause a great deal of confusion and administrative difficulty which the Government have not taken into account.
As several Conservative Members have noted, there is also the possibility of the competition rules being invoked at the European Court, and other countries are likely to use certain aspects of European legislation against Britain if they believe that we are deriving an unfair advantage through the social opt-out.
Some Conservative Members have expressed the hope that the principle of subsidiarity will extricate the Government from the difficulties surrounding social policy. I tend to agree with my hon. Friend the Member for Derbyshire, North-East (Mr. Barnes), who described the flexible nature of the definition of subsidiarity--it seems to mean whatever people like it to mean. The Government define it as applying whenever they do not like some European measure. Then, they say, we should decide the matter at home. We do not find that very convincing.
I would not counsel the Government to entertain any hopes that subsidiarity can be invoked to spare them difficulties with social legislation. The conclusions of the Edinburgh Council meeting clearly stated that the social chapter had to be proceeded with and that there was no question of its being dismantled under the heading of subsidiarity. The Government are therefore in danger of being dragged along, all unwilling, on social matters, if they insist on pursuing the social opt-out avenue. It would be far better to be a fully participating member of the European Community and to take part in social affairs decisions than to be dragged through the European Court subsequently, which would serve only to weaken our position in the Community.
There is no doubt that our semi-detached status in Europe detracts inward investors. Ernst and Young have done an interesting study, surveying many of the United Kingdom's leading companies. It shows that the opt-outs agreed by the Government at Maastricht worry businesses and inward investors, who wonder about the scale of the
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Government's commitment to the EC and whether Britain will be a good base from which to operate if it does not offer proper access to the rest of the large internal market. The Government should take such worries seriously.If the Government accept our view and opt back into the social chapter, that will ensure an orderly and effective way of dealing with social issues. It will avoid the Government's being embarrassed and dragged unwillingly into decisions. Many hon. Members on both sides have tellingly described how that might come about. My hon. Friend the Member for Derbyshire, North-East made a worthwhile point about how the Council of Ministers dealing with social issues work. The problem is secrecy ; it is difficult to find out which way Governments voted on some issues. It is irritating for Members of this Parliament or of the European Parliament to be told in answer to questions that we are not allowed to know how Governments have voted, although the next day the answers to our questions are published in the newspapers.
9.15 pm
My right hon. and learned Friend the Leader of the Opposition and some leaders of our sister parties in the Community and outside it recently held a meeting at which my right hon. and learned Friend met the new Danish Social Democratic Prime Minister whose election we welcomed. Also present were party leaders from Norway, Sweden and Finland and the leader's representative from the Federal Republic of Germany. I welcome the agreement reached between my right hon. and learned Friend and his colleagues. That agreement was a way forward for the Community and a welcome change from the negative attitude that Ministers have adopted throughout our Committee proceedings. The attitude of my right hon. and learned Friend is indicative of the way that Europe should go on social and employment issues.
The communique of that meeting showed the importance not only of tackling employment but of a social dimension to safeguard Europe's achievements in social protection. That communique was issued on 5 April and stated that all the parties agreed that Europe must be more than just a market for business. It must be a community for people. That is why the social dimension is critical.
My right hon. and learned Friend and his opposite numbers agreed on the importance of unblocking some of the social initiatives that for years have been persistently blocked by the Government in the Council of Ministers. One of those initiatives was mentioned by the hon. Member for Colchester, North, who spoke about the European works council directive. He suggested that the matter would be pursued via the social protocol by the other 11 countries acting on their own. The Government will have to give some kind of view on this issue at the next official meeting of the European Council of Labour and Employment Ministers.
Perhaps the Minister of State will tell us about the attitude that the Government will adopt to those directives at the June meeting of the Council. The right hon. Gentleman seems to be sinking lower in his seat and avoids meeting my eye. I shall repeat my question, because three important directives are to be considered at that meeting. One will be a directive on works councils. Another will be
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on working time, which is of great interest to many British people who are forced to work long hours. Another confirms the directive on the protection of young people at work. Again, the Government have so far taken a negative view on that.I should like to hear from the Minister what attitude the Government are to take at the June Council of Labour and Employment Ministers on those three matters. What is not an option at the meeting is simply to postpone the matter. The Danish Prime Minister has said clearly that the Danish presidency wants to get agreement at that meeting on those three important directives as well as on other matters on which the Government might have an idiosyncratic view. It does not look as though the Minister will enlighten us this evening on the Government's view, so let me make it clear that we shall watch him closely on those matters because we believe that the three directives are very much in the interests of British people at work. It would be outrageous if the Government went along to the Council in June and simply blocked them. The Government might try to block them in the hope that the other 11 member states would simply go on by themselves once the Maastricht treaty is ratified and agree the directives by majority vote. Again, it would be foolish to go down that route as, eventually, other European Governments will complain that the United Kingdom's action distorts competition within the Community and effectively makes the operation of the single European market--all along the Government have said that they are keen on that--difficult to work in practice. We hope that the Government will take a positive view on those issues.
Perhaps the Government would also like to tell us what view they will take at the European summit at Copenhagen on these matters.
The Chairman of Ways and Means (Mr. Michael Morris) : Order. The hon. Lady is stretching new clause 74 rather extensively.
Ms Quin : I have given the Minister a great deal of food for thought and I am sure that we all look forward to hearing the detailed response that he will make to the points that I have raised.
My hon. Friend the Member for Wallsend (Mr. Byers) said, a few hours ago, that for us the Maastricht treaty and the social charter go together and I entirely concur with that view. My hon. Friends have also said that it would be reprehensible for the Government, if they are defeated and the House agrees to the motion accepting the social chapter, to thwart the will of the House. That message needs to be made clearly. Whatever legal niceties the Government might want to take refuge in, their position would be politically and morally untenable if they decided to ignore the will of the House as expressed in such a motion.
The arrogance of a Government who were prepared to go to such lengths in such a matter would be punished not only by political opinion in the House but by the country as a whole.
Question put and agreed to.
Clause read a Second time, and added to the Bill.
The Chairman : Order. Before I put the final motion, I should like to place on record my thanks for the support that I have had from the two Deputy Chairmen, the hon. Members for Pontefract and Castleford (Mr. Lofthouse)
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and for Plymouth, Drake (Dame J. Fookes). The Committee has sat for 163 hours, 131 hon. Members have made speeches, and a further 30 have contributed by way of points of order, making a total of 161.Mr. Garel-Jones : On a point of order, Mr. Morris. At this historic moment, I should like to say a few words on behalf of all members of the Committee. You have just given us some statistics. No doubt the parliamentary "Wisden" experts will, in the coming weeks, let us know whether we have broken any records.
There are two things which I am sure that the whole Committee would like me to say. First, when we come into this House, none of us knows what fate holds in store for us. You, Mr. Morris, have achieved the position of Chairman of Ways and Means. I dare say that from time to time a number of your constituents ask themselves exactly what contribution it is that you make to the House of Commons since you are unable--as are all other hon. Members, because of their position either as Front Bench spokesmen or as Back Benchers--to make the kind of contribution that your constituents often expect you to make. I am sure that the whole Committee supports me when I say that your constituents should be under no illusions whatever, for you are making, and have made, a very distinguished contribution to the House of Commons by the way in which you have conducted yourself and by the way in which you have looked after all of us throughout this Committee stage. I am sure that all hon. Members will also wish to join me in thanking Mr. Lofthouse and Dame Janet for the way they looked after us when they occupied the Chair.
Secondly, you have alluded, Mr. Morris, to the number of right hon. and hon. Members on both sides of the Committee who have contributed to the debates. The hon. Member for Hamilton (Mr. Robertson) is, according to some right hon. and hon. Members, in collusion with me. I see him nodding gravely. Alas, the collusion that I should like to see between the Treasury Bench and the Opposition Front Bench has not taken place quite so fully as I should have liked. Nevertheless, I know that the Committee will wish me to say that the hon. Member for Hamilton has been a regular and distinguished attender of these proceedings.
As for the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), his position on this Bill and on the European Community is different from that of the Treasury Bench and the Opposition Front Bench and, certainly, from that of the other friendly alliances that have existed across the Committee. The hon. Gentleman's party and he himself have held a consistent and honourable view on Britain's position in the European Community, though it is not one that I share.
And so we conclude our consideration of the Bill. Time will tell whether we have broken any records. I have been asking myself what this Bill will be called when, as I believe it shortly will, it becomes an Act. I am told by my officials that its official name will be the European Communities (Amendment) Act 1993. I very much hope that its date will be 1993. I am also told by my officials that, although that will be the official name of the Act and how it should be cited legally, hon. Members are perfectly entitled to call it anything they like. After the number of hours that we have put in, I dare say that hon. Members will have a number of ways of describing the Act and I would not wish to speculate on them.
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As the Minister of State in charge of the Bill, may I say--I know that my right hon. Friend the Foreign Secretary joins me in this--to all members of the Committee how much I, too, have appreciated the friendly and courteous way in which we have handled the proceedings. If I could introduce a harmonisation measure through the Commission, I should like, without presumption, to introduce one which enabled other Parliaments of the Community to scrutinise European Community legislation in a way which incorporated the interest that hon. Members in all parts of the Committee have taken in the proceedings on this Bill. If there could be more of that spirit throughout the Community, it would be a much better place. Thank you very much, Mr. Morris, on behalf of us all.Mr. George Robertson : Further to that point of order, Mr. Morris. I crave your indulgence in adding a few words to those of the Minister of State in charge of the Bill. I believe that all Opposition parties agree very much with what he said. We are grateful for the understanding and patience that you and your deputies have shown during the 163 hours of debate. If 161 Members have spoken for 163 hours, the average time must be rather peculiar, given that some Members have taken slightly more than the average. Nevertheless, that is a formidable record for those who have had to sit through all that time, those who have had to chair the Committee, stay awake, stay at attention and keep it in order. We are duly grateful for that. 9.30 pm
I also endorse what the Minister of State said, although perhaps I should be very wary of endorsing too much of what he says lest people begin to talk, although I suppose that speaking in the Committee stage of the European Communities (Amendment) Bill is as close to speaking off the record as one can get in Parliament. The Minister is right to say that there has been a friendly atmosphere on what is still a controversial Bill, with a number of hurdles still to come. Throughout the Committee stage there has been an element of frankness, of friendliness and of courtesy, to which we should pay tribute. It is only right to explain at this stage why my hon. Friend the Member for Gateshead, East (Ms Quin) was coming in for some nervous criticism towards the end of her speech. That was entirely my fault, because I had asked her if she would keep speaking until I told her to stop, so that I could complete a task which had to be finished before the end of our proceedings. I then handed her a note of the time for which she has already spoken--28 minutes. My hon. Friend believed that I was asking her to speak for a further 28 minutes and, displaying great skill, while continuing to speak she pencilled the words "No way" at the bottom of my note. So loyal is my hon. Friend, however, that she kept on speaking until the message eventually got through. I take all the blame for that, and no criticism should be attached to my hon. Friend.
Having sat through the Committee stage of the Single European Act as well as the Committee stage of this Bill, I am reminded of one of my favourite quotations from Oscar Wilde :
"I have never much admired the courage of the lion tamer ; after all, inside his cage he is at least safe from other men". I congratulate you, Mr. Morris, and offer you and your deputies our thanks. I am sure that when you are outside
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the cage, come next Monday, you will look on the Committee proceedings on the Bill with nostalgia but, I dare say, with little regret.Bill reported, with amendments ; as amended, to be considered tomorrow.
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Import Substitution
Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Arbuthnot.]
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Mr. Nicholas Winterton (Macclesfield) : I am most grateful to Madam Speaker for allowing me this important debate in which to raise my deep concern about the erosion of our manufacturing base and the United Kingdom's severe imbalance in trade in manufactured goods. I believe that those two problems can be tackled effectively by my proposals for import substitution. I am delighted to see my right hon. Friend the Minister for Industry in his place, and I consider it a great honour that he has decided to answer this Adjournment debate.
As the House knows, with a number of my parliamentary colleagues I have recently launched the Manufacturing and Construction Industries Alliance, which has received messages of support from the Leader of the Opposition, from the leader of the Liberal Democrat party and, of course, from my right hon. Friend the Prime Minister. My right hon. Friend sent the following message to the alliance on the occasion of its launch :
"I am sure the Alliance will argue the case for manufacturing industry with vigour in the years ahead. I look forward to its dialogue with Government in this important cause."
It is clear that the Prime Minister is aware of the importance of our manufacturing and construction industries to our economic recovery. I believe that he shares my view that manufacturing industry is the only real source of non-inflationary economic growth, and that we neglect it at our peril. I believe, Mr. Morris--I am sorry, Mr. Deputy Speaker : I am so used to seeing you in your guise as Chairman of Ways and Means, presiding with distinction over the Committee stage of the European Communities Bill, that I inadvertently called you by the wrong name. Anyway, I believe that the Prime Minister may see what he can do to reverse the decline in that sector of our economy in the years to come.
I must stress that, in this debate--which I consider to be part of that dialogue--I do not use the term "import substitution" in any protectionist sense. I am far from isolationist ; I want more trade, not less. May I refer again to the debate that preceded this one? My horizon is well beyond the boundaries of the European Community--even the expanded boundaries of that Community. I believe that we need to look to North America and, increasingly, to the Pacific rim, where the fastest economic growth in the world is taking place. Many countries in that area are well disposed towards the United Kingdom and keen to buy its products, and my right hon. Friend's Department is already giving much more emphasis to those countries.
None the less, the position is dire. During the 1980s, the manufacturing sector lost 2 million jobs, which is probably costing the country--the taxpayer and the Exchequer--£18 billion. That is a major part of the deficit of which we currently hear so much. Between 1990 and 1992, manufacturing output dropped by a further 6.5 per cent. ; between 1971 and 1991, the manufacturing share of gross domestic product shrank by more than 10 per cent., while--as the House knows only too well--our trade balance has fallen dramatically into severe deficit.
The need for action to stop the decline was rightly identified recently by the Engineering Employers
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Federation in its industrial strategy document, which called for a twin-track approach to economic growth, first through immediate action to rectify the balance of payments deficit and secondly by continuing long-term development of technology, skills and industry. In the short term, there is an immediate need for increased competitive capacity for exports, and for import substitution. New capacity can be installed either by established United Kingdom companies, or by inward investors in activities in which buildings and equipment can readily be obtained, and staff can be recruited and trained quickly. Such opportunities will continue to be internationally mobile as companies seek the greatest productivity for the lowest cost. I am sure that my right hon. Friend the Minister agrees with that.In the short term, therefore, the exchange rate must be at a level that is competitive for internationally mobile activity. Government must increase support for our exports. Permanently improved capital allowances would be a major stimulant to investment. That view is widely shared in industry, particularly by the Engineering Employers Federation.
That aim can be achieved by increasing the after--tax rate of return and by improving the availability of funds for investment. At the same time, transport and communications infrastructure investment will be required. That is why, in its pre-Budget representations, the alliance called specifically for the introduction of 100 per cent. capital allowances, a commitment to lower interest rates and a competitive sterling, greater support for exporters and greater public investment in partnership with the private sector in infrastructure development.
The House--and I personally--welcome the additional help that the Department of Trade and Industry has given to our exporters through larger sums being available to the Export Credits Guarantee Department and by more competitive premiums. However, as my right hon. Friend is aware, those premiums are not as yet as competitive as Hermes and Kopas, which are two of our major competitors. In the longer term, competition only on cost would leave British manufacturers increasingly competing against developing countries rather than advanced eonomies. Our products would be competitive only by selling at an ever lower price and at lower prices. We would therefore become unable to support our advanced-country living standards. No doubt my right hon. Friend is aware of that. In order to create the climate for import substitution, we must therefore continue to invest heavily in research, product development, education, training and equipment procurement. It might help the House if I were to put the principles that I have articulated into the context of just one industrial sector with which, as some hon. Members will be aware, I am familiar : the clothing and textile industry.
The clothing and textile industry has an annual turnover of £15 billion. It has exports of £4.8 billion annually, and it still employs, despite the dramatic reduction in employment, 400,000 people. However, as we all know, it faces intense import competition. In 1992, imports reached £8.6 billion--up 7 per cent. The trade deficit in textiles and clothing was almost one third of the total national deficit. We are talking about very large sums.
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It is glaringly obvious to me that we need to reduce the percentage of our markets that are supplied by imported goods, not--I repeat strongly--by erecting protectionist barriers to trade, but by a three-pronged approach. That approach is, first, to ensure that foreign producers do not receive hidden subsidies and that products are not dumped in this country at unrealistic prices. As we all know, free trade must be fair trade.Secondly, it should be to identify the areas in which imported goods could effectively and realistically be produced in this country and to ensure that relevant manufacturers and sectors of our economy are made aware of those opportunities.
Thirdly, public and private sector purchasers should be aware of the range of products available from domestic producers and be reminded of the real, but hidden, costs that are involved in purchasing overseas, not only in respect of our balance of trade, but in relation to the jobs that are lost and the loss to the Exchequer in tax from individuals and in corporate taxation from the companies or firms in question. That is a very important matter.
The level of sterling makes import substitution and increased exports more feasible. As my right hon. Friend is aware, industry is making strenuous efforts to rise to the challenges and opportunities that are currently presenting themselves. Further improvements are being made in production. For example, the Apparel, Knitting and Textile Alliance estimates that the volume of output per head in the industries that it represents grew by more than 6 per cent. in 1992. That is a commendable achievement at a time of deep recession. Response times to the requirements of consumers, especially those to major customers, are being reduced. That is good for those who want to buy goods in the United Kingdom. Goods are more readily available and the response times to the requirements of customers are more quickly realised by those who can produce the goods so required. Standards of quality, design and innovation are continually being improved. The manufacturing industry is working more closely with schools and colleges to improve the skills of the work force. In the clothing sector, the trade associations are ensuring the continuation of the manufacturer-retailer panels--which were previously, as my right hon. Friend is aware, under the wing of the National Economic Development Office--with a remit for promoting consideration of import substitution. Trade associations have established databases of United Kingdom manufacturers in the textile and clothing sector and the engineering sector. They are able to put together customers directly in touch with suitable purchases.
The background to the current position is an erosion of our manufacturing base and a worrying balance of trade deficit yet at the same time a window of opportunity. Recently, the response of the Department of Trade and Industry has been as drab, dreary and unimaginative as only a Government Department can, sadly, too often be. I do not criticise my right hon. Friend at the Dispatch Box, because I know that he shares in many ways my concern about the state of our industries. Those industries are, of course, his responsibility.
My right hon. Friend has read the confidential advice to Ministers on the parlous state of our industry, and I know that he is aware of the window of opportunity that now exists, but I fear that his Department has often missed the point. When I tabled a written question inviting the
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Minister to respond to the need for import substitution, this was the precise response given by the Minister for Industry : "Government activities which seek to discriminate in favour of United Kingdom producers against exporters from other Community member states are precluded by the treaty of Rome."--[ Official was dumbstruck by that reply because my question had not called for protectionist measures in any way but the establishment of a new task force on import substitution. If industry in the United Kingdom is represented by people in the Department who respond to a constructive and positive question in that way, God help the future of our industry. They will need God to protect, help and advise them, because, on that sort of record, the Department certainly will not. I put this rhetorical question : would the Government of any other country, whether or not it was a member of the European Community, have responded to the question in that way? I am sure that the answer would be a deafening no.In the absence as yet of any constructive suggestions from the Department of Trade and Industry, let me set out again those areas in which the United Kingdom and its economy and industries have the right not simply to expect but to demand action from the Conservative Government. The Government must maintain competitive interest rates and exchange rates. We are doing our best to do that, and I commend the Government on their action. They must fight for a level playing field in international trade both within the Community and globally. On that matter, they leave a great deal to be desired. Actions to deal with unfair competition should be much more speedy than they are. Too often, if we complain about the uneven playing field and dumping, by the time the procedure has been cranked and geared into action, the damage is done--the industries have been knocked out of business and jobs have been lost. As my right hon. Friend the Minister knows, it is difficult to resurrect industry, although that is the objective of import substitution.
As I have already said, it would be a major incentive and stimulant to industry to introduce 100 per cent. capital allowances, even if there were some restrictions on eligibility or the allowances were geared specifically to areas of industrial activity which showed immense potential for import substitution.
The Government should continue to invest in our transport and communications infrastructure. I pay tribute to the Government for their somewhat hesitant steps towards the introduction of private capital into infrastructure expenditure. I should like to see that take place on a much wider basis. The better our infrastructure, the better the opportunities for import substitution and the more efficient and effective our industry will be.
The Government should strive to remove unnecessary burdens on business. Again, I am prepared to pay tribute to my right hon. Friend the Minister and his Department, and in particular to my hon. Friend and constituency neighbour the Member for Tatton (Mr. Hamilton), who has responsibility for corporate affairs. The Government must ensure that young people leaving our schools, colleges and universities have the skills which are essential if Britain is to remain competitive in world markets. The
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Government must ensure that existing workers have opportunities to reskill and retrain as new production techniques and new designs are developed. That is absolutely critical. It costs money, and the Government must realise that.Recently, industry has operated mainly on very low profit margins indeed. It does not have the scope within its resources to provide opportunities for training and reskilling of its workers. The Government must establish in partnership with industry a new task force on import substitution. Perhaps my right hon. Friend the Minister will say that that is my main recommendation. Such a task force could identify areas which offer potential for such substitution.
The task force should ensure that public sector purchasers treat British goods on equal terms with imported goods in terms of quality standards and environmental acceptability of production techniques. That is important. It could ensure that adequate statistics continue to be collected, collated and published, so that a detailed picture of import patterns can be produced to identify areas which offer potential for import substitutions.
The task force could ensure that areas which offer such potential are drawn immediately to the attention of suitable manufacturers. It could ensure that all potential customers, whether large or small, were reminded of the true cost of buying imported goods. The true cost includes the loss of individual taxation and corporate taxation. I did not mention earlier that, if people are not employed, they have to receive some form of state benefit, whether income support or other benefits. The cost of unemployment is extremely heavy and negative. We need to be much more imaginative than we are. The Government need to make recommendations. The task force should perhaps suggest to the Government ways of ensuring that Government policy as a whole remains sympathetic and responsive to the needs of industry. I take as an example one current and topical issue in Cheshire. The company in question is close to my constituency and that of my hon. Friend the Member for Congleton (Mrs. Winterton). It is located in the constituency of the hon. Member for Crewe and Nantwich (Mrs. Dunwoody).
I refer to Rolls-Royce motors. Is the Treasury aware of the potential damage which it is doing to that company by its taxation of the corporate use of cars? Rolls-Royce is one of the few remaining genuinely British car manufacturers. Yet the proposals in the Budget, to which the House will be directing its attention in the Second Reading of the Finance Bill on Monday week, could further damage that company and force it to put hundreds more workers out of employment. They might destroy the sound home base of the company which is so important if it is to continue to export its products.
When we travel throughout the world and ask people what they know about British manufacturing industry, one of the few companies which will be first on their lips is Rolls-Royce. Therefore, it is important that there is co-ordination among all Government Departments to ensure that their policies are sympathetic to the manufacturing sector of the economy.
I have set out more than a dozen specific areas where action needs to be taken by Government. None of the measures would be contrary to the provisions of the treaty of Rome. When he is responding to my proposals, I hope
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that the Minister will give a more positive, constructive and fulsome response than that given recently to a positive and constructive parliamentary question.I remind the Minister that the manufacturing sector is critical to our future economic prosperity. It produces the only non-inflationary economic growth. It is the foundation of the economies of some of our major, successful competitors, such as Germany, Japan, France, Italy and Spain, despite the problems that they are experiencing because of recession.
I hope that my right hon. Friend will accept that I have promoted the interests of manufacturing industry for all the time, almost 22 years, that I have been a Member of Parliament. I am proud to represent my constituency of Macclesfield, which has a diverse cross-section of manufacturing industry from textiles to paper and board, to light engineering, to pharmaceuticals, to chemicals, to video production and technology and to dental laboratories as well. From the Lobby today, I learned another sad fact. The cut of 7 per cent. in the remuneration of dentists last year has led directly to the los of 25 jobs in my constituency. My hon. Friend may ask what that has to do with import substitution. It has much to do with it, because it affects productive industry. Again, there seems to have been a lack of liaison between Government Departments which are seeking to respond directly to requests by the Treasury for a reduction in public expenditure.
The Treasury has failed to appreciate the long-term effect that those decisions will have on the country and its ability to produce and to reduce the number of products that are imported. Those imports deprive our people of employment and, dare I say it to my right hon. Friend, deprive the Exchequer of much-needed income. The Government need to receive a greater income to enable them to fulfil their role. Surely my right hon. Friend is aware that, to do that, it is much better to produce more rather than to tax more. If he responds positively to the debate, I believe that the country will have a golden opportunity to achieve a second industrial revolution. It being Ten o'clock, the motion for the Adjournment of the House lapsed, without Question put.
Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Arbuthnot.]
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