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Mr. Heseltine : Forgive me : I want to make some progress. Let me mention one other major fallacy of the motion. It points out that employment has been decreasing in some of those industries--the major manufacturing industries--and the solution, apparently, is more investment and the use of more highly skilled people.

What the Labour party cannot understand--has not begun to embrace in its analysis of the world that confronts us--is that more investment and the use of more skilled people might lead to fewer people being employed. That is the dilemma that confronts the advanced technological world in which we move. Any suggestion--that is what the Labour party did with the steel industry--that one can stop or slow that process leads to the loss of markets, to increased subsidisation and, in the end, the rationalisation which too often takes one out of that business altogether.

The very things that the Labour party is speaking about, therefore-- increased investment to secure the increased productivity and competitiveness--are likely, in many cases, to result in a reduction in employment. There is no point in the House and the country not understanding that, and explaining it to a work force who will have to have better and more widely based training precisely to enable people to move from job to job more frequently, several times during their working life.

That brings me to the question that I asked at the beginning--why did the hon. Member for Livingston choose manufacturing ? There is an answer to that. Why did he choose those three industries ? He did so because it so happens that, in this regard, they produce a case which does not extend across the range of the British economy. The answer to that is very important.

Manufacturing accounts for only 27 per cent. of the

wealth-producing sector and 20 per cent. of the whole economy. Of course it matters, but every sector matters,

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and the only reason why the hon. Member keeps using those statistics is that he cannot find any way of applying the general case to the general state of the economy.

The only intellectually honest way to deal with comparisons of that type is to compare peak with peak and trough with trough ; the high point of one economic cycle, compared with the high point of another. However, the hon. Member for Livingston cannot do that because, if we compare the high point of 1979 with the high point of 1989, his case falls apart. Manufacturing investment was greater under the Tories, up from £13.5 billion to nearly £15 billion between 1979 and 1989. Let us therefore take the hon. Gentleman's own phoney way of dealing with those issues, which is to consider the whole economy. Investment for the whole economy in 1979 was £75.8 billion. The comparable figure for 1992, comparing a peak with a trough, was £94.7 billion. [Hon. Members :-- "Oh."] Comparing a Labour peak with a Tory trough, what do we find ? A growth of 25 per cent. in investment. The news gets rapidly worse for the hon. Member for Livingston. The ground is already being cut from under his feet. The figures in the latest Confederation of British Industry surveys show--I would be the first to recognise that not many hon. Members have seen the latest CBI surveys ; they were so good that they hardly received a mention anywhere in the national press--that the gross domestic product in the last quarter of 1993 was 2.5 per cent. up on the previous year. The Organisation for Economic Co-operation and Development forecast is that manufacturing output in the United Kingdom will grow by 3 per cent. next year--one of the fastest rates in the European Union. Certainly manufacturing matters, but it is myopic to pretend that the energy, tourism, construction, communications, entertainment and invisibles industries do not matter at all. They all contribute to the national economy, and they include some of the most successful and largest companies in this country.

As the hon. Member for Livingston is prone to publicise good news, I am sure that he will want to congratulate the Stakis Hotel Group, which recently announced a £6 million project to build a hotel in his constituency. I hope that there will not be a row of placarded pickets outside demanding that it be closed because it is not manufacturing, because such an action would not come across very well.

I refer now to the hon. Member for Leeds, Central (Mr. Fatchett), who will be winding up the debate for the Labour party. I hope that he too will celebrate the good news of the £1 billion order from the Ministry of Defence for Challenger tanks and a £140 million order from Oman for tanks and vehicles--unless Labour can find a way of upsetting our relationship with that country which would lead to the cancellation of the order.

Why did we not hear anything from the hon. Member for Livingston about the small and medium-sized economy of this country ? Why did he not tell us about the 1 million extra companies that have been formed despite the world recession ? The fact is that, every time the hon. Gentleman talks about competitiveness, he has to resort to generalisations and vagueness. He is not capable of producing solid policies relating to the wealth-creating process.

Mr. William Cash (Stafford) : My right hon. Friend mentioned intellectual honesty and the macro-economic situation. He may recall that our 1992 manifesto

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committed us to the exchange rate mechanism as the centrepiece of our counter-inflationary policy. Does he accept that it was a failure, and that we should under no circumstances re-enter it ? In view of the good news to which he has referred, and in the light of his views on the role of the Treasury in these matters, does he agree that we must ensure that we do not go back into the ERM, and that we will not take a single step further towards economic and monetary union ?

Mr. Heseltine : I can say only that I helped to write that manifesto, and there is not much point in my hon. Friend trying to re-write it now.

It is very important that we deal with competitiveness. Nobody can seriously doubt the nature of the challenge we face in the world of wealth creation. The Opposition parties--the Liberals play the game as ruthlessly as the Labour party--talk of the national preoccupation that great care must be taken before we take risks with the national reputation and self- interest of our companies overseas. The fact is that Opposition politicians have become expert at undermining by innuendo and smear the interests of our exporting companies. Let me explain to the Opposition parties that Britain does not rule the world. We do not dispense justice to the world ; we do not police the world ; and we do not establish the customs and practices of other countries. But we do have to sell to the world, and everything that is said here is used to harm our interests and is exploited by our competitors.

On the shop floor and in the boardrooms of this country, every sanctimonious posture is seen for what it is--the desperate parading of Opposition parties trying to get cheap publicity, regardless of the damage they do to British firms and investment. For that reason, I believe that the House will want to support the Government tonight.

4.53 pm

Mr. Doug Hoyle (Warrington, North) : Listening to the President, as he likes to be called, giving his prospectus for the future of manufacturing, one would believe that we were living in a paradise. He could also perhaps have explained why the Government are so electorally unpopular, for unpopular they are. Many people would not begin to recognise what the President of the Board of Trade tried to explain to us.

Conservative Members, especially those sitting on the Government Front Bench, are like false rain doctors who keep saying that the rain will come tomorrow and the famine will soon be over. The truth is that the rain is not likely to come--we are as far from prosperity as ever.

Mr. John Evans (St. Helens, North) : My hon. Friend shares a constituency boundary with me. Is he aware that SmithKline Beecham today announced the closure of the Beecham's factory in St. Helens with the loss of 480 jobs, thus ending a 150-year association with the town ? Is he aware that, seven days ago, the company reported an increase in profits to £1.2 billion but did not have the courtesy to inform the work force or the trade unions of its intention to close the factory ? Is that not typical of the way in which British employers treat their work forces ?

Mr. Hoyle : I could not agree more with my hon. Friend. I see that the hon. Member for City of Chester (Mr.

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Brandreth) is smiling. If redundancies in the north-west amuse him, it is perhaps something about which he should search his conscience. Mr. Gyles Brandreth (City of Chester) rose

Mr. Hoyle : No, I shall not give way.

Mr. Brandreth : Will the hon. Gentleman please give way, as he mentioned me ?

Mr. Hoyle : Oh, very well.

Mr. Brandreth : One is, of course, always concerned about any new unemployment. I am grateful that unemployment in my constituency is about 27 per cent. lower than five years ago because of all the inward investment. Will the hon. Gentleman tell us something about the social chapter, which the hon. Member for Livingston (Mr. Cook) failed to explain ? The Department of Employment reckons that the cost of the social chapter would be about £5 billion. What do manufacturers in the hon. Gentleman's constituency believe that the cost would be ?

Mr. Hoyle : I can tell the hon. Gentleman that there will be no manufacturers in my or any other constituency if the Government continue as they are. It was significant that when my hon. Friend the Member for St. Helens, North (Mr. Evans) gave the House the grave news of the factory closure, the President chose to ignore it and left the Chamber. He left and the hon. Member for City of Chester smiled--I do not believe that that is the way to treat such news. It is all very well for the President of the Board of Trade to tell us about his wide experience in industry, but he has never worked in industry in his life. The same is true of all Government Front Benchers and, indeed, of many Conservative Back Benchers. I should have preferred the President to consider the underlying problems which could occur and which have occurred in the north-west. In Lancashire alone, 40,000 people work in the defence industry. All their jobs could be affected by the imminent defence cuts, but we heard the right hon. Gentleman try to decry my hon. Friend the Member for Livingston (Mr. Cook) and our attempt to think of other industries and products to create new jobs. We would establish a defence diversification agency to examine what we could be doing. That idea was received with laughter, despite the fact that jobs are disappearing. The hon. Member for Chorley (Mr. Dover) is as worried as I am. He nods his head and shows sympathy and concern because 823 jobs might go at the royal ordnance factory in Chorley. In fact, notice has already been served. The 800-acre site in Chorley should be developed, yet the President of the Board of Trade said nothing about it.

The matter is of grave concern in the north-west. In Cheshire, Cammell Laird recently closed down. My hon. Friend the Member for St. Helens, North expressed concern about the rundown of the work force base. There has been a rundown of industry at Pilkington. In the past two weeks, 109 jobs have been lost at BICC in my constituency because of the state of economy. My hon. Friend said that the Parkside pit, the last in the north-west and one of the most modern, has also shut.

Mr. Den Dover (Chorley) : Does not the hon. Member welcome the Government's new policy for the north-east, the east midlands and Yorkshire to designate enterprise

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zones in old coal-mining regions which have experienced an enormous loss of coal-mining jobs ? That policy proposes 100 per cent. capital allowances, 10 years without business rating and free planning criteria. Will he therefore welcome the changes in the defence industry in the north-west and the introduction of an enterprise zone at the royal ordnance factory in Chorley, which, as he correctly said, has 800 acres of land available ? We should be flexible and quick on our feet and should come up with new industries and job opportunities.

Mr. Hoyle : I should welcome an enterprise zone in Parkside, where the colliery has closed. The other day, I heard the hon. Gentleman question the Prime Minister without obtaining a positive answer on enterprise zones. I should welcome any measures that would create new jobs in not only Chorley but Newton-le-Willows, St. Helens and Warrington. We need those jobs.

Redundancies have been announced at AEA, which is one of the more successful companies in Warrington. The hon. Member for Chorley did heed a few words of sombre warning. He joined me in condemning the sale of the highly successful truck division of Leyland to DAF. We were right, because Leyland was sold off to a village company that was not large enough to provide the opportunities that the then Secretary for Trade and Industry said would develop. We were told that the sale provided a great opportunity, but we know what happened. The bus company was acquired by a management buy-out, and in turn it was sold to Volvo. We have witnessed the destruction of the bus and coach industry in this country. The modern bus manufacturing plant in the constituency of my hon. Friend the Member for Workington (Mr. Campbell-Savours) has closed.

Leyland, what is left of it, has experienced difficulties ; but thanks to its management, it is holding its head above water. It is no longer the powerful firm that was recognised worldwide for its trucks, coaches and buses. We should take that lesson on board. Rover, the last British car company, has been sold to a foreign company. We do not need to look into the crystal ball to learn any lessons : we recall what happened to the British truck industry. Rover has been sold to BMW, one of its competitors, with all the possible dangers of that. I am sure that the four-wheel drive vehicle, which was the jewel in Rover's crown, has a future, but the future of the other models is less certain, especially since Honda's announced withdrawal. Honda helped to create Rover's success. It invested money in new models and in research and development. Will such investment continue ? What will replace the co-operation and collaboration between Rover and Honda ? Will BMW fill that vacuum ? What will happen when there is competition between BMW and Rover models ? The Opposition know and have tried to make the point that such decisions will be taken not in this country but in Germany. There is a danger that Rover's future models, especially its larger ones, will merely be badge-engineered products.

I should have thought that that would be of some concern to the President of the Board of Trade, who again outlined the prospectus and told us how successful we are. The hon. Member for Stafford (Mr. Cash) said that that success was due to our leaving the fixed exchange rate system. That enabled us to compete. We were taken into

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that system by the previous Prime Minister, who became one of its foremost opponents, but hon. Members should not forget that the Chancellor of the Exchequer at that time was the present Prime Minister. Entry might have been desirable, but the Government took us in at the wrong rate and at the wrong time. It is only because we left the system that we have had success with exports.

We must get rid of the structural difficulties that still exist in many of our industries. I noticed that the President of the Board of Trade again steered away from addressing the economic indicators. All hon. Members welcomed the falls in unemployment, but there was a rise in January. The retail sector and the previous Chancellor expressed fear about what might happen as a result of this year's Budget. They warned that tax rises would cut consumer spending and reduce the chances of a boom. The underlying rate of inflation, which has been the jewel in the crown of the Conservative party, is beginning to increase again. I should have thought that the President would spend some time examining those indicators.

As my hon. Friend the Member for St. Helens, North knows, the aluminium industry is important to Warrington. People in the industry told me recently of the consequences of free-market conditions. We are always told that everything must be left to the market. Free-market conditions in the world mean that the aluminium industry in this country and in Europe is being undercut by supplies from previously uneconomic plants in Russia, which use outdated smelters and pollute the environment. That puts the aluminium industry in this country, Europe and worldwide under great strain.

One understands that, given their position, the Russians are seeking to find what markets they can, but environmentally advanced smelters in this country are closing because of imports from countries whose plants pollute the atmosphere. Again, the President of the Board of Trade made no comment on that. What help and advice has he given to that important world industry ?

The Minister might note and pass on to the Department of the Environment the importance of recycling in the aluminium industry. There is an aluminium plant in the Warrington, South constituency, the neighbouring constituency to mine. When considering how we can achieve greater success in recycling, I hope the Minister will tell the Department of Environment that the aluminium industry should be involved in its survey. There should be co-operation. Such matters cannot and should not be left to the market.

My hon. Friend the Member for Wentworth (Mr. Hardy) will speak later on the steel industry, but I may say in passing that, once again, we appear to have got the rough end from the Commission. We have already heard that we have the most modern steel industry in Europe, which was created under public enterprise and then sold. We have seen many redundancies and many closures of what were economic and viable plants, yet, despite all that, fines are being imposed on British industry while subsidies are given to the industries of other countries. We heard nothing about that from the President of the Board of Trade at the Dispatch Box, except that it was a matter for the Commission.

Mr. Peter Hardy (Wentworth) : My hon. Friend will be aware that the achievement of the British steel industry today is to be able to produce steel at a cost of £413 a

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tonne, compared with Germany's £558 a tonne and Japan's £572 a tonne. Does he think that the Japanese or German Government would be as daft as the British Government ?

Mr. Hoyle : No Government anywhere could be as daft as our Government. One despairs of them and of what they are doing to British industry.

Rover has been sold. Yet Gareth Rhys, a motor industry expert who offered his expertise to the Select Committee on Trade and Industry when I was there, reported that there could have been a management buy-out of Rover instead of its being sold to a competitor such as BMW-- [Interruption.] I cannot hear what the hon. Member for Coventry, South-West (Mr. Butcher) is saying, butGareth Rhys said that that could have happened. But to prop up the British aerospace industry, Rover was sold for £800 million.

Mr. John Butcher (Coventry, South-West) rose

Mr. Hoyle : Let me finish what I am saying, and then of course I shall give way.

What did Mr. Cahill, the tax exile who was appointed, get for the master stroke that put the British motor industry in jeopardy ? He got a £10 million pay-off. And what did the Prime Minister say ? Like the President of the Board of Trade, he said that that was not a matter for him. I expect that the workers at British Aerospace, the royal ordnance factory and Beecham would have liked redundancy terms such as those, yet the pay-off was for delivering a blow at the economy of this country.

Mr. Butcher : I am grateful to the hon. Gentleman for giving way, especially as I am hoping to catch your eye later, Mr. Deputy Speaker.

I am afraid that the dream of a management buy-out, which many of us would have found attractive, must remain just that. It is common knowledge that even if £700 million or £800 million could have been found to buy out the equity, another £600 million or £700 million would have been needed to develop the model range, and that sort of money would not have been available to such an operation.

Mr. Hoyle : It was the undue haste with which British Aerospace sold out Rover, with the full backing of the Government, that alarmed many of us. The hon. Gentleman says that the management buy-out must remain a dream. Yes, it must now, for ever more, because control of the last British motor manufacturer has passed from this country and in future decisions will be taken in Germany.

Mr. Robin Corbett (Birmingham, Erdington) : My hon. Friend is right about the impact of the sale of Rover, but I remind him that we have one other British-owned car manufacturer left--Beans Engineering of Tamworth, which produces about 1,300 Robin Reliants and Rialtos a year, and about 150 Scimitars. That makes it slightly larger than Rolls-Royce.

Mr. Hoyle : I praise Beans Engineering for what it turns out, and I hope that it will continue to turn out those products and will expand its production. That firm makes an important contribution because, as my hon. Friend says, it is slightly larger than Rolls-Royce. But now we are down to talking about the odd one or two companies. Let us hope that what remains of the indigenous motor manufacturing industry has a future.

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I despair, however, because we have heard nothing positive at all from the Government. The President of the Board of Trade gave his usual knockabout performance, the kind of performance that we have grown to expect from him. He may talk about honesty, but it might have been more honest of him to have come to the House a while ago when we had a debate on Matrix Churchill and told hon. Members what had happened, instead of waiting until he was called before the Scott inquiry and then saying that he was almost forced to send innocent people to prison.

We need no lessons from the Conservative party about credibility or honesty. I was disappointed that the Secretary of State did not take his office seriously and say what he intended to do about the vital parts of the economy, instead of engaging in a knockabout performance. My hon. Friend the Member for Livingston was right when he spoke of the civil and the defence sides of the aerospace industry, and about the continuing demise of companies such as Beecham and BICC. Even successful companies such as AEA Technology are continuing to slim their work forces.

If Ministers would get out of their black cars into the real world, they would find despair, disillusion and disgruntlement among many people wherever they went. Despite the figures that the Government publish every month, they would see factories closing

Mr. Dennis Turner (Wolverhampton, South-East) : My hon. Friend has made an important point about companies continuing to close, especially in view of what the President of the Board of Trade said about the steel industry. Steel companies throughout the country are continuing to close, and one of the reasons why--apart from the fact that companies in Europe are operating in a manner that is totally devastating to our competitiveness--is the 70 per cent. increase in scrap prices over the past 12 months. A company in my constituency is struggling with electricity prices. It is paying 54 per cent. more per kilowatt of electricity than its parent company is paying in France. That is supposed to be the competitive

Mr. Deputy Speaker (Mr. Michael Morris) : Order. The interventions have been very long.

Mr. Hoyle : That may have been a long intervention, Mr. Deputy Speaker, but my hon. Friend was expressing the concern of his constituents and mine, and that of the constituents of my other hon. Friends and of many Conservative Members, too.

As I was saying, if Ministers would get out of their cars when they made their rare visits to plants and would talk not only to the directors in the boardroom but to the office staff and the people who produced the goods, the people on the shop floor, they would get a different message.

I have no faith in the future of our industry if it rests with the Government--with jaded John, careless Kenneth, miserable Michael and the rest of the motley crew. It is time that they got out and we had a general election to elect a Government who believe in industry and in bringing about investment and employment and who will restore our manufacturing industry to what it once was--profitable and expanding. That will never happen so long as the present Government remain in power.

5.18 pm

Mr. John Butcher (Coventry, South-West) : The hon. Member for Warrington, North (Mr. Hoyle) said that he doubted whether many hon. Members had industrial

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experience in their own right. I preface my remarks by saying, as co-chairman of the all-party manufacturing group, that that weakness of the House does indeed sometimes manifest itself. I recall debates in the past on the engineering industry where we could muster only about 18 or 20 colleagues who had direct experience of the engineering industry at that time. I hope that the hon. Member for Warrington, North will accept in a non-partisan manner that the way in which Members of Parliament are recruited, selected and elected is something that the major political parties should consider if, with integrity, we are to defend the interests of a key sector of our economy which produces tradeable goods to the tune of about 80 per cent. of its output. Sometimes we must recognise our weaknesses and recognise that, although we may be brilliantly equipped to comment on the fortunes of manufacturing industry, due to the way in which Members of Parliament are recruited we have not brought sufficient numbers into the House who have truly understood an industry in which they have worked and earned their livelihoods. I add immediately that I include myself in that minority of people.

I shall make two suggestions. One is about an issue which both parties deem important--training and education and how those factors affect the performance of manufacturing industry. The other is about the cost and availability of capital to a sector which distinguishes itself from the service sector by virtue of the fact that it is more capital intensive than a service sector activity. I shall return to those points in a few moments and I hope that I can lay before the House a couple of proposals which may at least be worthy of further debate, even if they may not find complete consensus.

Before that, I shall refer to our current position as a trading nation. In our debates we tend to work in time frames in which industry and commerce do not work. When I listen to speeches, I sometimes think that we forget about leads and lags and trade cycles. I was refreshed and encouraged by the speech of my right hon. Friend the Member for Henley (Mr. Heseltine) when he brought that point to the centre of his argument. In considering trends about which we ought to worry, I shall lay one set of statistics before the House. In 1964, Britain enjoyed around 14 per cent. of the world's traded exports. By 1979, that figure had fallen to 8 per cent. If my memory serves me correctly, we did stop the rot in the 1980s and have kicked up just above that 8 per cent. in recent years.

There are a number of reasons why that remorseless decline occurred during a period in which both Labour and Conservative parties had time running our economy. First, an intensification of competition occurred. There was not too much competition in certain key sectors in the Pacific Basin in 1964. Now there is intensive competition in the sectors in which we are currently fighting in our domestic and international markets. We threw away a large number of the advantages that we held in the 1960s, but we now have an opportunity, in the first investment cycle out of the past five since the war, to be real winners in the international markets.

Something is going on out there which is exciting and tangible. If one considers the growth in productivity in this country over the past half a decade, one sees a rate of growth which cannot be explained away merely by the

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occurrence of surplus capacity as we emerge from a recession. It is a normal and natural phenomenon to see an increase in productivity when we come out of recession, but the current rates of increase in productivity are virtually unprecedented in our post-war history. That means that for the first time we are out-performing our competitors in Europe in the application of certain investment programmes and especially in some of the high-tech investment programmes as they apply to manufacturing systems engineering, to design work, to computer- integrated manufacture and to computer-aided design. Those special technologies have been applied faster and in a more sophisticated manner in Britain than by most of our competitors. To a certain extent, that explains the sea change in our performance over recent years. Let us bank that as an asset that we can continue to use.

We have had a bonus in the exchange rate position, which may be short or medium term. There is no doubt that the Germans especially are deeply worried about the rate at which we can capture some of their markets in north America, for example, and at which we can begin to penetrate their domestic market. The exchange rate competitiveness has been of great help, but one cannot run a country, an economy or a manufacturing sector for ever counting on an advantage given through exchange rate competitiveness. As hon. Members on both sides of the Chamber have said, we must get into higher added value, higher productivity, and apply new technologies to our basic industries.

However, we must beware of taking German economic history and applying it to Britain. No one in the House will deny that Germany has had 40 brilliant years as a manufacturing economy. It has built its Wirtschaftswunder and has been immensely successful. Germany developed a social market economy which in its terms worked and which gave it an economic dominance in Europe which many of us envied. However, it developed a social market economy which has become more social than market. German industrialists are now worried that their wonderful years are coming to an end. They can see only an erosion of market share, higher on-costs and their competitors giving them a hard time.

One can take two views of the German problem--one can either assume that it will bulldoze its way through that problem in three or four years, or one can take the slightly more apocalyptic view that some of its current structural defects may continue for some time and be the devil's own job to put right. I veer towards the latter view. We must not adopt the Germans' policies, which are beginning to fail them, with social chapterism and loading on-costs on to employers. If we do that, our German competitors will start to smile again.

Mrs. Jacqui Lait (Hastings and Rye) : I agree with everything that my hon. Friend has said. Will he comment on whether he has experience, as I have, of recently visiting a German manufacturing factory and realising that they not only do not have the technology that we have but they do not have our industrial relations either ?

[Interruption.] It is similar to visiting a British engineering plant in the 1970s in terms of management fear of the unions.

Mr. Butcher : I notice the response of Opposition Members and I repeat what I said earlier. We must be aware of leads and lags and investment cycles. Opposition Members may smile, but it is indisputable that in the five

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investment cycles since the war Germany has out-performed us in three and one was a shaded bet. However, in the recent investment cycle, we have done better in the application of new ideas

Mr. Corbett : What about Germany's industrial base ?

Mr. Butcher : I am not disputing that Germany's base has been built up faster than ours, but when one puts things right in 1985 one sometimes does not see the benefits until 1995. The Germans know that and we know that. Why can the hon. Gentleman not accept that and celebrate the fact that we have a chance to be winners again ? In some areas there is a consensus in the House on objectives, but unfortunately there is dissent about how to achieve them. I refer to training and to the shortage of capital in key sectors such as small and medium-sized business and manufacturing. When I was an education Minister, I enjoyed a trip to Germany. I did not take an entourage--just one inspector--and we did not see any Ministers, but spent our time intensively in German schools talking to German children, German students and German parents.

The German tripartite education system has Hauptschulen, Realschulen and Gymnasiums--high schools, technical schools and grammar schools. We abandoned such a system, but the Germans retained their free-place, state technical schools for 11 to 18-year-olds. Interestingly, the middle-class parents of children in Germany were fighting to get their youngsters not into the equivalent of grammar schools but into the technical schools because they saw the vocational opportunities to be gained from such an education. In the past two and a half decades we have abandoned that system. May I tell my hon. Friend the Minister for Energy, who used to be responsible for education, that we may be giving technical schools a push now, but why cannot we give children of statutory school age of all backgrounds, in every city, an opportunity of a technical education, paid for by the state ? More than anything else, that would help us to overcome what many hon. Members are worried about--an anti-industrial culture in education and the media.

Mr. Ken Purchase (Wolverhampton, North-East) : The hon. Gentleman is absolutely right to speak of the culture in which we live, particularly for manufacturing, although I suspect that it has more of a class nature than an educational one. Does he agree that the tripartite system that he mentioned operated in this country post-Hadow from 1935 until the 1970s, yet failed to deliver as the German system has delivered ? If he thinks it through carefully, he may accept that this country has a class bias towards engineers and their status which is different from Germany's. The truth lies more in that than in the tripartite system.

Mr. Butcher : I am being tempted into making a longer speech than I had intended. I have thought carefully about this matter and it is a chicken-and-egg situation. The Germans have kept their strong industrial culture because they have kept a strand of their schooling through which they put a third of their children. They continue to value that culture whereas I am afraid that we tend not to give children the opportunity to be exposed to simple questions

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like "What is a balance sheet ?" and "What is a production control system ?" No one under the age of 18 knows what those are. Given the two hats that my hon. Friend the Minister for Energy has worn in the Government, my plea to him is that we should stop mucking about with the introduction of technical schools for statutory-aged school children. Let the state fund them, let us have at least one in every city of any size, and let us restore the opportunities that have been denied to many of our young people in the past quarter of a century. Let us start putting ladders up against the wall again. When I hear the manager of a big manufacturing company say that he failed his 11-plus and went to a technical school, I wonder whether future generations who could have had the opportunity to say the same will be thinned out because they will not have had that alternative opportunity.

There is still a shortage of risk capital in the small and medium-sized manufacturing sector. We can produce schemes to give incentives to people to invest by exempting them from certain taxes. At first sight my proposal may be dismissed as indulging in the worst aspects of class warfare, but I propose that we abolish capital gains tax for investments where there is a real risk of loss and where a long-term gain is sought. We already have some history on that. We know that we need not necessarily abolish capital gains tax where the gains are short term and virtually guaranteed, but the manufacturing sector and the small and medium-sized firms sector would benefit most from the abolition of capital gains tax under the criteria that I have placed before the House.

If there is agreement that we have a problem with capital, let us try that route--and if we do so, for Pete's sake let us not argue about whether capitalists or workers will benefit because everyone will benefit.

5.34 pm

Mr. Nigel Jones (Cheltenham) : From time to time in the House someone makes a gem of a speech and we have just heard such a speech from the hon. Member for Coventry, South-West (Mr. Butcher). It is a great delight to follow him.

First, may I declare an interest in ICL Computers ? It seems particularly appropriate, when Britain appears to be experiencing a gradual economic recovery, to examine the current state of UK manufacturing. How has it fared during the recession and as a consequence of 1980s economic policies, and what does the future hold ? Many hon. Members--we have already heard one or two in this debate--are bound to condemn the Government over their policy void towards manufacturing in Britain, but this debate is a chance to put forward positive ideas for creating jobs and wealth, both now and in the future.

Britain has traditionally earned its way in the world by inventing and making quality products. In recent years, as technology has forced change, the number of people employed in manufacturing has diminished. Other countries have adapted to that change better than Britain. No one in the House will sit back and say that all is well today with British manufacturing industry. Since 1979, large-scale industrial manufacturing has declined almost to the point of extinction in some areas. Our position in product manufacturing is certainly insecure. The

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perception outside is that everything seems to be made in Japan, Germany or Taiwan and that Britain has, essentially, a service-based economy.

I spent more than 20 years in the computer industry before being elected to Parliament and I share the worry of the hon. Member for Coventry, South- West about the make-up of Parliament today. In my 20 years in industry, I learnt that British people are not the problem. We have the best inventors and designers in the world, although we may not have enough of them. Britain has long been associated with inventions, but rarely with their practical application in recent years.

Television advertisements are widely acknowledged to be best made in Britain, but the televisions themselves are made abroad. The best cars in the world are widely acknowledged to be designed in Britain, but they are made either abroad or in Britain by foreign companies. Britain lacks a vision for the future. The Government have a key role to play in defining that vision. We must acknowledge that the best of British manufacturing is first class. We cannot and should not criticise it. But that is not enough. Given our £12 billion trade deficit in a recession, we must be worried for our manufacturing industry as a whole. I am concerned about the state of small and medium-sized British manufacturing companies as they are the base of our wealth. Where are they ? Why are there so few of them ? How well are they doing ? And what can the Government do to help manufacturing companies so that they thrive and Britain can pay its way in the world ?

To put it bluntly, we must be able to apply enough national wealth to keep us in the manner to which we have become accustomed. How are we to ensure a manufacturing base that is strong enough to earn the money to keep up our standards of living ? How are we to ensure that that is not done to our country's environmental detriment ? The future of British wealth is in high technology. Hon. Members may think, "He would say that, coming from a computer background". In the mid to late-1980s, the increase in manufacturing output, much of which later proved to be unsustainable, was strongest not in high-technology, high-growth product manufacturing sectors but in more dated, low-growth areas such as spirits, tobacco, asbestos goods, munitions and small arms. Each of those markets is now facing a decline.

We cannot return to manufacturing of the past, but we can have a strategy for the future and a proper integrated plan. It should include support for research into new technologies, targets for sustainable developments, and ensuring high educational standards for future generations and for those currently trying to get back into the work force. That must be led by the Government. It is not the Government's job to run industry but they must support it. As the hon. Member for Coventry, South-West said, the Government must provide the opportunity for industry to take long-term decisions, and they must encourage industry to take an environmental view and an investment-led view.

In 1987, before I entered the House, my right hon. Friend the Member for Yeovil (Mr. Ashdown) introduced the House to the concept of a fibre-optic communications highway reaching into every home in the land. That was his

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vision and we should aspire to it because fibre-optics are with us. I have a piece of fibre-optic cable with me which was made by BICC.

Mr. Gordon Prentice (Pendle) : Is it not the case that fibre-optics were being developed by British Telecom years before the right hon. Member for Yeovil (Mr. Ashdown) made his speech ?

Mr. Jones : Fibre-optic communications are a miracle which was invented in Britain. [ Interruption. ]

Mr. Deputy Speaker : Order. The hon. Gentleman may not be aware of this, but it is not acceptable to bring what could be considered a missile into the Chamber.

Mr. Jones : I can assure you, Mr. Deputy Speaker, that there is nothing subversive in a one-foot length of fibre-optic cable. My right hon. Friend's vision in 1987 was a fibre-optic communications network--a broad band highway reaching into every home in the land. Every time the utilities --gas, electricity, telecommunications or water--dig up the road, it pains me that they do not put fibre-optic cables everywhere. There is a map in the office of my Chief Whip showing the areas of the country that are currently being set up for cable television. Eighty per cent. of the country is completely untouched.

For the future well-being of our people and our businesses, we should ensure that Britain plays its full part in that exciting new information revolution and gains a decent slice of the market. What are the benefits of a communications highway ? It would create jobs--jobs in manufacturing the fibre-optics, installing the network and making the terminals that people would need in their homes and offices to make use of the highway. I am not simply talking about cable television. I want to see a two-way multimedia information flow, for example, to allow distance learning.

In yesterday's debate, hon. Members discussed the need for investment in education to equip our people with skills so that our work force can compete in an ever more competitive world. Distance learning is one way in which we can open the opportunity to study and learn from home cheaply, for example, for young mothers wishing to keep up to date with their skills and for those who have lost their jobs to retrain for a new career. There will also be a chance for companies to make use of teleworking so that their experienced staff, who, for one reason or another, wish to change their pattern of work, can still contribute their experience from home.

If traditional markets are lost or declining, we must look to new and growing markets. There is a substantial market for environmental products and processes, to which the hon. Member for Warrington, North (Mr. Hoyle) referred. The market is currently estimated to be worth £200 billion a year and is expected to treble in size in the next six years.

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