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Mr. Gyles Brandreth (City of Chester) : The debate has reminded me that since becoming a Member of Parliament I have met only two types of people--people with problems and people who are right. I welcome the people with problems, because one can always learn from them, and occasionally one can help them. People who are right present more of a challenge--and there is no shortage of people who are right about manufacturing.
Quite a few such people have been on parade this afternoon. They have their own vivid picture of what constitutes manufacturing, and--at least among Opposition Members--it tends to be a somewhat nostalgic picture, more in the tradition of L. S. Lowry than anything else. Alongside that picture goes a conviction, an unshakeable belief, that everything in the world of manufacturing is bad news. Those people say that manufacturing in the United Kingdom is in terminal decline, and they repeat the mantra so frequently that clearly they have convinced themselves. One's concern is that they may have convinced some other people as well. They seem unaware of the fact that, since 1981, as the President of the Board of Trade said, British manufacturing exports have increased by 66 per cent.--faster than those of any of the other G7 economies. We are told that the hon. Member for Livingston (Mr. Cook) was with the Confederation of British Industry this morning. I wonder whether he was shown a CBI publication called "Competing with the World's Best," which says :
"recent years have seen a transformation in Britain's manufacturing base. The recent strength of exports confirms the widespread anecdotal evidence : companies based in Britain are able to compete successfully in some of the toughest, technology-intensive markets in the world."
I wonder whether the hon. Gentleman was told that the CBI regretted that,
"unfortunately, the extent of the transformation is not widely understood. Moreover, the experience of the recession has reinforced the widely held-- though incorrect--belief that Britain's manufacturing base has been run down over the last decade and is unable to compete in international markets."
I imagine that the hon. Member for Livingston has learnt a lot today--a great deal this morning and, to his cost, a great deal this afternoon.
The fact that manufacturing output per head in the last quarter of last year was 3.2 per cent. up on the year before is good news--and the fact that manufacturing is not what it used to be is not bad news : it is inevitable. Everything changes ; it always has, and it always will.
A century and a half ago, my namesake, Jeremiah Brandreth, bewailed the state of manufacturing in the midlands and the job losses that the new technologies of the time brought about. That Brandreth was the last of the Luddites. He was also the last man to be beheaded for
Column 1006treason in this country--but that is another story. They called him the hopeless radical. I see myself as the hopeful radical, and I believe that we have radically to alter our perception of manufacturing.
For a start, we must stop compartmentalising manufacturing and segregating it as though it were a sacred zone of business unrelated to the rest. We must abandon the false barrier that has been erected between manufacturing and services. It is outdated, irrelevant and absurd to imply that there is some intrinsic merit or special worth in something simply because it has been manufactured in the old-fashioned way.
We shall never succeed by harking back, but only by developing further the areas in which we have distinctive capabilities and competitive advantage, be those the elite sciences, pharmaceuticals, chemicals, retailing or financial services. In my constituency, we manufacture aluminium cans, but we are also a great centre for financial services. We can export the cans, and the financial services.
Where yesterday we might have exported widgets, tomorrow we might be exporting the design and management of airports or hospitals, or the teaching of English as a foreign language. Our success depends on recognising the areas in which we have distinctive capabilities and on retaining our competitiveness.
Over the past year, we have been able to strengthen our competitive position as a result of firm control of costs following the depreciation of sterling. It is not for Government to tell businesses how to run themselves, although the hon. Member for Livingston would not agree. That is no doubt why today he announced his plan for Government dividend controls, which were so warmly welcomed by his namesake, the hon. Member for Brent, East (Mr. Livingstone). I talk to manufacturers and service providers in my constituency--I do not make a distinction, I see them all as business people--and they are all clear about what they want from Government. First and above all else, they want a stable economic climate. They want to know where they are so that they can plan with confidence. They want sustained low inflation, sustained low interest rates, sustained low corporate taxes and a flexible labour market.
Well, inflation has been brought down to its lowest level for 30 years, interest rates are down to 5.25 per cent. from 15 per cent., which represents £13 billion off the costs of industry, and we have the lowest rates of corporation tax in the European Union or among the G7 countries.
Also, we have created a flexible labour market, encouraging decentralised wage bargaining and strengthening democracy in the trade unions to make them more accountable to their members. Industrial strife, once the hallmark of manufacturing industry in the country, is now a thing of the past, thanks to the Government. That is why we must continue to resist the blandishments of the Opposition and the dangerous nonsense of the social chapter. It is incredible that a major party is going into the European elections committed to the social chapter, to a minimum wage, and that some of the party's members are even committed to a 35-hour working week. By talking to people in my constituency in manufacturing, I know that they are concerned with six key elements--banking attitudes and finance, capital allowances, export facilities, deregulation, research and development, and, in the longer term, education. In each of those areas, the Government are and have been taking
Column 1007action, and we must salute that. The manufacturers in my part of the world were concerned with those matters, but none--not one--was asking for a national business plan from Government.
Running businesses is not the business of Government. The Opposition will never understand that, and that is why they have opposed every privatisation since 1979. In 1979, the Government-owned industries, before we privatised them, cost the taxpayer some £2.6 billion in subsidies. In the past year, those same businesses paid some £2 billion in corporation tax.
Not surprisingly, when the Leader of the Opposition unveiled his business plan for Britain in Glasgow, the director general of the CBI, who was on parade this morning with the hon. Member for Livingston, found that Labour's policy contained "uncomfortable echoes of the past". We have been here before. Remember the Department of Economic Affairs, the national plan and the National Enterprise Board? As I recall, of 100 investments, two thirds went awry--half were sold at a loss, the other half went bust. It is incredible that the Opposition's policy vacuum should be filled with talk of another national business plan.
Today, the hon. Member for Livingston paraded himself as a latter-day Lord George Brown without the hiccoughs, and it will not wash. At least the late Member for Belper believed in what he was doing. He was a conviction politician. I do not believe that the Opposition Front Bench Members can believe in what they are doing, because it does not add up to a row of beans, and it certainly does not add up to a credible manufacturing strategy.
Mr. Roy Hughes (Newport, East) : I have never purchased anything but a British car, from a Standard Ten onwards, so it was a sad day for me when British Aerospace decided to sell the Rover Motor Company to BMW. Why did the Government allow that to happen? In recent years, Rover has been building a quality product. Its success could have been built on and expanded, but, instead, it was flogged cheaply to a foreign competitor.
Now that the decision has been taken to sell out, I only wish the new enterprise well, because so many jobs are at stake. There is a tripartite entanglement among Rover, BMW and Honda, and I hope that good sense prevails, because Honda has certainly been slighted. Despite the setback, Honda needs to be encouraged to continue its mutually beneficial association with Rover. Meanwhile, BMW must recognise the delicate nature of the relationship between Rover and Honda, which may benefit all concerned.
Newport, in my constituency, has a major interest in the steel industry, especially through the great Llanwern works. Llanwern supplies large quantities of quality steel to the motor industry, and I trust that that arrangement continues. However, there has been some suggestion that, because BMW uses galvanised steel, there may be problems.
Perhaps the Minister would look into that situation, because it may cause trouble in future. British Steel is an efficient producer and its product is reckoned to be the best in Europe. Of the total United Kingdom steel production in
Column 10081990, 87 per cent. was produced by the continuous casting method, whereas the world average was only 70 per cent. There has been success in the export market, and the productivity of British Steel is reckoned to be 10 per cent. above the European average. However, such success has come about only through traumatic change. Since the mid-1970s, the United Kingdom steel industry has shed some 200,000 jobs. Many redundant steel workers, especially those in their mid-fifties, have not worked since. Alongside that job shedding, there was considerable investment in steel-making technology. The success of British Steel bears out the theory that what British industry needed was new investment.
Despite that success, a fresh crisis has arisen because of the recession and of over-capacity in continental Europe. That over-capacity is estimated at 30 million tonnes, which is equivalent to the steel industries of the United Kingdom and Spain. The position was made difficult because continental countries did not cut their capacity to anything like the extent to which it occurred in the United Kingdom. Germany, Italy and Spain are openly flouting previous commitments by keeping inefficient capacity running. The rules are being broken as those countries heavily subsidise their steel plants.
In the process, our industry has been undercut, and the jobs of our steel workers are being put in jeopardy. Unfortunately, the Government have not kept abreast of the situation. Resolute action was required from the Minister for Industry. He should have insisted that the Italians, the Spaniards and the Germans made capacity cuts to match ours. That has not been done, and the Minister has been left with half-baked promises which do not amount to much at all. Meanwhile, the Government have aggravated the situation by announcing the ending of the iron and steel employees readaptation and benefit scheme. A statutory instrument to formally wind up the scheme was laid in Parliament on Thursday 27 January by the Minister for Industry, and it came into force the following day.
Incidentally, that same Minister has been weak-kneed in his dealings with countries which have failed to cut their steel-making capacity. Early-day motion 485, standing in my name and that of 120 other hon. Members, calls for a reconsideration of that decision, and I reiterate that call this evening.
The scheme is unique, as it is funded by the European Coal and Steel Community, using a levy on steel production by all companies. Since 1974, it has had no fewer than 118,000 redundant steel workers. If the Government terminate that agreement, the United Kingdom will be the only member state of the Coal and Steel Community without such a scheme. What a travesty that is, yet it is so typical of the Government. On and on they go down the path of deregulation. There have even been cuts in health and safety standards.
The Government now talk of an economic recovery, but that recovery is patchy, to say the least. It relies on increased consumer spending and the purchase of goods from overseas, rather than products manufactured in our own factories.
I sincerely hope that one day in the not too distant future the Government will be replaced by a Labour Government who truly believe in the importance of manufacturing industry. When that happens, Britain will truly be on the road to recovery.
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Mr. Anthony Coombs (Wyre Forest) : I follow my hon. Friend the Member for Surrey, North-West (Sir M. Grylls) in expressing surprise that the Labour party should choose a debate on manufacturing industry, for two reasons. First, our manufacturing industry is in a fundamentally stronger position than it has been in for many years. Secondly, I have yet to meet a business man who is impressed by the "business plan for Britain" which the Labour party recently proposed. One business man in my constituency said that the only business men he knew who would be impressed by it were his German competitors. On the fundamentals of the British economy, I entirely agree with my hon. Friends. In terms of efficiency ; productivity, which is still increasing ; exports ; market awareness ; and trying to improve productivity, which has increased by an unprecedented 70 per cent. since 1979, manufacturing is leaner, more efficient and more decisive than ever. Small wonder, therefore, that this year our economy will grow by 2.6 per cent. while those of other European countries will either not grow at all or will contract. Last year, the German economy contracted by 7 per cent. and the French economy by 5 per cent., while ours grew by 2 per cent.
That view of manufacturing was emphasised by the hon. Member for Coventry, North-West (Mr. Robinson), one of the few Labour Members with an active interest in manufacturing and business. He said that the recovery is happening and must be protected, a view shared by the London Business School which, only last month, said :
"Our forecast suggests that the UK will settle down on a path of steady growth with historically low inflation."
That is the key to sustained improvement in manufacturing capacity and output, as we saw in the 1980s, as a result of three Government policies. The first is low inflation, which is crucial to the ability to plan and, therefore, to invest. If we are to achieve more realistic pay-back periods for investment, we need low interest rates. As we have already seen on long -term Government bond rates, low inflation is crucial to low interest rates. If we want to get rid of short-termism, which has dogged British industry for too long, we need an assured, long-term inflationary climate, unlike the inflationary climate that we endured under the last Labour Government.
The second policy is flexibility. The Government are right to prevent British industry from being taken over by the social chapter. Companies in Germany are already closing down and moving their plant to this country, particularly to my constituency, because the "on costs"--not the basic wage costs--which they must pay as a result of their social policies are far too high.
When companies nowadays have to operate with stocks of only 2 per cent. of turnover--I visited one such company on Monday--they need flexibility in terms of their work force. They need not lines of demarcation but co- operation and better industrial relations. That is precisely what the Government's policy of flexibility has delivered. It is significant that Germany, which we all thought was the home of good industrial relations, should now see IG Metall and the public sector unions threatening all-out strikes because the German Government do not have control of their economic environment and are done down by high social costs.
Column 1010A sophisticated economy cannot specialise in everything, which is why this country, with only 1 per cent. of the world's population, 3 per cent. of its output and 8 per cent. of its exports, must attract inward investment if it is to survive. It is right that we should have such a fundamental climate that allows us to attract 40 per cent. of American and 40 per cent. of Japanese investment in Europe. That investment is not just one way. This country, possibly more than any but three other countries in the world, invests overseas, adding £7 billion a year to our balance of payments.
By specialisation and encouraging inward investment, manufacturing industry has a rosy future, provided that it does not adopt the nonsensical policies proposed by the Labour party, to which it seems to be wedded in view of its ideological opposition to free enterprise and profit.
The most eloquent statement on that subject was made last September by the hon. Member for Dagenham (Mr. Gould), who said of the Labour party :
"Where we are absolutely deficient is in suggesting that, in any respect, we have a clue about how to manage the economy or whether we should even try".
That was a senior member of the Labour party talking about the opportunity that his party has had, in 14 years in opposition, to get its industrial strategy together.
The Labour party's competence on forecasting is not much better. After the Budget in March 1993, the hon. Member for Dunfermline, East (Mr. Brown) said :
"I make one Budget forecast--that, after the Budget, unemployment will rise this month, next month and for months afterwards."--[ Official Report, 17 March 1993 ; Vol. 221, c. 289.]
Precisely the opposite happened. That month, the following month and for months afterwards, unemployment fell by an unprecedented amount--206,000 less than throughout 1993, and in my constituency, 10 per cent. less.
Not content with that, the Labour party wants to foist on this country two policies that would be totally disastrous. First, in the European context, they seem to have swallowed hook, line and sinker, the social chapter and what some members of the shadow Cabinet have been discussing, the 35-hour week. I was with one of my carpet manufacturers only last Friday and he told me that his work force--shop floor as well as management--voted almost to a man for the Conservative party at the last general election because they were terrified of the 35-hour working week which the Labour party said that they would impose on all workers as part of its European strategy.
The Labour party also talks about a minimum wage. The two European countries that have a minimum wage, France and Spain, have unemployment rates of 15 and 21 per cent. respectively. That is because the economy is fossilised and people do not want to invest there. One of the major manufacturing companies in Europe, perhaps even the world, Philips UK, if asked whether it is interested in investing in Spain in a manufacturing capacity, will say, "Sorry, no", precisely because of the high social and non-wage costs that must be incurred in that country.
The other major policy that would discredit the Labour party in anyone's eyes, let alone a sensible business man, is its idea of closing loopholes, which the Confederation of Business Industry rightly said would amount to no less than a 25 per cent. increase in business taxation in this country. That translates to £3.6 billion a year--it is not just a one-off-- which equates to somewhere in the region of one third of all existing manufacturing investment on an annual basis. If Labour Members honestly think that that
Column 1011would assist the country in gearing up to improve productivity still further and reduce the productivity gap between the United Kingdom and our European competitors, which has been reducing over the past 14 years under this Government, they are living in cloud cuckoo land and deserve the support of the electorate and the business community in this country even less than I thought. I think that the Labour party has a basic antipathy to profit and wealth creation. Labour Members are obsessed with the distribution of wealth, rather than the creation of it. Their current policies and, indeed, their argument about clause 4, which they do not want to give up even 50 years after the event, is evidence of precisely that. 8 pm
Mr. Peter Hardy (Wentworth) : The Secretary of State did not stay in the Chamber long. He was out of here like the president of a banana republic who knew the reality and recognised that his friends were all right, but understood that the problems that he had shallowly skirted round remained very serious. I wanted to intervene in his speech because, during it, I received news of the statement of United Engineering Steel for the past year. That company lost £48 million. It is interesting that one of the losses was in restructuring costs.
In 1961, at the Templeborough site near Rotherham, 9,500 people worked in the production of engineering steel. They produced 1 million tonnes of steel and made a profit of £16 million. Last year, 194 people at the same site produced 264,000 tonnes of steel--an increase in productivity of 1,200 per cent. However, the comapny made no profit and closed. So one of the most successful and effective steelworks in Europe closed not long after the Minister cancelled ISERBS and said that there would not be any more redundancies. There have been 500 more job losses in engineering steelworks in our area and the Minister knows why. It is a pity that the Minister for Industry is not here.
I hope that the Minister will answer some of my points and those of my hon. Friends because our people demand answers. They demand answers because they know that the engineering steelworks in the Rotherham area are the best in Europe. They know that nothing in the Community steel industry can match us. They know that we hold the world records and Europe does not. They know that our workers and management have put everything into that industry and achieved the potential of enormous success. However, they have not met success, certainly not on the scale that they should have done, simply because the Government have been taken for a ride by more intelligent and competent nationally interested Ministers from the rest of the Community.
During the statement about the fine on British Steel, I asked the Minister a supplementary question about unfair competition and subsidies being put into their engineering steel industry by our competitors. The Minister said that that had stopped. I asked him when it had stopped and he said now. Did it stop on that day? Has it stopped since? Will it stop? Under this Administration, I do not think that it will stop because the British Government are regarded as a soft touch by our European competitors. The steelworks in Spain which competes with the works in Rotherham is
Column 1012bankrupt so its Government picks up the labour costs and it continues to compete. The two German plants which compete with Rotherham cannot match us. However, the Bremen local authority proposes to buy the Klockner works in order to keep it operating at a loss.
We are all right on a level playing field but we are not getting a fair deal. What is worse, Ministers are not capable of ensuring that a fair deal is obtained. If we are not getting a fair deal, let them give other people the chance to ensure that areas such as mine are not destined for the label which it has been given by the Community of being one of the 10 most deprived areas inside the Common Market. The Government have destroyed the mining industry and a large part of our engineering industry. Would they happily see the most successful engineering steel industry perhaps in the world but certainly in Europe destroyed because of the incapacity of Ministers and the inability of Commissioners properly to pursue policies?
I shall give an illustration and then I shall have to finish because of the time limit. Since 1975, the steel labour force in Britain has fallen by 78 per cent. In Germany, it has fallen by 40 per cent., and in Italy it has fallen by 47 per cent.
[Interruption.] Tory Members may not represent steelworkers, otherwise they would not be amused by these tragic figures. Germany had 220,000 steel workers and now has 132,000. The United Kingdom had 183,000 steel workers and now has 41,000--and it is going down further at a rate of knots. I have to live with those figures because I live in my constituency. Last year, at one of the schools in my constituency--it is a good school-- only four young people got jobs. If we do not get the economy right and the industrial base of this country reinvigorated, fewer young people will get jobs and the consequences for this nation will be an unutterable tragedy. In the forthcoming by-election, I certainly hope that the people of Rotherham will cast the verdict on the Government's record that needs to be placed.
Mr. Michael Bates (Langbaurgh) : I shall begin my remarks by apologising for not being here for the opening speeches, which I would like to have been here for, but I was attending the Select Committee on Health. I trust that the House will accept my apologies for that.
Manufacturing is close to my heart as I come from the north-east. Whenever I see the subject on the screen or the Order Paper, I want to take part in the debate because manufacturing is vital. I have a great love of the instinct of manufacturing, which is making things and selling things. That is a good instinct to have for an economy. I shall respond to some of the remarks made by the hon. Member for Wentworth (Mr. Hardy) about the subject of British Steel. I share some of his views because I have British Steel at Skinningrove in my constituency. We also have the Teesside works which is one of the most productive works in Europe, if not the world. I also share the distinct anger at the fine imposed on British Steel which was completely disproportionate to the fines placed on other steel manufacturers by the European Commission.
Let us be absolutely clear on that point--the fine was imposed by the European Commission. I totally deprecate the decision to apply that level of fine to British Steel, especially when it is compared with some companies which have been involved in the same cartel. The fines imposed on the other companies amounted to the princely
Column 1013sum of 8 ecu. According to a newspaper this morning, that should be about £4.50, compared with £25 million. That is more than the half-year profit of British Steel. It will have a catastrophic effect on British Steel in my constituency and across the country. I smelt something rather unsavoury in the announcement. I put two announcements side by side ; the announcement in December related to steel capacity cuts and efforts to cut capacity within the European Community. We are at one in believing that everyone else should have the cuts. That is logical because we want to put Britain first. We believe that British Steel is the premier steel manufacturer in the world. However, it is a little rich for Labour Members to talk about British Steel because that was not the score in the 1970s. It brings a wry smile to our face because the Opposition fought privatisation tooth and nail and it is that which brought about the profitability of which we are proud and which we wish to protect.
We always want someone else to take the capacity cuts. We want the Portuguese, the Spanish or the Italians to take the cuts--in fact, there should be great emphasis on the Italians who ought to be bearing the brunt of the capacity cuts. However, we are part of a community and there must be agreement. That involves some tough bargaining.
We must remember that the Labour party signed up to the decision to give away our national veto at the Council of Ministers. Where would that leave us in our negotiations on issues such as this? I have absolute confidence that our Ministers at the Board of Trade are fighting our corner well and I wish them success.
I am certain that British Steel will appeal against the fine. I dare suggest that when the ink is dry on the agreement on capacity cuts, we may find that the heavy fine on British Steel is rescinded somewhat by the European Commission.
British Steel is very much a part of the manufacturing base of the north- east. That manufacturing base is important to us because we have such a history and we have done rather well. The first railway was built between Stockton and Darlington. The first electric lightbulb was in Gateshead at Thomas Swan's house off Kells Lane--I should know that because I used to live behind it. Steamships were built in the north-east and turbines were perfected by Armstrong. That great ingenuity has been the cornerstone of the north-east and provided its wealth. That manufacturing created the demand for raw materials such as coal and iron ore which then went to the steelworks. Therefore, there was interdependency between the industries.
I could tell stories similar to those of the hon. Member for Wentworth (Mr. Hardy) about British Steel on Teesside. At the beginning of the 1980s it used to manufacture 1.5 million tonnes of steel a year with 25,000 employees. It now manufactures 3.5 million tonnes a year with 5,500 employees. That is industrial success. The separate issue involves the challenge of finding jobs and places for those who have lost their livelihoods and for the communities in which they live.
If one takes away the need for steel, that has an effect on coal. It has been a sad year for the north-east. The last deep mine in the north-east has closed. That affected members of my family. My father-in-law was a miner at Easington until a few years ago. I know that my hon. Friend the Under-Secretary who is sitting on the Front Bench has great affection for the British coal industry. We
Column 1014feel strongly about those old industries. However, when we can import coal for a fraction of the cost of mining it here, questions must be asked.
We talk about demand and energy generation and the way in which industry should be directed to use coal. One of the great changes in the level of demand has come about as people switch from coal fires to gas in their homes. Individual consumers have made that choice because they think that it is cleaner and more cost effective, but they deny that choice to industry. Industry must have that choice. New industries bring in their wake new jobs and new prosperity. In the north-east, on Teesside, we have the Enron power station. It is a £850 million investment and generates power from gas. We have gas from the North sea, supplied through the central area transmission system pipeline. That is another £1 billion investment and much of the pipeline is manufactured in the north-east. That brings jobs and prosperity.
Many people from the north-east work offshore. I had the privilege of visiting the Tiffany platform in the North sea. I saw many people from the north-east using their skills in the North sea in the construction of modules, in drilling and in the upstream and downstream aspects of oil and gas production. That was very encouraging. It is said that between 11,000 and 12,000 jobs in the north-east now depend on the offshore oil and gas industry. There is a link with the past. We can think of our great prowess as shipbuilding manufacturers. People in Sunderland built ships for the Japanese navy. We look with pride and nostalgia at our past and say that that is what we want to recreate. We are not building as many ships on the Tyne now, but companies such as AMEC are building offshore platforms. It is the same type of work but in a modern generation.
Many people in the north-east feel that previous Labour Governments-- Conservative Governments that preceded them must accept some responsibility --mollycoddled British industry. If tough decisions had been taken in the 1960s and 1970s, we would not have had the pain of the 1980s during the massive transition as Britain moved towards the 21st century. It renewed its ability to compete on all fronts and some painful changes had to be made. We must look to the future and see what can be achieved.
The north-east has had great success in attracting inward investment. About 40 per cent. of all inward investment into the United Kingdom comes to the north-east. It comes because of the skills of the population--the great indigenous skills of making things, building things and selling things which made our forefathers great and which are making us great now.
There is great pride at Nissan. That company wants to stick a Union jack on the cars exported back to Japan because the people there believe that that signifies a better-built Nissan car than those they build themselves. That is the modern equivalent of selling ships from the Tyne or the Wear to the Japanese navy. We should embrace it for what it is. It is a great transformation, demonstrating our skills. We must take pride in our nation and our region.
Another reason why people come to the north-east was shown by the recent decision of Black and Decker--we are not part of the social chapter. We cannot divorce the two. I remember reading the name of Karl Kratzenburg-- that is the type of name one does not forget. He was a machine shop supervisor in Limburg in Germany. He believed that
Column 1015capacity at Black and Decker had been shut down in Limburg and moved to Spennymoor in County Durham because, as he said, "It's simple. Industry must be flexible, the social chapter is not." He encapsulated it all in a short phrase. I do not know whether that was a translation or extremely good English, but he got the message across and we have accepted it.
If the north-east is to demonstrate its industrial and manufacturing prowess on the world stage, we must remain competitive ; competitiveness is what the Government is all about. We are not about mollycoddling, or protecting industry from the harsh whims of the market. That does nobody any good in the long term. We are now facing up to the future and to new challenges.
I will give an example of those new challenges. Rather than calling in a statutory board to tell people where, when and how much businesses ought to invest, and rather than making the old mistakes, two men--Karl Watkin, a north-east business man, and Mike McCullagh of the Marske machine tool company--have set up an organisation called Manufacturing Challenge. The organisation has two objectives, which are to double output and triple exports in 10 years.
The Opposition would tell us that a big bureaucracy, and perhaps a quango, was needed to organise and help the investment. They would sanction billions of pounds to direct that investment to various plants in the north -east. The two business men involved in Manufacturing Challenge said that they did not want a penny, and that they wanted to rebuild the manufacturing base of the north-east and develop it themselves. Business men and entrepreneurs looking after business men and entrepreneurs--that is the way it should be. Already, 1,000 manufacturing companies in the north- east have signed up to the Manufacturing Challenge. It is a great success, and the firms are helping each other, rather than providing subsidies. One company goes to another in the north-east before it buys goods from overseas and asks whether it can get the goods in the region. If not, Manufacturing Challenge will provide help to tell the company how to manufacture those goods to customer specifications, so that a firm is buying manufacturing goods and services within the north-east, rather than going overseas. That is the modern way--the Conservative way--in which to regenerate the manufacturing base of the north-east, and it is one which I support.
Mr. Deputy Speaker (Mr. Geoffrey Lofthouse) : Order. In the time available before the winding up, there are no fewer than six hon. Members who are hoping to catch my eye. I hope that, with a bit of co-operation, I will perhaps be able to call them all.
It is a pity that the hon. Member for City of Chester (Mr. Brandreth) swept into the Chamber, made his speech and swept out again, because I wanted to say something about his speech. The hon. Gentleman talked about business strategy and about industry standing on its own feet and not needing hand- outs. That is the man whose own business setting up royal exhibitions collapsed after receiving a grant of £200,000 from the English tourist board. That
Column 1016money was lost, and not repaid. When I hear that kind of stuff from Government Members, it sticks in my throat. The Government Members who have directorships and who are Lloyd's names and receive grants and loans are always the first people to criticise the minimum wage and the social chapter.
The hon. Member for Langbaurgh (Mr. Bates) talked about inward investment. If one looks at their performance, foreign inward investors pay higher than the going rate for indigenous United Kingdom-owned companies. That is a fact. Wages paid by foreign inward investors per head are 24 per cent. higher than those paid by United Kingdom-owned firms. Their productivity is 45 per cent. higher and their investment per head is 92 per cent. higher.
I will touch briefly on the speech of the President of the Board of Trade, which was typically vacuous. He said nothing at all, like so many of his Government colleagues. Conservative Members exist on a different planet and they operate in another dimension where they see things that other people do not see. They see growth, productivity and a booming economy where the rest of us just see dust. The President of the Board of Trade has a nerve. My hon. Friend the Member for Livingston (Mr. Cook) referred to the right hon. Gentleman's book "Where There's a Will", which was published in 1987. In it, the President said :
"It is simply not an option for the British Government to tell the country's motor industry to make its own way in the world An ominous development has been an increase in foreign ownership and control. Foreign investment and interest is, of course, to be welcomed, but control has its dangers. For the major parts of the British motor industry to fall entirely into foreign hands would leave it a hostage to decisions in Detroit, Paris, Turin and perhaps Tokyo."
The amazing thing was that, when challenged by my hon. Friend, the President said that he stood by every word. When Rover was sold to BMW, the right hon. Gentleman was somewhere in the far east on a trade mission and one of his Front-Bench colleagues had to deal with the matter. The President of the Board of Trade exists in a hall of mirrors where reality is not quite reality.
The Under-Secretary for Technology put his name to a document entitled "Manufacturing into the late 1990s". That document contained all the buzz words, but was selective with the statistics. The hon. Gentleman said in the foreword that from 1981 to 1992--it is always 1981, and never 1979--
"UK manufacturing output rose by over a fifth".
I have had the Library recalculate those figures going back to 1979. They show that output rose not by one fifth but by 6 per cent. The Under- Secretary added that investment had risen by one third, but the Library tells me that, when the figures are recalculated going back to 1979, there has been a 12.8 per cent. decrease in fixed investment in manufacturing. In the glowing foreword, the hon. Gentleman talked of exports rising by three quarters. Of course there has been an increase in the volume of United Kingdom manufacturing exports, but it has risen by 56 per cent. and not 75 per cent. The Under-Secretary's own Department gave evidence to the Select Committee on Trade and Industry on the competitiveness of manufacturing industry in the United Kingdom, and it was recognised that things were spinning badly out of control. After 15 years of Conservative party stewardship, the United Kingdom has slipped to 18th of the 24 OECD countries. That is a pitiful record, yet the
Column 1017Government tell us that everything in the garden is lovely. That does not correspond remotely to the perception of people outside. In my area in the north-west, we lost 88,000 jobs in manufacturing industry between January 1992 and March 1993. There has been an acceleration since then, but I do not have the figures to hand. My constituency has the highest percentage of the work force employed in manufacturing industry of any constituency in Britain. We have had a cascade of job losses in recent years. In the past year, there were job losses at Smith and Nephew at the denim plant. The United Kingdom no longer makes denim for jeans and for clothing.
Mr. Oppenheim indicated dissent .
Mr. Prentice : The hon. Gentleman shakes his head, but it is an incontestable fact that the United Kingdom no longer makes denim. There have been job losses at Rolls-Royce in my constituency, where aeroplane engines are made.
My constituency makes not just boots and shoes but high-tech components. Baxter Healthcare is a United States multinational company that makes intravenous drips and high-tech equipment for the national health service. It has pulled up sticks and decamped to Malta where, apparently, they pay lower wages than in north-east Lancashire--which beggars belief. We have seen the closure of Project Engineering and Wadkins of the Colne, which made woodworking machinery. There has been a collapse of manufacturing in my region. The rhetoric of the Department of Trade and Industry and reality diverge greatly. When the Department of Trade and Industry gave evidence to the Select Committee on Trade and Industry, it said : "Manufacturing is the key tradeable sector of the economy contributing roughly three times as much to exports as services." The hon. Member for City of Chester (Mr. Brandreth) said that there was no difference between manufacturing and services. He thinks that Britain can run itself by staging royal exhibitions--
My hon. Friend the Member for Livingston (Mr. Cook) said that manufacturing trade moved into deficit in 1983 for the first time since the industrial revolution. It did so under a Conservative Government and it stayed in deficit, reaching a massive £17.3 billion deficit in 1989.
The President of the Board of Trade said that our aerospace industry was a triumph. Rover was taken over by BMW in Germany because British Aerospace said that it needed the capital to develop the core aspect of its business- -aerospace. British Aerospace told the Select Committee on Employment--the report was published in January this year--that its problem was the availability of capital. In its evidence to the Select Committee on Trade and Industry last year, the Department of Trade and Industry quoted the Confederation of British Industry approvingly. It said :
"Uncertainty about the future demand and inadequate returns on investment are consistently seen as more important influences than the cost, or availability, of finance."
That is clearly not the case for British Aerospace, one of our biggest exporters.