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I have a document from Rolls-Royce, which manufactures aeroplane engines in my constituency. It mentions the uneven playing field on which the aerospace industry in Britain has to compete with other countries. It states that it is a major concern that companies in the United States and other countries receive support from their Governments for research and technology that British companies do not. Since 1972, launch aid has provided £500 million, but it will have to be paid back. It is not a grant but a loan--

Mr. Jim Cousins (Newcastle upon Tyne, Central) : And the Government make a profit.

Mr. Prentice : Yes, the Government make a profit.

Rolls-Royce finds it difficult to operate in a competitive environment without proper support from the Government.

I should like to say much more, but I am conscious of the fact that many of my hon. Friends want to speak, so I shall close my remarks. 8.35 pm

Mr. Phillip Oppenheim (Amber Valley) : It was a little unfortunate that the hon. Member for Pendle (Mr. Prentice) launched such a vitriolic attack on my hon. Friend the Member for City of Chester (Mr. Brandreth). Had he not done so, I should not have been tempted to remind the House that the hon. Gentleman was the leader of Hammersmith and Fulham council which, under a Labour regime, indulged in the disastrous rate-swapping scheme that lost ratepayers millions of pounds. He should be careful before attacking Conservative Members.

Mr. Gordon Prentice : The hon. Gentleman referred to my alleged responsibility for rate swaps in Hammersmith and Fulham council, presumably when I was leader. An independent report completely exonerated me and all elected members.

Mr. Oppenheim : If I were the hon. Gentleman, I would also try to disown that disastrous policy.

On a more consensual and emollient note, I think that probably all hon. Members would agree that manufacturing is important ; it is an important component of any advanced industrialised country. But the wording of the Opposition motion is particularly ill-chosen. I think that we would all agree that in an ideal world we would prefer to have a genuinely British indigenous player on the global car market. We did not lose that chance through the takeover of Rover by BMW ; we lost it in the 1970s when British Leyland was the butt of international jokes and was churning out products such as the Allegro and the Marina--international jokes in themselves that were not seriously marketable on the home market, let alone on export markets.

We must ask ourselves why British Leyland got into that position. The answer, to a significant degree, is that Governments of all parties--the Conservatives were almost as much to blame as Labour--meddled and fiddled with the car industry. They told it what to do. They told the companies that they had to merge and told the British car industry where it could build its plants. They insisted--probably for well-intentioned reasons-- that it should build plants in places like Liverpool and Scotland, well away from the core manufacturing areas. As a result, bodies and engines were shipped all over the country at great expense. We all know why that was done--it was a well-intentioned


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regional policy--but the net result was that the British car industry was severely handicapped. I have not mentioned the industrial problems that we all remember in the 1960s and 1970s. British Leyland suffered from meddling. Its successful parts--the truck and the four-wheel drive sections--were made to cross-subsidise the unsuccessful volume car sector. By the end of the 1970s, most people would not have given the British-owned part of the car industry much chance of surviving.

It is a tribute to the Government's policies and, more important, to the enormous efforts of the management and work force of Rover that it managed to grope its way back to a position where a company of the prestige and performance of BMW wants to take it over. To suggest that Rover is a jewel of British manufacturing that had a chance to be a global player is nonsense. The Rover Group, for all its successes in the past 10 years, was third in the home market and had a derisory share of the European market. It hardly sold anything in the United States or Asia and just about managed to crank up its four-wheel drive production by a few per cent. over a period when the Japanese managed to increase production by 1,000 per cent. We must get the Rover-BMW case in perspective.

It was unwise of the hon. Member for Livingston (Mr. Cook) and Opposition Members to talk about the steel industry. During the debate, they have concentrated on criticising foreign subsidies for foreign steel makers. They have told us that the United Kingdom industry is the most efficient in Europe--about which I agree. In the 1970s, Britain had a £1 billion a year deficit in steel products ; we now have a £1 billion a year surplus. By the end of the 1970s, British Steel was the world's largest loss-maker and cost the taxpayer hundreds of millions of pounds each year that could have been better spent on hospitals and schools. British Steel is now the most efficient steel maker in Europe and pays money to the Exchequer in taxes that help to fund the health service and schools. British Steel has been transformed. Why? There has been an end to the national champion-style meddling that characterised Government policy towards steel in the 1950s, 1960s and 1970s. Again, it was not just the Labour party. In the late 1950s and early 1960s, the private steel mills wanted to build a huge integrated steel plant in north Wales, but the Government said, "No. For regional policy reasons, you have to split the plant in two--half in north Wales and half in Ravenscraig."

Ravenscraig is inland, so all the coke had to be expensively shipped inland to the plant and most of the finished product had to be shipped expensively to the markets, which were not in Scotland. We all know why Governments did that ; it was well-intentioned, but such meddling with the steel industry saddled it with the burden of inefficient, uncommercial capacity.

In the 1970s, when the British steel industry was nationalised, Government policy became worse. It was no longer the market or the management who decided what capacity of production the industry should have--it was a combination of Ministers, bureaucrats and trade unions.

At one point, the management proposed one figure and the politicians suggested another. That was not enough for the unions and they ended up compromising with another figure that was way above what the market would bear. As a result, British Steel was meddled almost to death and by


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the late 1970s it was the world's largest loss maker. That was a result of the industrial strategy which the hon. Member for Livingston proposed for British industry today.

What brought British Steel back to health was a combination of privatisation and market discipline and the end of the meddling from which the company suffered in the 1950s, 1960s and 1970s. The hon. Member for Livingston has an absolute cheek to tell us that British Steel is now the most efficient steel company in Europe, when he and his party opposed tooth and nail the policies--I admit that they were difficult policies--that had to be implemented to bring the company back from the brink of disaster. It is extraordinary that he attacks subsidies elsewhere in Europe, when his whole industrial policy is predicated on subsidies for British industry.

I should like to think that, in their maturity, the hon. Gentleman and his hon. Friends have reached a sophisticated realisation that markets work better than interventionist industrial policies, but I suspect that their conversion has more to do with opportunism and hypocrisy than with a fundamental realisation of where we went wrong in the 1950s, 1960s and 1970s and where we should be going now.

Dr. Liam Fox : Does my hon. Friend accept that the argument goes further and what he calls well-intentioned meddling is fundamental flawed? When Governments have industries in the state sector, they will always make decisions for political and employment reasons and not for economic and profit reasons. Therefore, industries in the state sector are bound to feel that they will never be subject to market discipline.

Mr. Oppenheim : My hon. Friend is absolutely right. I was coming to the fundamental reasons why state control of industries or state intervention is almost invariably doomed to failure. There are a number of reasons, and my hon. Friend perceptively put his finger on one.

First, for all their undoubtedly excellent qualities, politicians and civil servants are not business men. They do not have access to the same information as the market. The market is the aggregate of thousands or millions of decisions by investors, customers and business men and, by definition, their aggregate decisions will be better informed than those of civil servants and politicians. Secondly, as with the steel and car industries, the decisions of politicians as to where to put investment are almost always distorted by regional and social considerations which, however well-intentioned, lead to uncommercial decisions.

Thirdly, when Governments give subsidies, they do not tend to support those industries that most need the money or could make best use of it ; they tend to subsidise those industries with the most lobbying power, and they tend to be the industries that will not use the money most effectively.

Finally, all too often, Governments put money into projects that are unsuited to the underlying fundamentals of the economy. That occurs particularly in the third world. The Indians have poured money into a rocket programme and the Brazilians have poured money into a computer programme.

I venture to suggest that the billions of pounds poured into the British nuclear industry in the 1950s, 1960s and 1970s fall into that category. When one considers the huge


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resources in terms of the highly skilled manpower, the brain power and the financial resources that went into that industry, and the result that was achieved in terms of high-priced electricity, one thinks of what could have been produced had all those resources been efficiently directed to where they could be used most productively by the market. One can see the errors that occur when politicians and civil servants have grandiose dreams of the great industries that they would create which almost invariably end up as disasters distorting the economy, draining it of resources and costing taxpayers large sums of money.

To return to steel, the European steel industry is a classic example of an industry which has been subject to politicians and state industrial policies for the past 30 or 40 years. Every European country, including Britain in the 1950s, 1960s and 1970s, has poured billions of pounds into its steel industry and the result is the mess of inefficient over-capacity from which we all now suffer. Industrial policy is almost invariably a beggar-my-neighbour policy. At the moment, British Steel is suffering from the ill-founded policies that are still, unfortunately, pursued in France, Italy and Spain.

The American writer H. L. Mencken said :

"For every complex and intractable problem there is a solution that is simple, plausible and wrong."

Industrial policy is just that : simple, plausible and wrong. However, the world is more complex than that. Markets may not be perfect, but they are a great deal less imperfect than business decisions made by politicians and bureaucrats.

One of the common theories from the Opposition is that we are trying to put Britain into a low-wage market to attract industry. The hon. Member for Livingston and his hon. Friends have completely missed the point.

To be sustainable, wages have to be matched by productivity. If wages are higher than is justified by the underlying productivity of the economy, the result will be high unemployment, as has happened in Spain in recent years.

How do a Government raise productivity in an economy? One of the key policies is improving education. The key industrial policy in Britain must be to improve standards of education, which over the past 30 or 40 years have slipped below those of our main competitors. That is why it is so important for the Government to press on with the reforms which they started in 1988 and which probably will be the most crucial component if we are to recover our manufacturing expertise and prowess.

Making labour truly productive requires good availability of capital. Opposition Members have told us that we need a German or Japanese system whereby the banks closely co-operate with industry, and with two-tier boards and supervisory boards such as those in Germany.

They should tell that to Metallgesellschaft or Philips in Holland. Daimler- Benz is another good example. Those companies had supervisory boards, and as a result they were not put under shareholder pressure. They became arrogant and took decisions that no company subject to the scrutiny of shareholders would have made. They have now made vast losses. That is why in countries such as Germany and Holland the system of supervisory boards and close links between banks and industries is being abandoned.

Shareholders are the crucial link in the chain of accountability. Countries such as Germany and Japan have greater availability of investment capital which allows


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their companies to take a long-term view. The reason is that they save more because the pool of investment capital for industry is pre-eminently private savings.

In Britain in the 1960s and 1970s, we clobbered savers with high taxes--98 per cent. investment income surtax on the savings of top rate taxpayers. That was no incentive to save. Under Labour, we had negative real interest rates, or interest rates below inflation. Who in their right mind would save when interest rates are below inflation and when what little profit is made is taxed at 98 per cent.? I am glad that the Government have reversed that policy, yet I do not think that Opposition Members have learnt their lesson, because they went into the previous election with a policy of reintroducing the investment and income surcharge. Until they realise that private savings are the real pool of capital, and that that is what industry must draw on to invest, they will carry on making the same old mistakes.

The key lessons from the experience of Germany and Japan are that they have an awesome, rigorously educated work force, which is their key competitive advantage. Until recent years, they maintained high levels of monetary and fiscal stability and maintained low taxes and incentives for savers, which allowed industry the pool of capital for investment. We are now pursuing those policies in this country. They are achieving results. Despite what Opposition Members have said, our performance has improved dramatically in recent years. In the 1960s and 1970s, we were consistently bottom of the Group of Seven and European Community countries on overall output, manufacturing output and growth in productivity. In the 1980s, and again now, we have been at least as good as the average of the G7 and European Community countries. In many cases, we have been near the top of the league tables. We are now at least average, if not higher than that, in the league tables.

Manufacturing output fell under the previous Labour Government, yet from the way in which Labour Members speak, one would think that everything was rosy in the garden. The truth, however, is that much of British industry was dead on its feet and multinationals, such as General Motors and Ford, were falling over themselves to shift production out of Britain and on to the continent. The opposite is now true. Under the Conservative Government, manufacturing output increased rapidly during the 1980s, and will again during the 1990s. Multinationals such as Ford and General Motors, and the Japanese manufacturers, are coming back to Britain. Britain is once again a good place to make things. We may not have made up all of the ground that we lost in the 1950s, 1960s and 1970s relative to our competitors, but we have made up a great deal of it. If we maintain our policies of trying to improve education, maintaining monetary stability and giving incentives for savers, Britain will once again become a pre-eminent country for manufacturing.

8.52 pm

Mr. John Denham (Southampton, Itchen) : The hon. Member for Amber Valley (Mr. Oppenheim) has just made a rather rambling presentation of the type of extreme free market views that I had thought--until earlier today-- that the President of the Board of Trade was criticising within the Conservative party in his book.

I heard the President of the Board of Trade speak this afternoon, and clearly he has also signed up to the view that


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the Government should do nothing, make no intervention and create no institutions to develop effective manufacturing industry. Yet the persistence of that view in the Conservative party, despite the self-evident damage that is being done to manufacturing in this country, is one of the remarkable political phenomena of the past few years.

Any cursory examination of any part of British manufacturing industry today will show that, far from the Government being able to say, "You get on with the job. What you do is nothing to do with us," it is intimately related and affected by Government policy. That is as true today as it has ever been.

In the south-east of England, outside London--the part of England where I come from--we have lost about one in six manufacturing jobs since 1990. Fewer than 700,000 people in the whole of the south-east region now work in manufacturing industry.

Since the beginning of the 1980s, at least 13,000 manufacturing jobs have been lost in the Southampton and Eastleigh travel-to-work area. Those job losses are truly massive. The hon. Member for City of Chester (Mr. Brandreth) argued that the job losses mean nothing, that they simply reflect changing technology or changing working practices. Although that element is there, it is clear from a look at industries operating in south Hampshire that the effects of Government policy have led directly to many of those job losses. Let us take a tour of some of the major employers in the Southampton area. On Monday afternoon, I visited Aerostructures at Hamble--the visit was arranged well before this debate. It is a former subsidiary of British Aerospace and is now an independent company. That company has shed, or will have shed when the latest redundancies are completed, some 20 per cent. of its work force in the space of three years. I was told that that is partly to do with changed working practices and the use of new technologies and processes ; but a significant part is due to the fall in orders from the aerospace industry.

When we were talking about the work that that company does for the airbus project, the European fighter aircraft and the defence industry, it struck me that, although that company is working hard and successfully to move into civil aviation projects with no Government links, it is hard to argue the case because

Governments--here, in the European Community, in the United States and in the third world--in terms of orders for the aerospace industry, directly affect the ability of that company to have orders to chase. The idea that a company such as Aerostructures can exist in some free-market paradise, unaffected by the decisions of Government, is quite wrong.

If one looks at it the other way round, that company does not want to be run by the Government. It wants a Government who have a vision of the future of the aerospace industry, who can back key projects, who are willing to invest in the very expensive costs of developing new projects and aircraft. That is where Government responsibility comes in. It is the way in which the Government, in so many areas of industry, have washed their hands of any responsibility for taking a strategic view of British industry that has been so damaging. In my constituency, Philips used to have a fairly significant production of semiconductor products. That has almost entirely gone. Part of it went to the third world--


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that is perhaps labour cost competition-- but part of it went to Holland, because the Dutch Government were prepared to work with Philips to provide the technology to develop the next generation of silicon wafers.

Conservative Members do not agree with a Government working with private industry. That is fine, but it is no use our not agreeing with it when such collaboration is under way in other countries. The result is that Philips has a high standard of research and intellectual property work going on, but without the production side to add value to the work on that site.

Pirelli, which had major job losses last year in Southampton and Eastleigh, is directly affected by the Government's failure to get major infrastructure projects off the ground, such as the channel tunnel link, with the requirements for signalling and communications cables. What Governments do, whether they have a view to the health of manufacturing industry, makes a difference.

Ford has thankfully returned just this week to five-day working. But nobody can deny that the long periods of short-time working were directly affected by Government mismanagement of the economy and Government failure to boost the small and medium-sized businesses that provide orders for Transit vans. One fifth of all jobs at British Rail Manufacturing Ltd. in Eastleigh are to go : that development has occurred in the short time since the passage of the Bill to privatise the railways. Government policies can directly destroy jobs.

It is true that there have been technological changes and moves towards more efficient working practices, but any examination of any part of manufacturing industry anywhere in the country will show that the actions of Government have considerable influence on the success of the manufacturing sector. The Government's real crime has been not to face up to the challenge--not to look at all the areas in which their actions influence the success of industry, and ensure that we make the best of that industry.

The result of the shake-out of jobs in manufacturing industry has been a large and significant change in the nature of the labour market. Conservative Members may wonder why, despite some fall in the headline levels of unemployment, they seem to be getting so little political reward for what they considered a great achievement. In fact, the well-paid, full- time, permanent jobs that used to exist in manufacturing industry are now being replaced by possibly a slightly larger number of jobs, but jobs that are poorly paid, lower skilled, often part-time and often non-permanent ; they tend to be in the service industry.

One of the major reasons why the Government are given no credit for the small fall in unemployment is the current rise in job insecurity. Those in permanent manufacturing work know that the chances are that they will either lose their jobs altogether, or be shifted from pensionable permanent jobs to contract jobs with no pension rights and few secure employment prospects.

Mr. Purchase : My constituency presents a mirror image in terms of manufacturing job losses. I have a list of more than 2,000 full-time manufacturing jobs that have been lost in Wolverhampton. That position-- which no doubt also applies in my hon. Friend's constituency--demonstrates beyond doubt the collapse in manufacturing output and jobs in this country.

Mr. Denham : I agree.


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I have listed some of the ways in which Government policies have affected job losses in the recent past. Let me now mention some of the Government's responsibilities for future planning.

It is generally recognised that about a fifth of all jobs in the south Hampshire area depend on the defence industry, and the rundown in defence orders is obviously affecting that industry. A number of problems arise. One is that the Government's procurement policies show little concern for the health of defence-related industries. I know that Vosper Thornycroft in Southampton has had to wait far too long more than two years too long--for the chance to tender for new minehunter orders ; that has imposed a variety of costs on the company and its work force, because of the lack of orders for those world-beating ships.

It often seems that the Treasury and the Ministry of Defence feel no concern for the health of the defence industry. Even now, with the rundown in defence spending, the Government should be planning their defence procurement to give long-term security and a sense of direction to industries that are supplying the country's armed forces.

We know that the defence industry is contracting. The Government's second failure is that they have done nothing positive for, in particular, the smaller companies that rely on supplying the main defence contractors. I feel that it will be relatively difficult to second-guess the commercial decisions that major defence-related industries should make.

The real challenge for defence conversion, however, relates to small firms employing 25, 50 or 100 people--firms that supply the main defence contractors, have only ever worked in the defence sector, are used only to the rhythms and routines of supply in that sector and often have highly skilled work forces and a well-developed use of technology.

It is those companies that, all too often, are going under completely nowadays, as the number of major defence orders is reduced--and it is those companies that are likely to benefit most from advice and support enabling them to review their products and the development of new products, learn about new markets and shift into those markets, abandoning their dependence on defence. It is a scandal that the only support available to small to medium-sized businesses wishing to reduce their reliance on defence has been the European KONVER programme. A welcome but relatively small amount of that money is finding its way to Hampshire. It appears that the Government are quite prepared to see many small defence industries go to the wall, rather than assisting them to develop new products and new markets.

The defence industry has a further significance. I did not understand why the President of the Board of Trade apparently defended public support for the defence sector, but for that sector alone. Much of south Hampshire's economy is based on successful defence industries, which are almost exclusively--or even exclusively--in the private sector.

That success is not a purely private sector success, however. It is the result of a partnership between the public and private sectors, which is very apparent in the defence industry, from research and development with the defence research establishments, through the development of the product, to the final purchasing of the product. What I do not understand is why the Government cannnot see that, if that type of partnership can be used to


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develop a successful industrial sector, based on private companies but with the backing of the public sector, it can be used in other sectors of the economy as well.

I want to float one idea which is peculiarly relevant to south Hampshire and to the industries there at present, where a Government of vision would be backing a new industry, an industry of the 21st century, but where this Government, I fear, will not.

Any review of the scientific or professional engineering press will show a widespread prediction that, as we move into the 21st century, there will be a whole new set of technologies and industries surrounding the development, exploration and exploitation of the oceans, whether it is for energy sources--taking advantage of differential temperatures in the oceans-- whether it is to do with deep sea fish-farming, whatever the technical term for that is, whether it is to do with mining minerals on the sea bed, or whether it is to do with understanding the way in which the oceans operate because of our need for detailed climatic knowledge. Even the Government's own reports over the years have shown that there will be a major deep-sea industry.

In the south Hampshire area, there is a concentration of different skills and expertise which could be brought together to put this country at the forefront of marine science and engineering in the next century. We build every type of ship, from small yachts to steel vessels. The department of oceanography at Southampton university is a world leader in oceanographic research. The Government's own deep-sea research ships are based in Southampton. We have the nautical skills, the communications skills, the underwater cabling skills, the electronic skills. All those different skills are available in the south Hampshire area.

What is required at this stage is to turn that potential base of support for a new industry into a real new industry--something that requires insight and foresight on the part of the Government. It requires the development of the science park which is envisaged for Southampton to enable new industries to develop, based on academic research. It requires a long-term commitment by the Government to seeing this country as a centre for deep-sea research and exploration.

It need not all be done by the Government themselves, but they need to show a lead. That would be to apply the model used in the defence sector, but with rather less money, to a new industry of the 21st century. The challenge for the Government will be to do that, to the benefit of the people of my area.

9.7 pm

Mr. Richard Page (Hertfordshire, South-West) : I apologise for not being in the Chamber earlier, due to the fact that I was on the Public Accounts Committee.

My brief contribution this evening is based on the position of one who has consistently argued the need for a strong manufacturing base. That is not to decry the advantages of the service industries, which are to be welcomed ; but, if the calculation is correct that we can export 80 per cent. of our manufacturing but only 20 per cent. of our service, it is folly to ignore our manufacturing base. The 80-20 split has never been seriously challenged.

I have never believed that service will save the day, so we must have a strong and powerful manufacturing base. When in the 1980s the noble Lord Ridley was looking


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forward to the abolition of his Department- -he was Secretary of State for Trade and Industry at the time--I nearly despaired. The situation today, however, is different, and I believe that, with this Government, under the leadership of my right hon. Friend the Member for Huntingdon (Mr. Major), we are seeing a commitment to manufacturing that has been lacking for several years. Some examples of a genuine improvement in our manufacturing base are coming through. I confess a personal involvement because I shall speak about the car industry, in which I did all my training and with which I have certain involvements.

In 1991, there were 1.593 million new car registrations. The next year, the figure had increased slightly. In 1993, the figure had increased to 1.778 million, and it is calculated that in 1994 there could be as many as 1.9 million new car registrations. I regard that as a barometer of success, because the tentacles of the motor industry reach forth and down into our economy more than those of practically any other industry.

I regard the machine tool industry as an even more important indicator. Machine tools are the fundamental starting point from which our economy can start to grow. It has been a disappointment to me for years that, as a percentage of our gross national product, the amount of money that we have invested in the machine tool industry has been remarkably small. We have fallen dramatically behind Japan and Germany. At long last, in June or July of last year, the number of orders for machine tools started to increase ahead of that for sales. That is where our country's growth will begin.

Before Christmas, I told you, Mr. Deputy Speaker, that one should always remember that a man with a JCB can dig a trench much more quickly than a man with a broad back and a big shovel. If we ignore that sector of our industry, we do so at our peril. Japan does not ignore it. Germany does not. In Japan, aid is targeted to specific sectors of industry. In one year, aid might be given for NCR machines ; in another year, it might be given for small business machine companies. I sincerely hope that we shall make greater efforts to increase investment of that nature.

That leads me to the second and last argument that I shall make tonight, and that is the question following on from inward investment. We have already heard that more than 40 per cent. of Japanese investment in Europe has come to this country, as has nearly 40 per cent. of the investment from the United States.

My criticism is that I believe that many pension companies, and many of our various insurance companies, have an investment policy which depends on the size of the dividends rather than one which takes a slightly longer-term perspective. Japan looks to the long term. Unless we put the investment in- -whether it be in machine tools or anything else--we shall not produce future growth, and we shall not be able to compete. Therefore, I would like to think that the message will go out from the House tonight to our industries, and to our pension and investment companies, that we must invest more, especially in our machine tools, to create growth in our companies. I promised that I would be brief, and I will be. Finally, I shall discuss trade associations, of which there are


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literally thousands in this country. Some of them do a good job ; some exist to choose the date of the annual dinner and the annual golf match.

The Department of Trade and Industry desperately needs to receive a coherent message from one trade association per sector of industry, so that it knows the views of that sector of industry. I know that the President of the Board of Trade has asked for that. I ask trade associations to combine, so that they can give the Government one coherent message and so that the Government do not become confused by a series of messages from all types of people that does not reflect the whole of that sector of industry. We need one trade association per sector to funnel through the deregulation requirements that we shall need for the future.

I conclude with those two points--that we need to have one trade association per sector, and that we need to increase our investment in manufacturing.

9.14 pm

Mr. Richard Burden (Birmingham, Northfield) : As I come from the west midlands, I have a great deal to say about manufacturing industry, but in view of the lack of time I shall concentrate on one issue--Rover--which has underlain the theme of the debate.

The sale of Rover to BMW means that, with the exception of Rolls-Royce and Reliant, the last remaining British-owned car manufacturer has been sold to a foreign firm. The reason why it is significant has nothing to do with petty nationalism or wrapping ourselves in the Union Jack ; it has to do with the fact, recognised by other countries, that we need a strategic decision-making role in our strategic industries. The sale has destroyed that role. It is ironic that the need appears to be well understood by BMW itself--the assurances that it has given since it made its bid have, ironically, been much more constructive than the response from either British Aerospace or the Government.

The story of British Aerospace's takeover of Rover and the subsequent sale of Rover by British Aerospace is symptomatic of the short-termism, sleaze and complacency that masquerade as an industrial policy under this Government. I say "sleaze" because Rover was sold to British Aerospace for a song and the sale was financed by sweeteners paid for by the taxpayer. I say "complacency" because the Government allowed it to happen and, indeed, colluded in the process. I say "short-termism" because the decision to sell Rover on was made in the short-term interests of British Aerospace's balance sheet ; it had nothing to do with the long-term interests of Rover or the British car industry as a whole. That is what the deal was all about, in contrast with BMW's responses since then.

The story has now jeopardised the future relationship with Honda which had been so successful. I quite understand why Honda reacted as it did, but I ask Honda to bear it in mind that the relationship with Rover has benefited both sides and does not need to end now. Honda's understandable and justifiable anger towards British Aerospace and the Government should not and need not be taken out on Rover, Rover employees or Rover plants. I hope that the relationship will continue.

It is sad that the Government are once again jettisoning and ignoring their responsibility to build bridges and to secure, even at this late stage, a strategic decision-making


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role within the new BMW-Rover partnership. They could secure that role, although doing so might present them with some ideological problems.

Discussions that are taking place in Europe could allow British Rover employees to receive information, to be consulted and to have an input in a new European-based BMW-Rover partnership, but the Government are doing all that they can to veto the development of European works councils and to stop British employees having a say in their own firms. Why are the Government prepared to stand by and allow Britain's last remaining car manufacturer to be sold to a foreign firm, while refusing to allow British employees to have a say in the same firm and to contribute to the defence of British interests in the merged company? I issue that challenge to the Government. As the discussions about works councils and supervisory boards continue in Europe and elsewhere, the Government will have questions to answer if they try to block the opportunity for British employees to defend British interests as the Government have failed to do.

A conference took place in Brussels yesterday which was attended by most of the major European car manufacturers and, indeed, by the unions and by Members of the European Parliament, but interest from the British Government was noticeable by its absence. The conference tackled the problem of overcapacity in the European car industry and dealt with the restructuring and reskilling that will be necessary if the industry is to thrive. That conference began to tackle the issue that the American Government are now prepared to tackle--producing a more environmentally friendly motor car and making available the necessary investment.

The Government say that their manufacturing policy is a success. Why, therefore, are they still looking the other way and refusing to face up to their responsibility? The sale of Rover should never have happened. The fact that it did is testimony to the failure of their policy and to their neglect of manufactuirng industry. The sale took place behind the backs of Rover's employees and over the heads of people who have made Rover such a success. The Government are responsible for that. Their collusion with British Aerospace's short-termism allowed that to happen.

It is now the Government's responsibility to ensure that, at this late stage, Britain has a strategic decision-making role. They can achieve that by talking to BMW, Honda and Rover and ensuring that the partnership continues. The Government should drop their opposition to British employees having a role and a say in the decisions of a firm that those employees have had made a success.

9.20 pm

Mr. Derek Fatchett (Leeds, Central) : I thank the hon. Member for Meriden (Mr. Mills) for his kind comments about our colleague, Mr. Ron Leighton, which will have been appreciated by all my right hon. and hon. Friends. The hon. Gentleman was right to say that Ron Leighton was one of the few people in politics who held strong views, but had mostly friends and very few enemies. His death is a sad loss to the House and his constituency.

The President of the Board of Trade asked why the Labour party was concentrating on manufacturing industry during its Supply day. If he had been here for the rest of the debate he would have heard the answer clearly articulated by all my hon. Friends. He would have realised the importance of manufacturing.


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