House of Commons Hansard Debates for 17 Jun 1994

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about competitiveness and not talk about social partnerships and social cohesion is an enormous error. An economy will not grow unless every one of our people feels part of its growth and feels committed to and involved with its growth. No matter whether people are considering starting an enterprise, where they should be in the labour market or whether they should stay with their enterprise or move to another one, they should always feel a part of it. They should always feel fully involved and, committed to its success and to its performance. We should not shy away from that.

It must be a source of great anxiety to all of us that so many of our people are poorly educated, poorly trained, poorly motivated and are low achievers--not just at school, but in the labour market as well. It is worrying that many parts of our society are underachieving. We are not realising the full potential of our people. The building of social cohesion and a true partnership are key conditions for our economic success. Let us admit that there are too many spectacular examples of Roger Levitts and Oskar Botnars sending wrong signals to many of our people about the real nature of success and enterprise and performance.

It would be sad if in talking about competitiveness we were debating a concept that engaged the enthusiasm of only some of our people. In such a debate, we must also reach out to the "invisible" people who are entering internal exile. An extraordinary feature of the present economic indicators is that not only unemployment but employment is falling. Hundreds of thousands of our people are disappearing from the statistics into a form of internal exile. Those of us who represent tough areas know that those people are there. They are the giro drops, the panhandlers and the hustlers. That should also cause concern.

Let us build competitiveness but not attempt to deny the global challenge to which the hon. Member for Hastings and Rye referred and which lies in front of us all. Let us also say that all our people and our entire work force should be engaged in that and that they should take pride and pleasure in our future economic success. 11.21 am

Mr. Patrick Thompson (Norwich, North) : I am grateful to have an opportunity to speak in the debate. I have not the slightest intention of speaking for as long as the Opposition spokesman, the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins), who spoke for some 46 minutes. In view of earlier interventions, I find that rather surprising. I shall return to the subject of the hon. Gentleman's speech.

I congratulate my hon. Friend the Member for Hastings and Rye (Mrs. Lait) on her good luck, which we all envy, in winning the ballot and on her initiative in choosing this vital subject for debate. I also congratulate her on her excellent speech, which I am able to criticise in only one respect--her use of a large number of acronyms. My speech will be brief and I must now try to make sure that it is totally acronym free. That may be easier said than done.

I listened with great interest to the lengthy speech by the hon. Member for Newcastle upon Tyne, Central. As is often the case with Opposition speeches, most of it was negative in tone and depressing in outlook and would not have uplifted anyone inside or outside the House. It is rather sad that so much debate goes on in College Green

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and I have no doubt that even at this moment many people on College Green are giving sound or vision bites to television. Those who take the trouble to listen to the debates

Mr. Martyn Jones : On a point of order, Madam Speaker. I am sorry to interrupt the hon. Gentleman's speech, but have you had any notification that the Government intend to allow time to debate the Civil Rights (Disabled Persons) Bill later today ? There are six or seven Conservative Members in the Chamber, but 6.5 million people in the country are waiting for us to discuss that Bill. Have you had any notification about that ?

Madam Deputy Speaker (Dame Janet Fookes) : That is strictly not a matter for the Chair nor for the Government. These are private Member's motions. I have no ability to control the length of this debate ; nor do I have any foreknowledge of how long it will take.

Mr. Austin-Walker : Further to that point of order, Madam Speaker.

Madam Deputy Speaker : I have said that it was not strictly a point of order. Does the hon. Gentleman have a different point ?

Mr. Austin-Walker : It relates to the fact that you referred to private Members' motions. A private Member's motion in terms similar to that which my hon. Friend wishes to move later was voted on and carried without any votes against. Can you say how that motion, which has been passed, may be given effect ? It was that the House should provide time to debate the Civil Rights (Disabled Persons) Bill.

Madam Deputy Speaker : That is still not a matter for the occupant of the Chair.

Mr. Thompson : I have congratulated my hon. Friend the Member for Hastings and Rye on her choice of subject. Hon. Members in all parts of the House must agree that there is no more important subject for today's debate than competitiveness and wealth creation, which can do only good for the health service and education and other matters. None of us should feel ashamed of taking part in the debate. As I said earlier, I was struck by the time that Opposition Members appear to be taking up in a rather wasteful way. Not least in that respect was the over-lengthy speech by the hon. Member for Newcastle upon Tyne, Central. I wish to take part in the debate because of the importance of its subject.

I was struck by three aspects of the speech by the hon. Member for Newcastle upon Tyne, Central. He spoke about stability, which was also mentioned by my hon. Friend the Member for Hastings and Rye. Of course stability is good, but in the same breath the hon. Gentleman referred critically to policy on Europe. That is surprising from a spokesman for a party which has had seven reversals of policy on Europe in the years that I have been involved as a parliamentary candidate or as a Member of Parliament.

Secondly, the hon. Gentleman made the apparent admission that his party now has no policy on wage inflation. I was not surprised when my hon. Friend the Member for Hastings and Rye picked him up on that, and I suspect that we shall hear much more about that in the coming months. Thirdly, I am surprised at the lack of interest by Opposition Members in the debate generally.

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While the hon. Member for Newcastle upon Tyne, Central was speaking, I counted the number of Opposition Members who were obviously interested in the debate and intended to take part ; judging from the attendance at the moment the number seems to be almost zero. That must be a reflection of their view of the importance of wealth creation, which we believe in and which the debate is all about because without competitiveness there is no wealth creation. The only point on which I had any sympathy with the hon. Member for Newcastle upon Tyne, Central was when he struck a note similar to that struck by my hon. Friend the Member for Hastings and Rye in referring to short-termism, dividends and the operation of the City. In that respect, I was in sympathy not only with my hon. Friend but with some of the implications of what was said by the hon. Member for Newcastle upon Tyne, Central. There, at least, I found interesting points that were worth further consideration.

I shall concentrate on education and training, but first I wish to refer to the comments of my hon. Friend the Member for Hastings and Rye on the importance of infrastructure and roads. Any Member from Norwich must have a strong interest in communications, infrastructure and roads. Since I was first elected in 1983, I have campaigned for better road communications with Norwich and East Anglia generally.My hon. Friend is right : the Government should look at this not in terms of counting how many cars or heavy goods vehicles are using the A11, but in terms of the economic benefits to the communities involved. I am delighted to support what she said in that respect and plead with my right hon. Friend the Minister for Industry to speak to our Government colleagues--particularly my neighbour in Norfolk the Secretary of State for Transport, my right hon. Friend the Member for Norfolk, South (Mr. MacGregor)--who are concerned with these matters, to persuade them to continue fighting for better road communications for East Anglia. It is a credit to the Government that much has been done and that it now takes me only half the time to drive from Norwich to London that it used to take. However, there is still a long way to go to bring the network up to standard. My hon. Friend the Member for Hastings and Rye gave me an opening which I have taken to make a constituency and local point.

Better competitive performance is essential for our success in the European Union, in which there is no alternative to co-operation. We tended not to notice the recent vote in Austria because we were busy with our own elections, but in that referendum there was a 66 per cent. yes vote and the turnout was more than 80 per cent. That was encouraging and showed that Austria was not fooled by the wilder claims of the extreme right and others in that country. I gather that older people were predominant in supporting Austria's membership of the European Union. I do not know whether that had anything to do with the old person network to which the hon. Member for Newcastle upon Tyne, Central referred, but I found that an interesting point. The approach of the White Paper on competitiveness is welcome and I congratulate Ministers on the work that they put into it and on the good message that it gives. The long-standing gap between our education and training

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performance and that of our competitors has long been recognised. The good news about the White Paper is that it has addressed the problem again and, I think, more vigorously than before. Thanks to the policies and actions of the Government, the gap is closing, but it must be eliminated altogether. It is not tolerable that there should be any gap between our performance in education and training and that of our competitors in Europe or elsewhere.

I welcome in particular the streamlined approach to the national curriculum, on which Ofsted--I have used an acronym, which has woken everyone up, but time or my memory does not permit me to give its full title--recently gave evidence to the Select Committee. According to that splendid organisation, standards have been raised in achievement and motivation, which must be due to the dedication of our teachers and the support of parents in the education system. The White Paper is correct to concentrate on strengthening the vocational element of the last years of secondary education. I particularly welcome the new general diploma and its emphasis on mathematics, science and languages--the key subjects for our young people, whatever future careers they pursue. Britain cannot afford to have its young people less qualified than those in Germany, Japan or elsewhere. I heard at a recent Industry and Parliament Trust conference in the House that some of our industrialists are saying that it may be more worth while to employ a German boy who is well qualified vocationally and in engineering and to teach him English than to employ an English boy and give him the necessary technical skills. I hope that that is not true, but if it is, I hope that it will give the Government further encouragement to do more than they are doing at present on vocational and technical training. I welcome the additional support and training for careers teachers. That is another important matter which I do not have much time to deal with in a shortish speech. The Government have been wise to provide an extra £23 million to ensure that the maximum number of 15 and 16-year- olds get work experience. All of this is good. The expansion in the range of schools' contacts with the outside world is bound to have an impact also on the responsibilities of head teachers and deputy heads. The White Paper- -this is perhaps the only critical note that I shall introduce--refers to a voucher scheme working from 1995-96 to help with the training of head teachers. That is good, but it does not go far enough. For many years, I have argued for a much bolder initiative--a staff college, perhaps funded through the proposed new Teacher Training Agency, dedicated to the training of heads, deputies and other senior teachers. A voucher scheme is a tiny move in that direction, but I am critical to the extent that I should like to see more. I welcome the opportunity once again to put forward that idea, which I know finds favour in many quarters.

Not many years ago, I was a member of the Education Select Committee. We visited Germany, where we saw the key contrast between the strength and quality of its technical education at secondary and apprenticeship level compared with ours. As other hon. Members have said--I do not intend to speak at length on this as time does not permit--there are differences in culture between Germany and this country from which we can still learn. Of course it works both ways : there are many things that people in Germany can learn from our culture.

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The good news is that we are now introducing modern apprenticeship schemes for 16 to 17-year-olds and accelerated apprenticeships schemes for 18 to 19-year-olds, which will provide them with vocational or academic qualifications and high-quality work, leading to recognised qualifications. These are all clear steps in the right direction. The £100 million that the Government have promised is good news, but I shall be one of those hon. Members, possibly from both sides of the House, who will be pressing the Government on training and apprenticeships. I am not in favour of ever higher public spending, but when considering priorities I would favour pushing training and apprenticeships higher up the list of priorities, and I suspect that Opposition spokesmen would not disagree with that sentiment.

The reaction of manufacturing and engineering companies and education and training bodies to the proposals on education and training in the White Paper has been very favourable. This is all good news. Perhaps my hon. Friend the Member for Stevenage (Mr. Wood), who has taken up his place on the Front Bench, will pass on to Ministers my welcome for the competitiveness White Paper and the opportunity to take part in the debate. Ministers must expect to be asked for more by groups interested in training, not least the all-party parliamentary group for engineering development, of which I am a member. A senior member of it--indeed, its treasurer--my hon. Friend the Member for Meriden (Mr. Mills) will take part in the debate later.

The Government deserve the strong support of both sides of the House for the initiatives outlined in the White Paper and for the work that they have done.

11.36 pm

Mr. Iain Mills (Meriden) : I shall limit my remarks to manufacturing industry, particularly the car industry. Hon. Members will be aware of my involvement in the motor industry, which is at the forefront of our economic and industrial operations. That was recognised by the President of the Board of Trade in his remarks to the Industry Forum, which was set up by the Society of Motor Manufacturers and Traders. In deference to my hon. Friend the Member for Norwich, North (Mr. Thompson), I will not give the acronym. The society, along with the Department of Trade and Industry, has established the Industry Forum. My right hon. Friend the President of the Board of Trade said :

"The automotive components industry is a major contributor to the UK's industrial performance. It plays a crucial role in the future competitiveness of our vehicle manufacturers."

I shall not continue the quote as that makes the situation pretty clear.

The motor industry is particularly relevant to this debate. I congratulate my hon. Friend the Member for Hastings and Rye (Mrs. Lait) on her excellent speech, in which she was aided by the penetrating wisdom of Conservative Members. The Employment Select Committee investigated the attractiveness to Japanese business men of investing in Britain. It was clear that there were a number of factors, such as our language, but the predominant one was our work practices. Just as we compete to sell our goods, we compete for inward investment not only from Europe but from the world. The fact that the Japanese choose to invest in Britain--whether it be to manufacture motor cars or television tubes--shows that we are competitive, but we can never be competitive enough.

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My motivation to leave my job as a senior manager in the car industry and to join the House in 1979 was to help to make changes which would make us more competitive. Given our productivity, the number of strikes and our industrial attitude in 1978-79, the changes that we have made are a fantastic achievement. It is not coincidental that they have been made over the same period as I have been an hon. Member, although I do not, of course, take full credit for the changes. We were greatly aided by Lord Tebbit, as he now is, who was at the forefront in introducing changes. As his Parliamentary Private Secretary, I greatly enjoyed seeing so many changes introduced. Democracy was introduced to the trade unions and the Government have introduced sense to the work force. Nissan, Toyota and Honda are manufacturing cars in Britain, the local content of which is about 80 per cent. About 80 per cent. of their products are sold abroad. It has been said that we do not export to Europe, which is correct as it is a single market, but I am talking of exports well beyond Europe. The three Japanese motor manufacturers have created new jobs, and the same can be said of all the other companies that have invested in the United Kingdom. They are not taking jobs away from domestic manufacturers, by and large. The jobs have been created as a result of sensible work practices. They have certainly not been created by social partnership. It is clear to me that if we signed up to the social chapter and faced increased costs--£17 billion or whatever--we would become less competitive and less attractive to inward investment at a time when we need to do everything possible to keep our costs low.

Mr. Cousins : Does the hon. Gentleman think that there is a major Japanese investor in new manufacturing plant in the United Kingdom who is not already meeting and exceeding by far any requirement of the social charter ? In his patterns of social partnership and worker involvement, the Japanese investor is blazing a trail for the rest of British industry.

Mr. Mills : The hon. Gentleman has a point. The Japanese are glad to admit that where they have introduced the Japanese system in our country the British have taken it over and improved it. Work practices in many Japanese companies in this country may be excellent. It must be remembered, however, that they are the practices that they have chosen. The Japanese made it clear to us at chairman level--it is usually president level in Japan--and through leading members of the Japanese equivalent of the Confederation of British Industry that they do not wish to have a centralised structure imposed upon them. They do not wish to be told that they must do this or that, that the working week must be 38 hours, and so on. If they wish to exceed their working practices, that is up to them. They do not want rigidity. They want flexibility. They wish to be able to consult the work force. They refer to their employees as associates or members of the company. They wish to be able to discuss with them the best way forward. If best practice schemes are introduced, the Japanese wish to ensure that they are paid for by productivity and that the return to the company will be greater. They say, "If you want all these good things, we must increase our productivity. We cannot lose productivity." By and large, their companies have succeeded because of the Japanese culture at the workplace.

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The reaction of our traditional domestic manufacturers--Ford, Vauxhall and Rover--has been fascinating. These companies are in or near my constituency. They have adopted Japanese work practices and then exceeded them. Their approaches have perhaps been slightly different from those followed by Japanese companies. These companies have also increased their productivity. The chairman of BMW, Mr. Pischetsrieder, talked about the reasons why his company wished to buy Rover. He explained that it was partly because of Rover's products and partly because of their quality. I asked him whether BMW wished to buy partly because of Rover's work practices and its high productivity. His answer was yes. That is the chairman of a leading car manufacturer which achieves engineering excellence. He has given Rover great credit in saying that one of the reasons for thinking that Rover would be a suitable partner in facing the tough car world of the future was its work practices, along with quality and engineering. The Conservative Government can take credit for introducing policies that have allowed good working practices to be introduced and implemented. Management has been encouraged to manage and to achieve successes.

Of course, we must never stop looking for greater productivity and greater competitiveness. The Industrial Forum of the Society of Motor Manufacturers and Traders is a joint approach to try to improve best practice for car component producers and car manufacturers. There is obviously a need for funding and the society is concerned because it feels that there is insufficient funding. That may be because the funding for training is channelled through training and enterprise councils. Perhaps the Department of Trade could talk to the Department of Employment about ensuring that appropriate funding--it may not have to be additional to the funds now allocated to training--is channelled more specifically to the Industrial Forum so that increased competitiveness can be continued as a result of better training. If my right hon. Friend cannot respond today, perhaps he will inform me of his views in future. The forum is seen by the car industry as a most important initiative. It would be a great shame to lose it.

I met the president of the training standards officers to discuss his concerns and those of his members. By and large, they support deregulation, and so do I, but they are concerned that local government changes leading to more unitary authorities could lead to a loss of competitiveness, bearing in mind the number of training standards that would be involved and their competitiveness. If my right hon. Friend the Minister feels that that is not a matter for his Department, perhaps he will pass it on to the appropriate Department.

Manufacturing industry and industry generally is facing competition which is not confined to our partners in the European Union or others in the western world, all of whom face a level of social employment costs which are not dissimilar. Our unit labour costs, however, are well ahead of those of our European partners. As my hon. Friend the Member for Hastings and Rye said, we are increasingly facing competition from the Pacific--from Taiwan, the Philippines and Indonesia. As those countries become more sophisticated, which happens rapidly as a result of access to high technology on a turnkey basis, they become more competitive because they do not have our social practices and costs. Their unit labour costs are far

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lower than ours, but they have access to the same technology. There is a burning need to increase our competitiveness. It is no good making comparisons with European countries or other countries in the west. In the real world, we must compete world wide in terms of both goods and services. That is why it is so important that this debate is taking place.

The car industry has shown that it is at the start of our pull out of recession. Housing starts take far too long. About 17 per cent. more cars were sold last year than previously. Fleet sales have at last started to pick up. When I attended the fleet show a few weeks ago, I was amazed by the number of people present. There was a buoyant feeling among company managers, who were about to buy the latest of the cars produced in this country. Generally, company cars are usually British cars. I welcome the partnership between BMW and Rover. I know that the intention of improving the joint company's competitiveness will give both parts of it a far better chance in the future. One element of competitiveness is having a large enough base to ensure world-class engineering. Our domestic car industry now has that base.

11.48 am

Mr. Nigel Waterson (Eastbourne) : I am delighted to be able to participate in an excellent debate. I join all those who have congratulated my hon. Friend the Member for Hastings and Rye (Mrs. Lait) on her good fortune in securing the debate and on her good judgment in selecting this subject.

It was interesting to hear the views of the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) on the recent rail strike and a possible threatened rail strike. He reminded me of the old saying that when in a hole the best thing to do is to stop digging. The almost complete lack of attenders and would-be speakers on the Labour Benches is remarkable. However, the complete absence of Members on the Liberal Democrat Benches is significant and I hope that point will not be lost on the House and the British public. We have had some good news in my constituency over the past couple of days. The statistics show that unemployment fell in the last month by 6 per cent. Since December 1992, unemployment has fallen by more than 19 per cent. Like so many parts of the south-east, my constituency was hit extremely hard by the recession. That is one of the reasons why this debate is so timely. It is manufacturing industry which will primarily drag us quickly out of recession and promote and encourage the recovery.

Contrary to popular myth, Eastbourne has a strong light engineering and manufacturing sector as well as the obvious service and tourism sectors. The problem is that, as in so many places in the south--far more during this recession than in many parts of the north--many companies have gone out of business. It has been all too easy for politically motivated people and the people involved in those companies to blame what has happened purely and simply on the recession.

It is true that some of those businesses went out of business entirely because of the recession and the difficulties that it brought in its wake. I fear that some would have gone out of business anyway, perhaps because of the management or other faults in the company. I am sure that some went out of business because of the late

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payment difficulties about which we have heard, when large customers with whom those companies were doing business slowed up payments to aid their own cash flow and, as a result, brought down the smaller companies. I also have to say that some of those companies went out of business because of excessive regulation. Finally, I am convinced that some of them went out of business because of the attitude of the major clearing banks.

It is unfair to tar all the banks with the same brush. In some cases, the banks have leaned over backwards to help companies. To put it differently, in some companies the bank manager has done the owner a favour by drawing a line and bringing matters to a head instead of perhaps putting the owner's home or whatever in jeopardy. However, there is a very strong feeling among local business men, which was revealed during a visit that I paid recently to the Eastbourne and District chamber of commerce, that the banks have not, for the most part, been helpful. People feel that the banks were far too ready to pull the rug from under companies as the recession took hold and, perhaps more relevantly, that the banks are not flexible enough with regard to new lending policy as the economy recovers. We all know that, as an economy recovers, there is an extra danger of people going out of business, of cash flow coming under stress and of over-trading. That demands extra sensitivity from the major banks. The White Paper is particularly useful in respect of some of these matters. It makes the point that a significant proportion of total United Kingdom employment is in small and medium-sized enterprises or, to use the favoured acronym in this case, in SMEs.

With regard to international comparisons, a Bank of England report showed that overdrafts account for 56 per cent. of small firm debt in the United Kingdom compared with only 14 per cent. in Germany. That is a staggering difference.

In paragraph 9.11, the White Paper makes a point with which we are all familiar from our experience of talking to small business men and women. It states that

"many businesses do not expect overdrafts to be withdrawn and come to rely on them as permanent sources of finance. This can give rise to misunderstanding and resentment when a bank wishes to reduce its exposure. There is evidence that both banks and businesses are now beginning to place greater weight on longer term finance."

Mr. Gary Streeter (Plymouth, Sutton) : Does my hon. Friend agree that another worrying trend among our major clearing banks is the increasing tendency for decisions to be made at headquarters and not by the managers out in the branches who know the businesses concerned and the people behind those businesses and who are perhaps better placed to decide whether to support such a business ? Increasingly, accountants at headquarters take decisions that are good for the bank's balance sheet, but perhaps very bad for the business.

Mr. Waterson : I am grateful to my hon. Friend, particularly for saying almost word for word something that I was about to say a little later. However, I am grateful to him all the same. I want to refer to two recent cases in my constituency. I spend a lot of my time, as I suspect most hon. Members do during these recessionary times, talking to small business men. A road haulier, whose business had been going for many years, came to my surgery. He told me that he had plenty of business. He wanted to expand and to buy

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new lorries. However, he could not even get an overdraft facility from his bank. The most that he could achieve was a chequeing facility. That is incredible for a business of that sort where cash flow is obviously very much up and down.

The second case is perhaps even more dramatic and it concerns a firm that I visited in my constituency called Channel Triline. That company was formed as a result of a management buy-out and it produces window cladding for buildings. It has been very successful following the management buy-out. It had a positive balance at the bank and a good full order book. At the end of April, that stood at almost £1 million.

Despite the difficult construction market of which we are all aware, that company had a £1 million turnover in its first year and a £2 million turnover in the second year. It had won prestigious contracts such as the London central mosque in Regent's park and the new Glyndebourne opera house just up the road from my constituency. It had also recently secured a very important order for screens and windows at a new Cadbury Schweppes factory in Poland.

That company had an enthusiastic work force and management and, as I have said, it had a very full order book. When I visited it, one of the directors looked fondly out the window at a neighbouring empty industrial unit and said that he could fill it tomorrow with men and machines. He showed me a pile of letters from every type of bank and financial institution one could imagine, and some that one perhaps could not imagine.

Clearly, the figures that the director wanted to discuss were not suitable for venture capital organisations. It is fair to say that the company received some help from the know-how fund, for which it was grateful. However, it had little or no success with the small loans guarantee scheme. I fear that that scheme is still difficult for business men to access.

My point is that that company, with its full and growing order book, with a tremendous future and, by definition, with no outstanding debt, because it had effectively bought out a business that had gone into liquidation, could not obtain any facilities, not even an overdraft facility, from its bankers. That is incredible. As a result of that, there was the notorious equity gap. The company was unable to finance its day-to-day, let alone its longer-term, financial needs. Such companies, which need finance, perhaps of £500,000 or less, have a major problem obtaining it.

In recent days, it has been announced that that company is to be put into liquidation at the behest of the directors. They have suggested that to the shareholders simply because they cannot find any finance to run the operation.

It is difficult for hon. Members to comment on relationships between business entities and their bankers--one never really knows all the facts-- but there is evidence, certainly in my constituency, that the banks are very inflexible at times in dealing with companies' financial needs and that they have an effective blacklist for certain sectors, of which the construction industry is one. It mystifies me how we are ever to see a recovery in that sector if the banks simply do not want to know.

My hon. Friend the Member for Plymouth, Sutton (Mr. Streeter) touched on the problem of inflexibility. We have seen swathes of redundancies among older and more experienced managers in the banking system and, as a result, I fear, the average local bank manager is much more susceptible to guidelines and directives from regional or head offices.

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But that is not to say that there are no success stories, including some in my constituency. One of our biggest companies in Eastbourne, the Nobo Group plc, which began life in a garage when two entrepreneurs found that there was a need for notice boards in industry, is now a very successful and substantial company. One of its subsidiaries, Elite Optics Ltd., has tremendously increased the quality of its designs, and its sales abroad have increased from less than 10 per cent. three years ago to more than 50 per cent. today. As a result, it also won a much-coveted Queen's award for export in April. That company is fighting hard to compete in an ever-more competitive world. The price of the hardwood that it imports from Malaysia and which is necessary for some of its products has increased by 40 per cent. in recent times. Such companies are at the coal face of competitiveness in our country.

Another example is Rhone-Poulenc Rorer Ltd., the pharmaceutical giant, which employs 600 people in my constituency. The important point to note about that company is that it spends approximately £28 million a year on research and development in the United Kingdom and that it makes a positive contribution of £50 million net to the United Kingdom balance of payments.

A company called HMD Seal/Less Pumps is another great success story in my constituency and it is well known to the DTI, with which it has had many discussions over the years. Some 84 per cent. of its turnover is sent overseas and it is competing on at least equal terms with the Japanese and many others. It has produced advanced designs and it has had some help by means of a DTI-subsidised consultancy under the enterprise initiative scheme. That company has effectively doubled its turnover in three years, which is a tremendous achievement in a recessionary time. It has substantial exports ; it has exported to 20 countries in the past year. The management are very committed ; they seem to spend much of their time travelling around the world.

I appreciate that the Government have decided for the moment that they will not introduce legislation on late payment. Like most small business men, I have mixed feelings on the subject. Of course there is a problem ; we all know about it. I have described how some of the companies that went out of business in the recession in my constituency did so through no fault of their own or because of the recession but because people simply became slower in making payments. On the whole, my view is still that the Government should reconsider statutory rights to interest, and so on.

There is a significant feeling among my small business men and women that it would be a matter of who would bell the cat, particularly with a large organisation or even a governmental or quasi-governmental department, and that it is all very well giving people a legal right, but whether, in commercial terms, it would make sense for them to try to enforce that right when competitors might not be willing to do so is another matter.I still have some doubts on that score.

I am conscious that time is moving on, so I shall refer only briefly to deregulation. Obviously, I have been particularly concerned about deregulation in tourism because of my constituency. I am delighted at the various steps that the Government have been taking in the

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deregulation initiative. The Government, as we know, have just completed the first stage of their review of 3,500 regulations affecting business--it is staggering enough to think that there are so many regulations--and more than 500 measures have been identified for action. A rolling review will continue. Deregulation will turn out to be one of the great touchstones by which the success of this Administration is judged when the history books are written. On health and safety, there is a dynamic to reducing the number of regulations. The review recommended a reduction of 94 such regulations, including the removal of more than 40 per cent. of regulations that currently affect business in general. My hon. Friends and I very much welcome the new deregulation task force under the able chairmanship of Francis Maude. The White Paper states : "The Government is determined to ensure that further regulation does not place unnecessary burdens on business. Before new regulations can be introduced, business will be consulted and the costs and benefits fully addressed."

That is extremely important.

What is particularly interesting is the way in which our views on deregulation are very much in the fast lane within the European Union. Other countries, such as, particularly encouragingly, Germany, are beginning to see things from our point of view. It is important to realise that there are various reasons for over-regulation. Often, the European Union is the source of the problem, but, all too often, it is the United Kingdom gold-plating regulations when they are translated into our domestic situation. There is also over-zealous enforcement.

Also, some problems have been brought about by genuine misunderstandings either by the people who obey the regulations or by those who try to enforce them, such as environmental health officers. One example of that--I will not dwell on it--is the electricity at work regulations.

There is also the problem of under-enforcement in some European Union countries. No one will persuade me that a building inspector in Sicily, for example, approaches his job with the same rigour as a building inspector in the home counties. We must address that problem. Although I am fairly unable to be persuaded on increasing the powers of some European institutions, the strengthening of the powers of the European Court to deal with the enforcement problem are to be welcomed.

I am grateful for the opportunity to participate in this important debate. I am pleased to see so many of my right hon. and hon. Friends present, but I am not surprised to see so few Opposition Members here. As I conclude my speech, the only person from any Opposition party gracing--if I may use that expression--the Chamber is the Labour spokesman, the hon. Member for Newcastle upon Tyne, Central. It is very good to see him in such splendid isolation. I will not press him, although I am willing to accept his intervention on the rail strike or his preferences for the Labour leadership.

We owe everything to British industry. The 40 per cent. of public spending that goes on social security, our defences, our education system and all the other good things are paid for by the taxpayer, but, ultimately, by the creativity, hard work and application of our business men and women, industry and commerce. They deserve our support as well as our thanks.

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12.9 pm

Mr. Gary Streeter (Plymouth, Sutton) : As always, it is a pleasure to follow my hon. Friend the Member for Eastbourne (Mr. Waterson) who talks enormous common sense. He is a real champion of the small business man in this country.

It is entirely appropriate that the my right hon. Friend the Minister for Industry will wind up this debate, because he is a friend to the west country. I am sure that he will understand if I begin my remarks by referring to the sad announcement that was made at Devonport dockyard of the loss of a further 850 jobs from that dockyard with effect from September. That is entirely as a result of the fact that there is not sufficient surface ship work for two dockyards in this country.

My right hon. Friend will understand that I share the anger and concern of people from our region in Devon and Cornwall at the announcement this morning. I urge my right hon. Friend to press our right hon. and learned Friend the Secretary of State for Defence to reconsider the decision that was made in June 1993 to place all surface ship work at Rosyth. There is a growing belief that it is now as plain as a pikestaff that there is not sufficient work for two dockyards. The Royal Navy wants a single dockyard solution ; that would be better for the taxpayer. Of course, it makes tremendous sense for the defence of our nation for our ships and submarines to be maintained at one location.

I call on my right hon. Friend to press the Secretary of State for Defence to reconsider the decision and reach the only conclusion possible : there is not room for two dockyards. As we have the Trident contract, our future is guaranteed. We must bite the bullet and take the difficult decision to close Rosyth dockyard and bring the surface ship work entirely to Plymouth. I know that in addressing my right hon. Friend, as a friend to the west country, that message falls on sympathetic ears.

I must tell my right hon. Friend and my colleagues in the House that I will not stop my campaign until I believe that the right decision for the taxpayer, the Navy and my constituents is reached--a single dockyard solution which, sadly, would involve the closure of Rosyth dockyard.

I turn to the subject at hand today ; the question of jobs and competitiveness in Plymouth, as well as in the rest of the country, is tied up with that. I am delighted to take part in the debate, because it seems that any debate on competitiveness divides the sheep from the goats. As we have heard, there are no Liberal Democrats present so I cannot comment on how llamas are placed in a debate of the push-me, pull-you variety a la Dr. Dolittle. Certainly, any debate on competitiveness divides the sheep from the goats, the realists from the idealists, and the people who live in the world as it really is from those who wish for some other sort of world-- some far-off fantasy world.

The other day, my 12-year-old son asked me why all people could not have a job and be paid as much as they need to pay all their bills. I tried to explain that it would be great if we lived in such a world. However, that it is not the real world and it can never be the real world. My 12-year-old son will grow up and realise that ; it is a pity that Labour Members never seem to take that truth on board. I spoke in a recent debate at the university of Plymouth. During the question and answer session, one of the students talked about everyone having the right to a job. I

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asked her where that right to a job came from. There is no such thing as a right to a job, there is no divine right to a job and there is no natural law right to a job.

We need to create jobs. We do that by ensuring that our companies and businesses are competitive and are selling goods and services that people want to buy. That is the essence of competition. The truth, whether we like it or not, is that the world is an ever-shrinking global marketplace and our companies must compete to flourish. We need to compete to eat. We must ensure that our products and services are more attractive than those of our competitors. When people decide to purchase goods, they look at quality, customer service and availability. By and large, if all those things are right, they then look at the price. We must ensure that the prices of our products compete favourably with those of our competitors in Europe, the United States, Japan and elsewhere. I shall focus my remarks on a success story in Plymouth. We have a company on the Estover industrial estate called the Barden Corporation. It makes high-precision ball bearings. Hon. Members may find that a dull subject-- [Interruption.] I should be delighted if they considered ball bearings an exciting product. Indeed, to see high-precision ball bearings being manufactured is exciting, because the skill level of the work force and the equipment involved are phenomenal and extremely impressive.

The Barden Corporation employs 250 people in Plymouth and it competes in a worldwide market. It has a sister company in Germany creating exactly the same product. I have visited Barden Corporation on two occasions in the past two years, and in the past few weeks I have spoken to the managing director, Dr. Graham Stirling. He is an excellent managing director--the sort of person who is giving British management a good name. He is keen to involve the best workplace practices.

Dr. Stirling told me that non-wage labour costs are so much higher at the German sister company than in the United Kingdom that the end product coming out of the German company is 25 to 30 per cent. more expensive than it is in Plymouth. I asked him what that meant for his sales, and he said that sales in the United Kingdom are increasingly dramatically and sales in Germany are reducing phenomenally. That is the sharp end of competition. That is where the rubber hits the road. It not only means that the Plymouth branch of the company is getting more business ; it means that the German company has now decided that as non-wage labour costs in the United Kingdom are much cheaper--I shall come to the reason for that in a moment, although hon. Members may guess what it is--it will close down its manufacturing arm in Germany and bring it to Plymouth.

In the past six months, the company in Plymouth has taken on 40 more full- time employees, two thirds of whom are men. That is a direct result of being more competitive. That means that 40 of my constituents, who were depressed and lacking self-esteem at Christmas because they were unemployed, can now hold their heads high and enjoy the fulfilment of a rewarding job because our companies are more competitive than their German counterparts. That is the reality of the social chapter.

Mr. Michael Bates (Langbaurgh) : The movement that my hon. Friend is talking about is not restricted to Plymouth. In the north-east of England, we can point to Black and Decker, which closed its production capacity in

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Germany and transferred it to Spennymoor for exactly the same reasons. That is the trend which we are talking about, and which my hon. Friend eloquently set out.

The Tory party is looking to the future, whereas the Labour party is constantly looking backwards to the days when perhaps they can reopen the shipyards, the steelworks and the coal mines which we know will never come back. They are mouthing the platitude of full employment while seeking to introduce measures that would remove the competitiveness that has introduced so many jobs into the north-east and Plymouth, and which the Opposition employment spokesman said will cause a massive loss of jobs.

Mr. Streeter : My hon. Friend makes a telling point. In one sense, he disappoints me. I had been under the impression that Devon and Cornwall were leading the nation out of recession into recovery. He tells me that is also happening in the north-east and I am forced to conclude that that is even better news.

I asked Dr. Graham Stirling why his products were cheaper than those of the German sister company. He said it was because we are not in the social chapter, or burdened by those extra costs and the extra inflexibility that the chapter and all its supporting social legislation entail and, therefore, his company in Plymouth has greater flexibility. He told me that at the German sister company, if management want to make a decision they must go through the committee process, consulting their works council, which was set up under German social legislation. That process takes months. The German Barden Corporation does not have the same velocity of decision-making as the Barden corporation in Plymouth, which means that Dr. Stirling can make the right decision now, rather than waiting for three to six months to make it. That means that he can give his customers what they want, and that is why the product in Plymouth is cheaper than that of the company's German counterpart.

Mr. Cousins : I am listening carefully to the hon. Gentleman's arguments, but I wonder how all the anecdotes stack up. Is it Britain or Germany that has a balance of payments deficit in manufacturing industry ?

Mr. Streeter : The hon. Gentleman will soon find out that one group of people in the world increasingly realise the damage caused by the social chapter--German and French business people, who are increasingly aware of the fact that they are suffocating under the weight of social legislation and failing to compete with British companies. Pressure is mounting from German and French industrialists to cause their Governments to shake themselves free of the dead hand of the social chapter. It is a pity that the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) does not have his eyes open.

The Barden Corporation is one example of many companies that are doing well, free from the social chapter and it has the flexibility to give customers what they want, producing an end product at the price that they want. Opposition Members would probably say that such companies employ people on a sweatshop basis and are exploiting their workers--those poor workers, who work all the hours that there are, under terrible conditions, to produce high-precision ball bearings.

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Opposition Members should open their eyes. I wonder whether they have ever visited today's modern factories in Britain. Have they looked at some of the workplaces or spoken to the staff concerned, as Conservative Members frequently do ? If they did, they would realise that management is becoming increasingly enlightened. Managers believe in workplace empowerment. Managers such as Dr. Graham Stirling understand that the man putting the widget on the wodget knows best and that such workers are the people who guide and shape management decisions.

I have been to several similar companies in my constituency and just outside it and have spoken to the staff. They are very content with the legislation that is in place to protect them. They do not want further burdens from the social chapter and they are pleased to have a job.

The hon. Member for Newcastle upon Tyne, Central, who is the only Opposition Member present, can by all means have the social chapter and a national minimum wage, but he must not expect me to explain to the 40 families in Plymouth who have been put back in work this year why they are out of a job because of some ridiculous European legislation. That is where the rubber hits the road.

Last Friday, I attended a debate at Devonport high school for girls in Plymouth-- [Interruption.] Hon. Members have obviously visited the school, which is one of three excellent grammar schools in Plymouth, one of which my daughter attends. The debate was on a number of issues and one of the sixth formers said that we must have the social chapter because all our workers are suffering without it. I told her that she should by all means have the social chapter, but that it would not be teachers, academics and intelligent high-fliers--the people who are advocating it--who would suffer. It would be the ordinary workers, who would be thrown out of a job onto the scrap heap of life just to satisfy some academic, theoretical notion of justice. I wish that Opposition Members would wake up to the real world.

We heard earlier about positive rights for employees, but they already have such rights. Opposition Members want to place all those so-called positive rights in statute.

The House will be pleased to learn that I have a very positive relationship with my wife. I know that it is important to listen to her, spend time with her, encourage her and share my overdraft with her. I do not need those things to be set out in statute or to be told the best way to conduct my relationship. It works on the basis of partnership. Management increasingly understand that their employees are their best asset. My wife is my best asset. I do not need a statutory instrument to tell me that. I do not need a Minister at the Dispatch Box to tell me how to love my wife. Management and employees today do not need chapter and verse set out in endless legislation to tell them how to conduct best practice in the workplace.

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