Column 363The most recent examination of the results of privatisation, carried out by London Economics--one of the few organisations, as Victor Keegan reminded us the other day, to have done comparative studies--shows that there has been no great gain in productivity following privatisation. There has been no great gain in profitability, either. Many of the improvements took place before privatisation ever happened. This study and many other analyses bear that out.
What has happened, however, has been the creation of private monopoly power --power which, as we saw again this weekend, has been roundly abused by those who have it in their hands: with share options, for instance. They have frittered the money away. The privatised water companies have had to write off more than £500 million because investments made outside the water industry have failed. These people would rather give bonuses to shareholders--East Midlands Electricity gave away £187 million in this way--than cut prices for consumers and give them a better deal.
The making of money, arguments with the regulators, bumping up emoluments, salaries, bonuses and perks for managers--these things have had a far higher priority for those who run the privatised utilities than has service to consumers.
Mr. McLoughlin: The right hon. Gentleman has just proved what the President said would happen. He has complained about some of the enterprises in which the privatised companies have invested and about the money that they have lost. How then would he make sure that the Post Office did not go into the same sort of enterprises if it got the extra commercial freedom that he is arguing it should have in the public sector? Instead of private investors losing money, the taxpayers would.
Dr. Cunningham: Taxpayers have already lost heavily in these privatised enterprises. So have consumers--we have Mr. Maples's authority for that. [Interruption.] We are well aware that the Tory yobbos are here this evening, but we are not going to be put off our stride by them. If the hon. Gentleman goes to the Library, he will see, in the shape of the write-offs that were given to the privatised water undertakings to get their balance sheets in shape, that the taxpayer lost billions of pounds before privatisation ever took place.
The Government and the President of the Board of Trade are almost alone in believing that the present system of utility regulation is adequate, effective and fair. I almost split my sides laughing this morning when I heard, on commercial radio in London, a British Gas advertisement that said:
"We put our customers before ourselves".
Today of all days, one would have thought that someone in the PR department would say, "I think we'll give this one a miss." This week, 3 per cent. price rises have been inflicted on consumers--including some of the lowest paid people in the country. This same week, they have been told, in what is supposed to be a democracy, that, if they do not sign direct debits, they will have to pay more. That amounts to a hidden tax on people without bank accounts--usually the lowest income families and households. All this comes at a time when more VAT is to be imposed on people's energy bills. Is it any wonder that people are infuriated by the announcement of British Gas salary increases?
Column 364We should have seen the warning signs when British Gas appointed a part-time chairman at a salary of £450,000 a year. Mr. Giordano is well known for making sure that he is well remunerated wherever he goes. Now the chief executive is to have a 75 per cent. increase, while directors will get a 50 per cent. increase. That really is an abuse of private monopoly power and, as these industries are answerable to him, the right hon. Gentleman should have said so loud and clear.
The President has had the chance now to reflect; does he still support these decisions? Does he expect that his credibility can be sustained while this is going on, at the same time as people are having another round of VAT imposed on their energy bills? It is a scandal, and the right hon. Gentleman knows it. He should have had the courage to stand up and oppose it.
The regulators should have the power to do something, and, while considering the gas Bill that the right hon. Gentleman foreshadowed in his speech, we shall seek opportunities to provide such power. It will be interesting to see whether any Conservatives support such powers--the public will be watching closely. Will the right hon. Gentleman at least give the House a guarantee that these problems will be dealt with in his legislation? Apparently he will not. Obviously, he thinks that there is nothing wrong.
We do not agree. We see our priorities as the protection of vulnerable consumers and the right of the 18 million households that depend on gas for heating and cooking to enjoy a safe and secure supply, free from the sort of exploitation that appears increasingly to be the trend with British Gas.
What of the work force? They were told that their industry could afford only a 2.9 per cent. pay increase, despite all the productivity and profits. Yet the chief executive gets a 75 per cent. pay hike. That is the kind of grotesque unfairness that occurs in the private monopoly companies of which the right hon. Gentleman proudly boasted in his speech.
The President had nothing to say either about another major industrial issue of the moment: the proposed takeover of VSEL by either British Aerospace or GEC. The struggle is going on before our very eyes, yet the right hon. Gentleman says nothing, and the Secretary of State for Defence says nothing. [Hon. Members:-- "Of course not."] Well, why boast about their White Paper on competition, if they are willing to stand by and watch another private enterprise monopoly being created, this time in warship building? That is one possible outcome.
Why this silence? Why no action from the man who said that he would intervene before breakfast, before lunch, before tea and before dinner? Why was he silent on the sale of Rover to Germany? Why was he silent about the transfer of Raytheon's business and technology to the United States? Why, a few days ago, was he silent about the transfer of the ownership of Boots's pharmaceutical division to a German company?
The right hon. Gentleman's silence is legendary. He did not even intervene to save Swan Hunter shipbuilders on the Tyne, or to ensure that a maritime nation could go on building merchant ships. We must be just about the only such nation in the world in this invidious position. So much for the right hon. Gentleman's intervention. We know, however, that people are not silent in the corridors of the DTI or the Ministry of Defence. We know that Lord Prior, one of the right hon. Gentleman's old
Column 365political friends and comrades, and the other people from GEC--including, no doubt, Lord Weinstock--are patrolling the corridors trying to fix up a deal.
I should like to know whether the right hon. Gentleman has a strategy. I ask, not for myself, but for the thousands of workers on Clydeside and in Barrow-in-Furness whose jobs, skills, livelihoods and mortgages are at this very moment being squabbled over. Meanwhile, no statement of any kind is made. The Government appear to have no policy at all--or do they?
Mr. Heseltine: I realise that the right hon. Gentleman has not been in his job for very long. He and the House will understand that I have quasi-judicial responsibilities in all these merger and monopoly cases. It would be quite inappropriate for me to make any statement or to become involved in the way that the right hon. Gentleman suggests.
Dr. Cunningham: I said that the President's response would be patronising and, predictably, it was. What about the Secretary of State for Defence? He has no quasi-judicial role in this matter. He has been boasting for two years of his determination to maintain competition to protect taxpayers' interests.
Why does the President not say that the matter should be referred to the Office of Fair Trading? That would not cut across his quasi-judicial role. Why does he not do that in the light of the implications for warship building, jobs, skills and technology and in the interests of the taxpayer? The reality is that he is transfixed because his political friends have probably once again got their sticky fingers in the pie, and he does not want to do anything about it.
The President is carrying out a review of Companies House, but he did not refer to that today, and it is not mentioned in the Queen's Speech. It would be helpful to my hon. Friends who are interested in this matter, to those who have constituencies in south Wales and, more importantly, to the people at Companies House to know when the review is to end. Is the right hon. Gentleman contemplating legislation on Companies House? Will he follow the advice of the consultants that he appointed to carry out the review? He took on board SRU, a private consultancy which was co-founded by Mr. Peter York.
As Prufrock told us in The Sunday Times a week ago, the paper made an inquiry to Companies House and reported that the service was satisfactory. Prufrock wrote:
" the company records I ordered last week arrived promptly. They show that, in its last filed accounts, SRU recorded a fall in turnover to £3.7 million from £4.1 million in 1992. And its profit of £193,000 in 1992 slumped to a loss of £328,000. During this clearly difficult period for the company, the chairman, Henry Stevenson, saw his pay rocket from £338,000 to £497,000."
That is the firm of consultants that the right hon. Gentleman favours and has found a place for in his review of Companies house. Does he not think that the people who work there and carry out many essential services deserve better? Do they not deserve a clear answer from him soon about what he intends for them, their organisation and their future? I hope that he will find an early opportunity to clarify that.
The President speaks about the economic recovery as if some great miracle has occurred. He speaks of British industry needing to be world class. Britain could do with a world-class Government, because at present we
Column 366certainly do not have one. In opening the debate, he spoke about a wonderful economic and industrial recovery. Unfortunately for the right hon. Gentleman, as his friend in Tory central office has told him, no one believes him. He has not convinced his own supporters, and he has certainly not convinced the British people or Mr. John Maples.
Over the period of Conservative rule, we have not improved our position vis -a -vis our competitors in Europe or in the wider world. Last Thursday, the Financial Times reported:
"Europe's long-term outlook gloomy but short-term business confidence bubbles."
That is a familiar story--short-term booms for Britain but no long-term strategy for our industry, manufacturers or our economy. A plethora of reports, which are available to us all, contradict almost everything that the right hon. Gentleman said in his speech. The Engineering Employers Federation says that, next year, UK engineering output will be no higher than it was in 1990. It says that output will remain below 1990 levels in mechanical engineering, metal goods and transport equipment. In its November "Manufacturing Bulletin", the CBI says:
"the manufacturing trade deficit continues at around £10 billion . . . Weaknesses remain . . . the longer-term underlying weaknesses still remain, with a 20 to 40 per cent. shortfall in the average levels of productivity, sluggish investment, lower levels of skills than our main competitors and persistent trade deficits in manufactured goods."
Mr. Barry Sheerman (Huddersfield): The President made a euphoric statement about British industry. Is my right hon. Friend aware that a recent IBM consultancy survey suggests that only between 1 and 2 per cent. of British companies are world class?
Dr. Cunningham: I am happy to confirm my hon. Friend's intervention, because I was coming to that matter in my speech. For good measure, the second "Lean Enterprise" report from Andersen Consulting states:
"The UK shows the lowest productivity of any European country, and the second worst quality. Low production volumes, coupled with the presence of many different car makers, creates a fragmented industry with multiple standards and different messages from different customers."
Dr. Cunningham: I shall do so in a moment, and I hope that I shall not be told that it is all the fault of the workers, because our labour costs are as low as those of almost any other country, with the possible exception of Japan. They are lower than those in the United States, Germany, France and Italy. The problem is that our unit labour costs are higher than those of all the countries that I have mentioned except Italy. That is the real problem, and it has nothing to do with wage rates. It has to do with lack of investment, training, skills and proper equipment for our work force.
Mr. Brandreth: I am pleased to intrude on the right hon. Gentleman's catalogue of misery, which is another example of talking our country down. What he says does not tie in with the facts. Over the past decade, manufacturing output in Britain has risen by 22 per cent., compared with 21 per cent. in Germany and 11 per cent. in France. Our productivity is greater than that of France
Column 367and Germany. What the right hon. Gentleman says is the reverse of the truth. The reason for inward investment in Britain is that what he says is not so.
Dr. Cunningham: That was not an intervention: it was a short speech- - [Hon. Members:-- "Answer it."] I am answering it. Our productivity is hopelessly lower than that of our principal competitors. It is worth reminding the hon. Gentleman and the House of the Government's incompetence. They manage to run a trade deficit with 10 of the world's richest nations and a trade surplus with 10 of the poorest. That puts the trading performance of the right hon. Gentleman's policies in some sort of context.
Over the period about which the President spoke, UK average growth was lower than that of Europe as a whole, lower than the OECD average and lower than that of the G7 countries. That is our performance on growth, and on investment it is much the same story. As the right hon. Gentleman said, export growth has remained steady at 3 per cent. However, the manufacturing trade deficit continues to be very large. As I have said, the underlying weaknesses are lack of proper training, lack of skills and a shortage of effective investment for our work force. In reality, manufacturing output is barely higher than it was 20 years ago. So much for the right hon. Gentleman's wonderful success story about 15 years in government.
As The Sunday Times said, Britain's productivity is so poor that our unit labour costs are higher than they are in almost any other country. It ran the headline:
"UK `bottom of league' in car productivity".
That is where the right hon. Gentleman's policies have brought us to.
Plenty of people in this country want change and recognise that we must live and succeed in a global economy. The evidence, over and over and over again, is that, far from getting us to that stage, the policies of the right hon. Gentleman and his right hon. Friends are taking us lower and lower down the performance leagues.
As for grappling with some of the problems, I was astonished to read that European Union officials are angry because the right hon. Gentleman and his colleagues are actually refusing European Union aid worth half a billion pounds intended to retrain workers in front-line industries in Britain. They talk about not getting a fair deal from Europe and not getting enough back, so why are not they taking that money? Why are not they taking the money to combat Euro-fraud? It is because none of them can ever agree on a policy on Europe. Listening to Ministers talking about Britain's place in Europe is like being at a Karaoke evening--they do not quite know the words, but they are singing a different song anyway.
I want to deal with the right hon. Gentleman's long-term support for the social chapter. In his book, he said that Britain had paid a heavy price for standing on the sidelines when the common agricultural policy was formed. The implication of his remarks was that he felt the same about the social chapter. Of course, since he has returned to the economic and political fold, he has changed his tune.
The Prime Minister made great promises on matters such as European works councils. I am delighted to tell the Secretary of State--although I am sure that he knows--that, just a few days ago, my union, the GMB, and my lifelong friend, the national officer, David
Column 368Williams, signed the first European deal with a British manufacturing company to form a Europewide works council. The company involved is United Biscuits.
Of course, what that really means is that the benefits of the social chapter are coming to British workers, despite all the bluff and bluster and the huffing and puffing about the opt out. What many of us always knew- -indeed, what the hon. Member for Southend, East (Sir T. Taylor) predicted- -was that that was exactly what would happen.
The Secretary of State could at least afford a little smile, because that agreement is likely to be the first of many. More than 100 British companies are covered by the regulations because of the extent of their operations in the European Union. United Biscuits is just the first of many. That is good news for working people in Britain. It is something of an aberration, or perhaps it is just a fluke, that the first company to sign such a deal has as a non-executive director Lady Howe, who I am sure was very much to the fore in arguing for a fair deal for the work force of United Biscuits.
When the right hon. Gentleman was deprived of Post Office privatisation, he was bereft of something to say to the House. He came today with flannel. He had nothing new to say and no proposals to create new opportunities for investment or skills training. Indeed, he continues to reject any. He once made a speech about abolishing the Department of Trade and Industry. He has moved a little way from that, and now talks about the essential need for an industrial strategy--another one of his political flip-flops--and his wish to reduce the Department by 30 per cent. Perhaps he should be the first to go.
Several hon. Members rose --
Mr. Deputy Speaker: Order. The House is aware that Madam Speaker has placed a 10-minute limit on speeches between 7 and 9 pm. A large number of hon. Members wish to speak, so I hope that those who are called outside those hours will bear that in mind.
Mr. Nick Hawkins (Blackpool, South): Judging by the speeches of Labour Members, including that of the right hon. Member for Copeland (Dr. Cunningham), they are experts in trying to rewrite history. They have forgotten all the disastrous results of the policies that they pursued every time they were in government, but especially, as I remember, between 1974 and 1979. We constantly hear Labour Members talking about the 1970s and what has happened to British manufacturing industry since then, but they never mention that it was trade union militancy that destroyed that industry throughout the 1960s and 1970s, and especially when Labour Governments were in power.
I also recall that every Labour Government that there have ever been left office with unemployment higher than it was at the beginning of their term in office. I am sure that that would again be the result if this country were ever foolish enough to elect another Labour Government. I lived in the midlands throughout the 1970s and I suffered with the rest of the British people from the effects of a Labour Government. Labour Members should remember that then there was inflation in the high 20 per cents. and compare that with this Government's success in bringing down inflation to low single figures. They should also remember the mistake made by the shadow
Column 369Chancellor, who predicted that unemployment would rise month after month, yet since then unemployment has fallen month after month. Labour Members, especially those in the shadow Cabinet, usually have one or two faults. First, they have had no experience at any time in their lives of working in industry. If the press were to investigate the jobs many of them had before coming to the House they would find many social workers and university lecturers, but few with any experience of working in industry, in any capacity. Secondly, those who speak about industry are frequently motivated by an unfortunate combination of ignorance and prejudice--ignorance because of their lack of experience of the sharp end of industry, which I have been lucky enough to have, and prejudice because they believe that profit is a dirty word.
When Labour Members talk about investment, they usually mean Government subsidy. They do not realise that companies raise the money for investment by making profits. To hear many of their speeches, one would think that they all believe that profit is a dirty word, yet it is profit that allows a company to invest. They throw around cheap insults about senior company officials and their pay while failing to recognise that companies must pay the rate for the job. While I would not defend every pay rise that directors vote for themselves, sometimes companies seek to recruit in the international market, and to get the right people with the right leadership for British industry they must outbid United States, Japanese and European competitors, all of whom pay very high salaries. Those factors are often forgotten by the opposition parties.
Both of the main opposition parties constantly call for the implementation of the social chapter and the minimum wage. I had the good fortune to visit some factories in Germany during the summer recess, where I met senior works managers at the sharp end of industry. They said, "Make sure that you do not make the mistake in Britain that we made in the 1960s and 1970s." German manufacturing industry today has precisely the problems that we had in the 1960s and 1970s, when I recall that management at places like Longbridge had lost the right to manage. In German companies, particularly those in which the IG Metall union has great power, managers do not have the right even to chose to move a machine on the production line 5 ft to the right without consulting the works council. A thick book of rules, closely typed with small print, entitled the "Bevertriebsrad", insists that the works council must be consulted on everything. The senior works manager who used to manage a plant for his previous company in south Wales as part of massive German investment there said that it was a joy to work in Britain because we have not saddled ourselves with the stupid bureaucracy under which German companies labour. That manager told me, "Make sure that you don't go down the road that we did. Don't have a minimum wage or saddle yourselves with social chapter regulations, because you will strangle your industry the way that German industry is now being strangled." Labour Members who claim that the social chapter works fine for Germany should ask those who work at the sharp end of German manufacturing industry. They say that it is a disaster, which is why German companies are losing out right, left and centre to Japanese and other far east manufacturers, and why companies such as Bosch,
Column 370which is in south Wales, are closing their plants on the mainland of continental Europe and relocating to Britain. Britain enjoys 40 per cent. or more of all inward investment to the European Union. The debate is about both industry and education, which are closely linked. If British industry has a well-educated work force and well -trained managers, it will have a successful future. I was delighted to hear last week's announcement of the new national curriculum, which will bring a return to the high educational policy standards that were so sadly lacking over many years because of the trendy socialist ideas peddled through teacher training colleges since the 1960s.
The new English curriculum will make increased demands on pupils. There will be greater emphasis on grammar, spelling and punctuation--the traditional values that parents want and children need, but about which the Opposition parties have forgotten. There will be more emphasis on reading, writing and arithmetic--particularly in the primary years, and on the need for pupils to be taught written and spoken standard English. There will be greater emphasis on high-quality English literature and, for the first time ever, more attention will be paid to correct English across the curriculum. In mathematics there will be more emphasis on arithmetic, particularly during the primary years. The use of calculators by five to seven-year-olds will be restricted so that children will learn mental arithmetic. Calculators cannot be a substitute for arithmetical skills. As someone who has taught and is the son of a university lecturer and mathematics teacher, I know that those things matter.
The new curriculum will place a strong emphasis on history, on targets for attainment, and on the ability of pupils to recall and to deploy knowledge, facts and understanding. There will be a strong emphasis on British history. A specific reference to British industry has been added, rightly, for five to seven-year-olds. Of the eight core historical periods that seven to 14-year-olds will study, six will focus on British history and one on the 20th century, including Britain's part in both world wars.
I am secretary of the Conservative Back-Bench sports committee and joint secretary of our Back-Bench education committee, and sport is a subject dear to my heart. The proposal that 14 to 16-year-olds should be required for the first time to play competitive team games has been strengthened, and competitive team sports for younger age groups have also been confirmed. That will help to ensure that young children will be taught well and be kept fit, to become the well-trained work force that we will need in future. Pandering to outmoded educational ideas is ending.
A crucial part of education policy must be encouraging young people to turn to constructive pursuits and to keep them away from drugs. Labour's new leader suggests that he and his party are tough on crime and tough on the causes of crime. How does he square that claim with the action of many Labour Members in signing motions and speaking in favour of legalising cannabis? The Liberal Democrat conference also voted to legalise cannabis.
Column 371The most serious cause of crime in my constituency and, I suspect, in many others, is drugs. I want my party to continue adhering to tough policies on crime, to ensure that there is a clamp down on drugs. I hope that, during my lifetime, no Conservative Member will ever call for legalisation of cannabis or any drug.
Mr. Hawkins: I understand, Mr. Deputy Speaker, but I was seeking to stress the importance of an education policy that encourages traditional values in law and order. I understood that hon. Members are allowed more latitude in the debate on the Loyal Address and to range wider than usual.
Mr. Hawkins: It is vital that schools adopt tough policies to ensure that there is no drug taking in their playgrounds. I was greatly concerned to discover recently that many schools, particularly those in inner cities and inner urban areas--including in my own constituency--are finding that drug dealers are congregating in the vicinity of playgrounds, trying to encourage children as young as 10 or 11 to buy and to take drugs. We have heard nothing from the Opposition Benches about tackling such problems.
It is crucial that traditional values in education are reinforced and that young people are encouraged by their teachers and parents to participate in constructive activities, because that will take them away from the danger of drugs. Competitive sport in and outside schools is an important part of that. I hope that my right hon. Friend the Secretary of State for Education can reassure me that she will stick to traditional standards and values.
We have already heard from my right hon. Friend the President of the Board of Trade about the great success of British industry. If we can ever get the British press to talk proudly about Britain's successes instead of constantly knocking our country, and if we can ever get either of the main Opposition parties to stop running Britain down, we shall have the right kind of debate. My party will build on our strength in industry and education rather than be diverted by the sideshows on which Labour often concentrates. 5.28 pm
Mr. Denzil Davies (Llanelli): This was the 15th Gracious Speech since a Conservative Government were elected in 1979. Like the others, it consisted mainly of generalities expressed in felicitous language. The Government are apparently in favour of economic growth, rising employment and permanently low inflation. The reality of 15 years of Tory policies and of 15 Queen's Speeches for a constituency such as mine--which, by the skin of its teeth, is hanging on to the status of an industrial constituency-- and others in south Wales is quite different from the description given by the President of the Board of Trade this afternoon.
The grim picture for my constituency--which is not very different from others in the north-west, the north-east and Scotland--is one of high unemployment among young people, and among young men in particular;
Column 372long-term unemployment; many part-time jobs offering low incomes; and low per capita incomes, with the consequences that that has for town centres, local authority expenditure on community services and everything else. We do not have much to praise after 15 years of Gracious Speeches produced by Tory Governments.
Recently, I met a group of about 20 of my constituents who had been declared redundant. They had been working for a small company in the constituency. Most of them thought that they would never work again. Some were fairly optimistic in thinking that they might, in the not-too-distant future, obtain part-time employment.
A gentleman in his late fifties sounded much more optimistic than the others. He said that he had already found another job. Indeed, he had found a full-time job. That came as some surprise to the others, and to me. He said that he had been made redundant four times since 1979. On each occasion he had found a full-time job within the constituency to replace the one that he had lost. Unfortunately, there was a sting in his message. He said, "In my next job, my take-home pay will be lower than the pay that I received in 1979 before I first lost a job." He was not engaging in any computations with inflation. He was simply talking about the cash return for his work since 1979 and the subsequent redundancies.
My constituent's account is, unfortunately, part of the reality. That is the position even where there is no unemployment and some part-time work. Even when people can secure jobs, they are finding time and again that they are earning less and less when they compare their take-home pay with that which they received in previous employment. That is certainly the position in constituencies like mine.
It seems, as far as I can discern, that the situation has not been very different in the United States. In the 1960s, when I was in the United States, it was almost the tradition among working-class families for people to take a second job. That enabled them to make ends meet and even to better themselves. In those days, a man would often take a second part-time job, and perhaps even the woman of the family would take one. There were such jobs available at that time, the United States economy being what it was.
I understand that that opportunity to improve a working family's standard of living disappeared in the 1980s. Second and third jobs are still available, but many of those who work in car factories, in industry generally and in the service sector in the United States are finding that their standard of living is becoming lower even when they take extra jobs. I suspect that that experience will come to Britain. It seems to be coming slowly to constituencies such as mine. There is not much joy there for the Conservative party if we choose to talk about such matters in political terms. As I have said, I think that the American experience will come to Britain and perhaps even to the rest of western Europe. The trend will be accelerated if we continue to hand over control of monetary policy to central bankers, whether in Britain or in the rest of western Europe. Another testament to 15 years of Tory rule appeared in my mail recently. My attention was drawn to some figures that analysed the 1990-91 census. There were the usual grim statistics about unemployment, including activity and inactivity rates. The statistics that took my eye related to inactivity rates among households. In 1991--only four
Column 373years ago--there was no one working in 41 per cent. of households in the Llanelli constituency. To use an old- fashioned term, there was no breadwinner in those households. The decline in employment had continued at about 1 per cent. a year since 1981. Taking account of that trend--I would not think that it has changed--the figure is now probably 45 per cent. It might be even higher because of recent redundancies. By the next general election, in about two years' time, it may be that no one will be working in 50 per cent. of households in the Llanelli constituency.
I understand the composition of households and I accept that there some are made up of elderly people who are not seeking work. Nevertheless, the figures to which I have referred are a grim condemnation of 15 years of Tory policies and 15 years of Tory Gracious Speeches.
The President of the Board of Trade has told us that he does not wish to subsidise industry. Although no one is working in about 45 per cent. of households in the Llanelli constituency--the position is not so very different throughout south Wales--there is no shortage of new build housing. The Tarmacs, Wimpeys, Westburys and McAlpines are building houses everywhere. That is despite the fact, as I have said, that no one is working in almost half the households in the Llanelli area. House building seems to be the main economic activity--it is certainly the most manifest one. Large estates of private houses, which have not been designed by Frank Lloyd Wright, are being built. The houses are rather cheek by jowl, but they probably meet the Parker Morris standards of a previous era. They are quite nice two and three-bedroom houses.
Before the few remaining representatives of the Adam Smith Institute on the Government Benches leap to their feet, let me assure them that the house building to which I have referred is not market driven. That is the vogue phrase that is used these days. It is not the result of real and proper planning, for there is no strategic plan.
Mr. Nirj Joseph Deva (Brentford and Isleworth): The right hon. Gentleman has talked about a high level of unemployment and a great deal of housebuilding. Is that building providing employment locally for those who would otherwise be unemployed?
Mr. Davies: I am happy to deal with that question immediately. Bricklayers, masons and carpenters are being employed. It is curious, however, that most of the houses are not being built by local builders. Building is taking place but local builders are not getting anything out of it. As I have said, the houses are being built by Wimpey and other large companies. I accept, of course, that some people are being employed while the houses are being built. It is strange that the building work is not market driven. No great strategic plans have emanated from the Welsh Office. It may sound parochial, but often the house building is the result of clearance by the Welsh Development Agency of old industrial land. Whatever critics of the WDA have said, and irrespective of the problems that have surfaced, the agency is extremely good at clearing and cleaning old industrial land.
It is unfortunate that in the early 1980s the Government stipulated that for every £1 of public money spent by agencies of the WDA, £3 or £4 had to be contributed by
Column 374private industry. That sounds fine but there is a problem. The easiest way of finding £3 or £4 in south Wales nowadays is to approach national companies, such as Wimpey, which build houses. Ever since the war, if there has been any money around, it has usually gone into property or house building, rather than into wealth- creating investment. That has been the history of the British economy under both Labour and Conservative Governments. That still happens. The £3 or £4 usually comes from the house builders. Nobody has an imaginative use for the land, so people say, "Let's put houses on it." No analysis is made about whether the houses should be there. No infrastructure questions are asked. Nobody asks whether schools and shops will be there to service the two and three-bedroom houses. Nobody thinks about the effect that the investment will have on the town centre down the road. Yet, public money is used.
Mr. Deva: I am becoming increasingly baffled. I have heard, on many occasions, the Labour party complaining that there are many homeless people and not enough housing, but the right hon. Gentleman is complaining because houses are being built. Will he please explain?
Mr. Davies: I am not complaining. Perhaps I should not do so in debates such as this, but I have been in the House long enough and I know that I am allowed to describe what is happening. The hon. Gentleman should not assume that I am complaining now. I shall come to my complaint when I get to the end of my speech. I am merely trying to describe the fact that, although no one is working in 45 per cent. of the households, thousands of houses are being built by national house builders. I am trying to point out that, in part, they are being built with public subsidy--the kind that must not go to BT, British Gas or to industry. Apparently, public subsidies are all right if they go to Wimpey, Tarmac or McAlpine.
The builders are pretty stupid. They can get cheap land that has been cleared for them, they can build reasonable houses at reasonable prices, but what if they cannot sell them in that low-income constituency? When I look around, I find that there is no problem. If they cannot sell them, there is always the fairy godmother of capitalism--the purchaser of last resort, which for houses in south Wales these days is the housing association.
Housing associations used to be collections of retired vicars, surveyors, trade unionists and various do-gooders, but not any more. They have become corporations. They have chief executives, public relations directors, nice motor cars, shiny offices. They buy the houses from the builders, who cannot sell them directly to individuals, and tenants are put into them. Again, I made some inquiries, and discovered that housing association rents are usually about twice as much as those for comparable houses built by that dreadful institution, the local authority. The Government are paying twice for those houses, which would have been built anyway. They are also contributing to the land, which is nice. They are creating problems for the future, because there is no planning for community services, or for anything else. So I am not complaining about public money--quite a lot of it goes into my constituency--but it is just scattered around. It is not planned. It is not even market driven. I wondered how anybody could afford to pay the rent charged by housing associations, but it does not matter, does it? The Secretary of State for Social Security picks
Column 375up the tab. He pays the extra rent, which goes to the housing associations to provide them with their empires. Yes, indeed, we have house building in my constituency, but it is not wealth- creating. All right, a few people will be employed, but we would rather have the money to recreate our industrial base so that my constituents do not have to live on handouts. Under the Conservative Government, a handout culture is developing. It does not really matter whether the money comes from Cardiff, from London or from Brussels, local authorities and Members of Parliament queue up for it. One cannot blame people, because the wealth- creating base of our communities has been steadily eroded since 1979.
Mr. Deva indicated dissent .
Mr. Davies: The hon. Gentleman can shake his head as much as he likes. I am telling him about my constituency. I take no pleasure in what I have said, as it is sad. My constituents are proud people. The tradition of south Wales for a hundred years and more has been the production of wealth, which benefited the communities and the wider world around them. They do not want to live in a society of handouts. If we are to get some money from the Government, at least let it be planned properly. Let us have value for money, because I do not see value for money in the exercise that I have recounted to the House. The problem remains one of no industrial strategy and no real belief in industry--the President of the Board of Trade may have believed in industry in a previous manifestation or incarnation, but probably does not any more. Certainly, many other Conservative Members do not. I was surprised to hear how few industrialists and how many people with experience in industry are Conservative Members. I see hon. Members with experience in finance, housing and other sectors, but not with experience in industry. It has been neglected for the past 15 years. We need an industrial strategy. If there is public money to be invested, it needs to go into wealth production. That is not happening in my constituency and will not until we have a new Government, devoted to rebuilding our industrial base. 5.46 pm
Mr. David Evennett (Erith and Crayford): I am pleased to be able to make a contribution to the debate. I do not wish to follow on from what was said by the right hon. Member for Llanelli (Mr. Davies), because Conservatives believe in industry, in wealth creation and enterprise.
I shall concentrate my comments on education and the Government's education policies. Before doing so, I wish to say a few words about measures proposed in the Gracious Speech. I welcome warmly the proposal to promote enterprise and improve the working of the labour market and, particularly, to reform the unemployment and income support benefit and create a jobseeker's allowance.
All hon. Members, from both sides of the House, believe that unemployment is one of the greatest evils of our age. Although I am delighted with the falls that we have seen recently in the level of unemployment, must be done to encourage people to get into training, retraining and, I hope, back to work. My constituency has pockets of very high unemployment and my constituents look to the enterprise culture, to the retraining potential, to get
Column 376jobs and opportunities for them along the Thames gateway. We look with interest at the development of the planning and industrial opportunities, which that area of the Thames gives.
I believe that the proposed contract between the employment service and the unemployed person will be of great benefit to both. A new approach to help genuine work seekers, with job experience, training and retraining, will result not only in better value for money for the taxpayer, but also a much better service to the client--those people who want to job. While the workshy are a small percentage of the total unemployed, the aim of the new allowance will be as a means of support while the unemployed person looks for work, and not an income for life divorced from the world of work. That is progress. We need good training and profitable and successful industries to create the jobs for those people.
I welcome the abolition of the regional health authorities, as proposed in the Gracious Speech. We need less bureaucracy. We need more cash up front so that the health service can provide service for the patient, not bureaucratic structures. Contained throughout the Gracious Speech is the belief that we need less government and more effective utilisation of our natural resources, for the benefit of all.
I am delighted that no major education reform Bill was included in the Gracious Speech. There have been many good measures in the recent past, and decisions from my right hon. Friend the Member for Oxford, West and Abingdon (Mr. Patten), who was Secretary of State for Education. I feel, however, that the fact that this Session will include no major education reform measure is good for education, good for the taxpayer and good for the nation's children, teachers and parents. In the past, so much had to be done because, regrettably, the education service declined during the 1960s and 1970s as the wrong policies were implemented. This Government confronted and tackled the problems; the results are beginning to feed into the system, and more achievements will follow.
In the past decade, much more public money has been spent on education in real terms--some 47 per cent. since 1979. More has been spent on books and equipment; we have seen better pay for teachers, and improvements in the teacher-pupil ratio. We have also made considerable progress in our aim of improving educational standards. Out have gone the trendy views of the 1960s and early 1970s--the destruction of good schools, and the endeavour to make the large, monolithic comprehensive the norm. In has come reform-- attention to standards, and pure common sense. We have seen the establishment of the national curriculum, local management of schools, regular testing of pupils, greater choice, more information about schools for parents, pupils and the local community, the expansion of higher and further education and so much more. That is a real record of achievement in the past decade.
Those measures were intended to improve our education service-- [Interruption.] Opposition Members do not like to hear about real achievements that were prompted by our ideas rather than theirs. We aim to improve our education service, and to ensure that individual children are given the best chance to develop their talents to the maximum. In addition, those who must foot the bill--the taxpayers--want to know that their money is being well spent for the nation's future. The fact that we now have more information--not only