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Mr. Barry Sheerman (Huddersfield): I have an increasing feeling of being unwell in the unreal world of this Chamber. Can the Secretary of State bring us back to the realities of life? Was he around in the 1980s when our manufacturing base was devastated? Plants in his constituency and in the constituency of every hon. Member were devastated and good firms closed down, never to reopen. Is it really true when the Secretary of State says that nothing of that sort happened? Were we all living in a dream world, or is he misleading the House?
Mr. Lang: The hon. Member for Huddersfield (Mr. Sheerman) seems to have forgotten the shambles which the Conservative Government inherited from his party in 1979, and the massive efforts that we had to make to reverse the trend of decline. Certainly manufacturing jobs were lost and plants were closed, but in recent years--as a result of improved competitiveness--we have achieved new investment, new growth and new export markets.
The hon. Gentleman asked me about the 1980s during my remarks on privatisation. The fact is that the Labour party opposed every privatisation measure that was brought before the House, claiming that privatisation and competition would lead to falling investment and rising prices. In fact, the opposite has been true.
Mr. William Powell (Corby):
My right hon. Friend's analysis of the changes in the British economy is not theoretical. If he comes to my constituency, he will see that every single one of the matters he is outlining is the truth and has led to a booming economy.
Mr. Lang:
My hon. Friend is absolutely right, and Corby possibly illustrates that point better than any other constituency.
Productivity in the privatised industries has moved sharply ahead. British Telecom, for example, has raised its productivity by 140 per cent. Investment in the privatised industries has shot ahead. BT has invested £25 billion since privatisation, while Mercury has invested
£2.7 billion in a new digital network.
Liberalising the telecoms market--a measure opposed by Labour, of course--has brought in new competitors and new investment. The cable companies expect to have invested £10 billion by the end of the decade. Labour's thanks for that huge investment would be to renege on the Government's commitment to the regulatory framework in favour of a sweetheart deal with one company. No wonder Labour had its wrist slapped by the director general of Oftel. Real investment in the electricity industry has increased by more than 10 per cent. since privatisation. Compare that with the 25 per cent. cut between 1974 and 1979. Investment by British Gas and the water companies has more than doubled in real terms since privatisation.
Customers too have seen major improvements, with falling prices and improved service quality. The average domestic electricity consumer will enjoy a reduction of about £90 in his bills next year. Domestic consumers have benefited from a fall in real prices since privatisation of more than 22 per cent. before VAT. Industrial customers have seen their real gas prices fall by 40 per cent. since privatisation. BT's prices have fallen by more than 35 per cent. in real terms since privatisation.
When the Labour party talks about investment, clearly it is not talking about private sector investment, privatised industry investment or manufacturing investment. It is not talking about inward investment, through which thousands of companies are investing billions of pounds to create hundreds of thousands of jobs. Labour is talking about that atavistic socialist belief that no investment matters unless it is public sector investment. If Labour wants to increase that, it should say by how much, and I invite the right hon. Member for Derby, South (Mrs. Beckett) to say so today.
How will that increase be paid for: by cutting other spending--perhaps on health or education--or by higher taxation? The electorate are getting fed up with Labour's absurd pretence that it can increase expenditure and cut taxation at one and the same time. That engenders only incredulity and distrust, and rightly so because Labour's sums do not add up.
Following the privatisation of state-run companies which used to account for around a tenth of our national output, we have greatly enhanced competition in our economy. Indeed, competition and choice have been at the heart of the Government's economic policies. As a result, competition is present to a greater degree than ever before in the economic life of this country. It is an essential ingredient in the promotion of the UK's competitiveness.
Competition must be underpinned by an effective system of competition law. I have been considering this matter, and I recognise that a reform and updating of the existing arrangements is overdue. The House is aware that the Government have decided to reform competition law in two principal areas. We intend to prohibit cartels and restrictive trade agreements unless positive countervailing
benefits can be shown. We intend to strengthen the powers of the Director General of Fair Trading to investigate monopolies and anti-competitive practices.
We do not intend to discard some of the real strengths of the UK system, such as the distinctive roles of the Office of Fair Trading as investigator and prosecutor and the Monopolies and Mergers Commission as the dispassionate assessor of the public interest. Nor do we consider that the case for the introduction of a prohibition on abuse of market power has been proven.
While we will wish to take proper account of the evolving relationship between European Community competition law and the competition law of member states and to consider how a prohibition on restrictive agreements modelled on article 85 of the EC treaty might fit into the UK common system, we must certainly avoid replicating those features of the EC regime which experience has shown to be unsatisfactory. The changes we make must suit our circumstances.
We must prepare the way thoroughly and on the basis of consultation for fundamental reform which the Government will then implement as soon as practicable. I can the tell the House that my Department will accordingly be undertaking a comprehensive consultation exercise in the new year. This will take the views of business, consumers and competition practitioners on the technical and operational issues which will need to be settled before the Government can give effect to the reforms to which we are committed.
It is not competition as such that costs jobs; being competitive creates them. Nor is it technological advance or trade that creates unemployment. It is the failure to foresee and the inability to adapt to change that leads to jobs being lost. That is why flexibility in our economy is so crucial, and that is why we reject the rigidities and the extra burdens that would arise from the Opposition's policies of a national minimum wage and opting into the social chapter.
Talking to the CBI last week, the Leader of the Opposition said:
But while the Leader of the Opposition was right to highlight the dangers of the social chapter, he was wrong to assert that it was not detailed legislation, but a set of principles. If that were all it was, why is he so keen to sign it? We could just proclaim the principles ourselves. The fact is that it is much more than that. It is a binding obligation that would lead inexorably to detailed legislation.
The right hon. Gentleman seems quite unable to grasp the fact that if the UK signs the social chapter, we would lose the opportunity to reject proposals for damaging legislation that would be imposed upon us--regardless of the views of this House--by qualified majority voting. So his claim that each piece of legislation will be "judged on its merits" is worthless. That is not an option. Once the social chapter was signed, there would be no protection for this country from laws which would raise employers' costs, undermine competitiveness and destroy jobs.
I welcome the Leader of the Opposition's tacit admission that some aspects of the social chapter would run counter to our interests, but the position of Opposition Members has been made more exposed by the words of their own leader. It makes their posture even more indefensible. They would sign the social chapter even though they now admit that it would damage the competitiveness of our economy. Opposition Members should read the leader of The Times on 15 November, which said:
Not signing the social chapter does not mean poor working conditions or low wages. On the contrary, both have improved very substantially for most workers. We have in place a fair and balanced framework of individual employment rights. One of the supports that underpins that framework is an industrial tribunal system which enjoys widespread trust and confidence. The essential work of the tribunals has grown both in scale and complexity over the years. The Government are firmly committed to ensuring that they continue to provide an effective means of resolving disputes over employment rights.
The Green Paper published last year invited views on ways of improving the operation of tribunals and of encouraging more settlements in-house or with third party assistance. Some 200 responses were received from both sides of industry, the legal profession and a wide range of other interested parties. They were broadly supportive of most of the proposals and I can tell the House that today I have announced the Government's intention to implement those proposals when a suitable legislative opportunity arises. I believe that this will be widely welcomed.
The changes proposed will make an important contribution to promoting the role of conciliation and voluntary arbitration as alternative means of settling disputes at work and to streamlining tribunal procedures. They will help to ensure that a system which has so amply proved its worth will continue to play its indispensable role in the framework of British industrial relations.
Part of the more flexible labour market that we have achieved, with all the benefits it has brought in terms of increased jobs, has been the result of the dramatic improvement in industrial relations. More than 2 million jobs were created in the last economic cycle; half a million since the end of the recession. Half of those were in the last year alone. Over the last economic cycle we have created jobs at twice the rate of countries such as France and Italy.
We have a higher proportion of our population in work than all our European competitors. We have broken out of the vicious cycle that saw each downturn in the economy causing unemployment to ratchet up another notch. For the first time since the early 1960s, unemployment peaked at a lower level in the last recession than in the one preceding it.
Even more encouragingly, the same is true of long-term unemployment. Britain is one of the very few European Union countries to have managed to break out of this cycle. Although it remains too high, unemployment has fallen faster in this country than in most of our
competitors in the EU or the Organisation for Economic Co-operation and Development--by more than 700,000 in the past three years. Our unemployment rate is now below that of Germany, Italy, France and Spain and well below the EU average.
"the real fear is that being part of the social chapter we may in future agree to the import of inefficient working practices to Britain".
That is right, and we have been telling the right hon. Gentleman that for years. That is the very reason why the Prime Minister negotiated the opt-out from the social chapter.
"The truth is that Britain is in an enviable and much envied position. By remaining outside the Social Chapter, Britain has become a magnet for outside direct investment. To throw away such a precious competitive advantage would be madness."
That says it all.
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