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6.22 pm

Dr. Keith Hampson (Leeds, North-West): I was interested, at both a personal and an economic level, in the suggestion by the hon. Member for Gordon (Mr. Bruce) that we should slash the duty on spirits. However, he forgot one important argument. If we were to see the level of devolution in Scotland for which he and Labour Members argue, extra tax would have to be generated to pay not only for the cost of running that Government but for all the commitments that a left-wing Government in Scotland would inevitably impose.

Mr. Malcolm Bruce: No, it will not. We will have proportional representation.

Dr. Hampson: The Labour party might have some thoughts about that. Under the present constitutional arrangements, we have seen the massive transfer of resources from south of the border into Scotland. Public expenditure per head in Scotland far exceeds its levels in England. People in my constituency in the north-east and in Yorkshire will not agree to continue to fund high cost programmes if Scotland is afforded the degree of devolution that is proposed. Therefore, the Scots would have to meet the funding gap themselves. That seems totally absurd economically, and even a reduction in the spirits duty would not generate enough economic growth to meet that gap.

The hon. Member for Gordon--who has served on the Trade and Industry Select Committee--is one of the few hon. Members who studies the Committee's reports. Labour Members never read the reports, and Opposition spokesman after Opposition spokesman acts as if the information, tables and statistics contained in them are totally irrelevant--they certainly do not understand them.

The Committee's report on the competitiveness of the manufacturing industry contained some valuable assessments of productivity levels. The hon. Member for Gordon served on the Committee during that inquiry. The Committee found that productivity in this country improved by 6.3 per cent. last year and, throughout the 1980s, the figure was 4.5 per cent. That was the fastest rate of improvement of any of the advanced nations in the 1980s--admittedly, from a lower base--apart from Japan. The rate of productivity improvement in the 1970s was 2.2 per cent.

The shadow Chancellor is correct to refer to the relative decline--although he forgot to use the word "relative"-- of the British economy. There has been a relative decline,

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as the Government documents on competitiveness clearly point out. However, at the heart of that relative decline are the rotten levels of productivity sustained, year in, year out, under Labour Governments. That is why we are now so far behind most of our major competitors.

On page 37 of the report there is an interesting box graph which illustrates the direct wages and the social add-on wage costs in the automobile industry across Europe. The Committee travelled to Munich and visited the BMW factory. The managers at that factory told us how they had spent two years negotiating with the unions to get rid of some of the imposed social costs. They said that they were looking forward to investing in industry in this country.

The figures are clear: wage costs are approximately the same in the United Kingdom and in Germany, but the add-on costs are 26 per cent. in this country and 47 per cent. in Germany. The add-on costs in Sweden are 46 per cent.; in Belgium, 37 per cent.; in the United States, 33 per cent.; and in Japan, 33 per cent. We have an enormous advantage, so why do the Opposition parties wish to saddle British industry with the sorts of additional costs that Germany is trying to be rid of?

Mr. Bruce: The hon. Gentleman is correct in his analysis. However, I attended that meeting when the managers spoke of voluntary costs, such as paying for their employees' weddings. They had agreed to meet those costs; they had nothing to do with the social chapter. Government Members must stop misrepresenting the situation. If social costs are too high in Europe, it is because countries have reached internal and domestic agreements, not because the costs have been imposed by the social chapter.

Dr. Hampson: But it is symptomatic of the psychology and culture of industry on the continent that is part and parcel of the social chapter. The social chapter embraces that sort of thinking. European industry is trying to get rid of some social costs, so it is sheer economic lunacy to try to impose similar costs on industry in this country.

The Chancellor referred to the fact that there has been substantial growth and that unemployment has fallen dramatically. In Leeds, in my constituency, there has been a dramatic improvement on the job front. There are now many unfilled places in the job market. I shall move from the Chancellor's Rose and Crown philosophy to the philosophy and outlook of the Fox and Hounds in Bramhope. Last week, business men told me that it is important that the Budget stimulates them to recruit new employees--particularly young people. The economy in Leeds is booming. Leeds remained successful throughout the recession, but it would still like some extra encouragement.

In one sense, I agree with the hon. Member for Gordon. Interest rates are at the heart of it. We have to ensure that they do not go up and that our economic strategy is not at the cost of preventing lower interest rates. As has been pointed out, the Treasury still has time to make adjustments. I am in favour of tax cuts, depending on exactly where they fall, as they are part of maintaining the enterprise system. We need that degree of stimulus and reward to ensure growth. We should aim and strive for a low-tax economy, and there is scope in the Budget to move further towards it. The business men in the Fox and Hounds were asking for help with national insurance.

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They thought that the NIC was inhibiting them taking on quite as many people. If there is still a chance, that tip and hint might go down very well.

I should draw attention to the role of the training and enterprise councils, which represents one aspect of the success of Leeds. TECs have had a bad name from an awful lot of people, particularly Opposition Members, but in Leeds the TEC has worked extraordinarily well in partnership with the private sector and has achieved dramatic success in increasing the number of young people and adults getting qualifications and work experience, while lowering the unit costs.

In the past three years, youth training provision has doubled and, in terms of national vocational qualifications, the Leeds TEC stands 27th out of 81. It has achieved dramatic success in increasing the number of young people getting qualifications and two and a half times as many adults go through the system. That is crucial to Leeds, where there has been enormous diversification in the city's economy, which has developed from a few stable, heavy industries to a broad range of high-tech and service sector industries, including insurance and law in particular. The city physically has benefited and gained enormously. It is vital, therefore, that the training base is developed as successfully as before and even more so. The whole country needs a more highly and broadly educated work force.

I have some figures from the Financial Times which show that, because of inadequacies of numeracy and literacy, an estimated £5 billion costs fall on industry. When we discuss our education programme and the measures in the Queen's Speech, we must not overlook a basic fundamental failure which has continued through every Government. One in five young adults needs urgent help with numeracy and one in seven with literacy, and 35 per cent. of 21-year-olds do not have the maths skills expected of 12-year-olds in the national curriculum. Report after report comparing the standards of those leaving education at 16 shows Britain falling way behind the standards of most of our rival nations, particularly in maths.

It is not enough to acknowledge that there is a problem; we have to deal with it and at last the Government have done something about it. Had the process of getting to grips with the problems been started earlier under the last Labour Government, we would be in a different position now.

Mr. David Clelland (Tyne Bridge): That was 16 years ago.

Dr. Hampson: As a former teacher, I can tell the hon. Gentleman that education always has a lead time of at least 15 years. By the time a young person who enters the school system gets stimulated to take maths, for example, goes through school to college, into teacher training and back to school, different techniques have been introduced. There is a long lead time.

Hon. Members may recall the "great debate" when Labour was in power. The then Mrs. Williams launched that great debate, following the speech of the then Prime Minister, Lord Callaghan, at Ruskin college. He said that the education service was failing the nation, particularly industry, as it was not producing enough people with the right standard of maths and so on. So there was a great debate on the national curriculum. It went all round the country to conference after conference and what

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happened? Because the Labour party was the pawn of the teaching unions, nothing happened. They dismissed the whole thing.

Had there been a national curriculum in the mid-1970s or had Prime Minister Wilson, after his accurate diagnosis in the 1960s that we needed the white heat of the technological revolution, done something other than put as head of the Technology Ministry a clapped-out trade union magnate--Frank Cousins--and if those opportunities had not been missed, the lead time would now be producing results. The Opposition did nothing. We had to do it and they opposed the national curriculum every inch of the way.

When we set the standards and introduced the testing system, they opposed it. Of course the system had to settle down. It was not ideal in its early days, partly because we listened too much to the education experts with whom the Labour party is hand in glove. We have at least the basics in place, and the Queen's Speech takes the process further. We now have to ensure an awareness of learning and the seedcorn of literacy and numeracy as early as possible in the system.

I welcome thoroughly the voucher scheme for nursery provision. Yet the Labour party in Leeds ruthlessly attacked it and therefore did not apply for the pilot scheme money. So, for political reasons alone, the Labour party in Leeds has denied families in Leeds the opportunity of a huge expansion in nursery provision as early as next year.

According to the Audit Commission report, Leeds is not a good story in terms of nursery provision. It is below halfway down the list and requires a great deal of extra nursery provision. It simply will not do for the city group leaders in the Labour party to argue that the voucher scheme would deny the city money that it was already spending--the fact that it has not spent that much is another matter. It has to be stressed to the people of Leeds that they are missing out. If the city were producing such good nursery provision, it would not lose money under the scheme because there would be the same number of children in the schools or, if provision were so brilliant, there would be more. If nursery schools took more children, they would get more money and they would lose money only if fewer children entered the nursery education that the city provides.

Leeds needs a more diversified provision than is offered by the city itself. Out of a total of 130 nursery schools in the city, only three are in my part of it. So two young mothers, having found that there was a waiting list of more than 260 to get their three-and-a-half-year-olds into nursery school, decided to set up their own school. It is called Clever Clogs and operates in Cookridge primary school. It represents an excellent working partnership between the state school and a private enterprise initiative. If Leeds had the voucher scheme, parents could use that school on a bigger scale.

Other parents would be tempted to set up such new schools, but different from that one. The advantage is that a nursery provision incentive such as the voucher scheme stimulates different varieties of provision. It encourages some to be progressive and others to be more traditional. It allows parents that choice. The state provision would still exist, but parents might decide on a more progressive or traditional environment. They would be able to cash in their vouchers and enjoy a degree of choice, which would

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put competitive pressure on the city council to ensure that its provision is good enough to attract parents to its schools.

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