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Mr. Cotter: Such a decision would cap the pound's rise and help industry. Businesses are irritated by the lack of a clear timetable for the single currency. The hon. Gentleman says, "Not at this rate." Had the steps I described been taken at the right time, we would not have the present rate.
The Government should have done a better job on fiscal policy. They claim to have tightened fiscal policy, but most of those measures will not cool the consumer boom in the short term. Raising extra taxes on savings and businesses may seem like good policies, but they are bad economics.
The consumer taxes that the Chancellor has spoken of are modest, or offset by other measures. When asked by the Treasury Select Committee last week to list the actions that he has taken to dampen consumer demand, he could point only to a reduction of mortgage tax relief, which is only just taking effect; a reduction in tax relief via the married couple's allowance, which will take place in 1999; higher stamp duty on highly priced properties; and a higher petrol tax.
Those measures will have only a limited effect on consumer demand. We are back to having only one mechanism. Interest rates alone are being used to dampen the economy, at the cost of a stronger pound and higher costs on industry.
Is the Chancellor feeling somewhat chastened after strong criticism from the Engineering Employers Federation? If not, he should be. The EEF is right to say that the Treasury is "not listening enough" to industry about the damage that the strong pound is doing to UK manufacturers. The EEF also agrees that the problem should be tackled through taxes targeted at the consumer--otherwise, it predicts, up to 50,000 jobs will be lost in the engineering sector alone.
What should the Government do? We Liberal Democrats have consistently argued that money should be devoted towards training and education. The hon. Member for Rotherham (Mr. MacShane) made a constructive speech, the tenor of which we can support. He spoke about crossing the political boundaries to come up with solutions, the importance of training and education, and the important role that rural development agencies should have in future in regeneration at local level. He also spoke of adopting a rational approach to the European Community.
I fully support many other initiatives, including the foresight initiative, which links science and technology with industry, although many are now saying that it is underfunded. I am glad to see the Government embarking on a programme to help small businesses with exports, but we Liberal Democrats believe that, overall, the Government should have made a stronger commitment toward a single currency.
I could make other constructive points, but I conclude by saying that tonight we have debated a cynical motion from a party that has neither principle or policy. The Conservatives' suggestion that labour standards should be undermined is unacceptable to Liberal Democrats. It may be a bitter pill for the Tories to swallow, but the previous Conservative Government were responsible for much of the decline of manufacturing industry.
Dr. Nick Palmer (Broxtowe):
I have noticed in previous debates on industry the curious fact that few leading Conservatives have any personal experience of manufacturing industry. Let us look at the backgrounds of the six signatories to the motion in the dim and distant days before they fell on evil times and became professional Conservatives.
The Leader of the Opposition, the right hon. Member for Richmond, Yorks (Mr. Hague), was a business consultant. The shadow Chancellor, the right hon. Member for Hitchin and Harpenden (Mr. Lilley), was an oil analyst. The shadow President of the Board of Trade, the right hon. Member for Wokingham (Mr. Redwood), was an investment adviser. The right hon. and learned Member for Folkestone and Hythe (Mr. Howard) was a
barrister, as was the hon. Member for North-East Hampshire (Mr. Arbuthnot). The right hon. Member for Wells (Mr. Heathcoat-Amory) was a farmer, an accountant and a finance director.
All those professions are extremely respectable--if I had a daughter who wanted to marry one of them, I should say, "By all means. My son-in-law the oil analyst--why not?"--but it is curious that the parliamentary Conservative party is unable to find a single manufacturer in its ranks to sign the motion.
That might explain why the previous Government and the current shadow Cabinet have managed to get so far out of touch with British industry. I shall not go into the question of sterling, because almost all the other speakers have addressed it; but I have spoken with many managers in Broxtowe, and I should like to say a couple of words about the other points on the charge sheet assembled by the Opposition.
The motion claims that managers are worried about taxes, but not one of the Broxtowe managers to whom I spoke cited tax as an issue that worried them--on the contrary, they feel that the reduction in corporation tax is helpful to industry. Taxation does not appear to be a problem for them.
The motion also alleges that managers are alarmed by social and labour law legislation. None of the Broxtowe managers has evinced any such concern, with the exception of a firm run by an exclusive Christian group called the Brethren, which believes that the Bible forbids it to recognise trade unions. If Conservative Members wish to promote that group, that is fine, but I have not heard them mention it. Perhaps they are saving that argument for the wind-up speech.
The hon. Member for South-West Hertfordshire (Mr. Page) made an interesting point. He said that he wondered whether, in the present regime, overseas companies would wish to pursue inward investment in Britain.
Unlike the sponsors of the motion, I have recent experience of management in a large overseas-based multinational manufacturing company. I spoke to the chairman after seeing advertisements placed in the local press by the former Conservative Government, which said that companies should invest in Britain because our wage rates were low and there were few restrictions on employers.
I felt a little ashamed that we should be openly advertising ourselves as an ideal home for sweatshops, but I asked the chairman whether those arguments would persuade him to increase UK investment. His reply was revealing. He said that, other things being equal, lower wage rates were welcome, but that, at that time, there were two problems in Britain which were significant barriers to investment: the poor state of infrastructure, especially in the universities; and the low average quality of education, which made it hard to get the staff needed for high-quality precision manufacturing.
Given that background, I whole-heartedly welcome the new Government's focus on creating an environment for education and training that surpasses that of our foreign competitors. I particularly welcome the emphasis on support for research and development, which the Minister for Science, Energy and Industry has made his own.
British business needs four things from Government, regardless of the Government's political complexion. First, it needs a stable economic environment focused on
long-term growth, as emphasised so many times by the Chancellor. Secondly, it needs an education system that delivers the expertise needed for competitiveness. That is the focus of the policies put forward by the Department for Education and Employment. Thirdly, it needs a financial environment that rewards enterprise and venture capital investment, as stressed by the Minister for Small Firms, Trade and Industry when we debated that matter a few weeks ago. Finally, it needs a social and environmental policy framework that makes clear what is expected of it, and is not subject to constant change. That is another commitment of this Government.
Mr. David Heathcoat-Amory (Wells):
It was kind of the hon. Member for Broxtowe (Dr. Palmer) to go into the biographical details of those who signed the motion, but he was wrong to assert that none of us has manufacturing experience. He mentioned that I have a business background, but I spent 10 years in manufacturing before coming to this House, and am now a director of a manufacturing company, an interest that I am proud to declare in such a debate.
More generally, almost all my right hon. and hon. Friends who signed the motion have more manufacturing and business experience than the entire Department of Trade and Industry Front Bench. Therefore, Conservative Members think that we know what we are talking about, and we have heard some excellent speeches from my right hon. and hon. Friends this evening.
We have on our hands a betrayal of everything for which Labour said they stood when in opposition. We are used to broken promises from Labour on taxation, but their betrayal of the manufacturing interest is probably the greatest. When they were in opposition, no speech made by Labour Members was complete without reference to the central importance of the manufacturing sector. They always called for lower interest rates, more investment, intervention of one sort or another, but now that they are in office, they have no strategy whatever. That has been noticed not just by hon. Members on the Opposition Benches, but more generally.
I was interested in a debate in another place last week, in which Lord Paul--a new Labour peer--finished his speech by saying:
The President of the Board of Trade, in her somewhat petulant and shrill speech, showed that she had no idea whether she was on the side of those who still believe manufacturing to be important, or whether she thinks that manufacturing is no longer sufficiently cool to engage the interest of Ministers. I personally thought that it was one of the weakest performances from the Dispatch Box that
I have ever heard on a subject of this importance. It showed the shallowness of the Government's entire approach. They have no strategy.
On reflection, perhaps we should not be too surprised at that, because one of the first things that the Government did, four days after the general election, was to give away the power to decide interest rates--a central lever of the economy. When the Chancellor of the Exchequer transferred the decision-making power to the Bank of England, he did so without telling the House, without consulting anyone outside, and in defiance of what was in the Labour manifesto.
In Labour's business manifesto, which we all know was more important than their main manifesto--
"There is a cynicism creeping into the minds of UK manufacturers that this Government are indifferent to the fate of manufacturing industry".--[Official Report, House of Lords, 1 April 1998; Vol. 587, c. 298.]
That has been shown again this evening.
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